[Senate Hearing 113-253]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 113-253

                 IMPLEMENTATION OF THE AFFORDABLE CARE
               ACT: UNDERSTANDING SMALL BUSINESS CONCERNS

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

                                HEARING

                               BEFORE THE

            COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP
                          UNITED STATES SENATE

                    ONE HUNDRED THIRTEENTH CONGRESS

                             FIRST SESSION

                               __________

                             JULY 24, 2013

                               __________

    Printed for the Committee on Small Business and Entrepreneurship






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            COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP

                    ONE HUNDRED THIRTEENTH CONGRESS

                              ----------                              
                   MARY L. LANDRIEU, Louisiana, Chair
                 JAMES E. RISCH, Idaho, Ranking Member
CARL LEVIN, Michigan                 DAVID VITTER, Louisiana
TOM HARKIN, Iowa                     MARCO RUBIO, Florida
MARIA CANTWELL, Washington           RAND PAUL, Kentucky
MARK L. PRYOR, Arkansas              TIM SCOTT, South Caarolina
BENJAMIN L. CARDIN, Maryland         DEB FISCHER, Nebraska
JEANNE SHAHEEN, New Hampshire        MIKE ENZI, Wyoming
KAY R. HAGAN, North Carolina         RON JOHNSON, Wisconsin
HEIDI HEITKAMP, North Dakota         JEFFREY CHIESA, New Jersey
ED MARKEY, Massachusetts
                Jane Campbell, Democratic Staff Director
           Skiffington Holderness, Republican Staff Director




























                            C O N T E N T S

                              ----------                              

                           Opening Statements

                                                                   Page

Landrieu, Hon. Mary L., Chair, and a U.S. Senator from Louisiana.     1
Risch, Hon. James E., a U.S. Senator from Idaho..................     4

                               Witnesses

Iwry, J. Mark, Senior Advisor to the Secretary, U.S. Department 
  of the Treasury................................................    11
Brooks-LaSure, Chiquita, Deputy Director, U.S. Department of 
  Health and Human Services......................................    19
Olafson, Meredith K., Senior Policy Advisor to the Administrator, 
  U.S. Small Business Administration.............................    29
Clark, Nancy, President, Glen Group, Inc.........................    66
Lee, Jamal, Director and Chief Engineer, Breasia Studies, LLC....    70
Settles, Kevin, President and CEO, Bardenay Restaurant & 
  Distillery.....................................................    76
Katz, Lawrence K., President and CEO, Jomar Cafe, Inc., dba Dot's 
  Diner..........................................................    94
Houser, Jim, Owner, Hawthorne Auto Clinic, Inc...................   100
Dennis, Jr., William J., Senior Research Fellow, National 
  Federation of Independent Business.............................   108

          Alphabetical Listing and Appendix Material Submitted

Brooks-LaSure, Chiquita
    Testimony....................................................    19
    Prepared statement...........................................    21
    Response to post-hearing questions from:
        Senator Risch............................................   140
        Senator Enzi.............................................   142
        Senator Fischer..........................................   143
        Senators Landrieu and Enzi...............................   148
Capitol City Legal Medical Solutions
    Letter dated August 4, 2013, to Senator Landrieu.............   151
Clark, Nancy
    Testimony....................................................    66
    Prepared statement...........................................    68
Cosponsorship agreement between the U.S. Small Business 
  Administration and the Small Business Majority                    132
Dennis, Jr., William J.
    Testimony....................................................   108
    Prepared statement...........................................   110
    Response to post-hearing questions from Senator Risch........   138
Hatch, Hon. Orrin
    Letter dated July 18, 2013, to James Hoffa, Joseph T. Hansen, 
      and D. Taylor..............................................     9
Houser, Jim
    Testimony....................................................   100
    Prepared statement...........................................   102
International Brotherhood of Teamsters
    Letter dated July 11, 2013, to Senator Reid and 
      Representative Pelosi......................................     7
Iwry, J. Mark
    Testimony....................................................    11
    Prepared statement...........................................    14
    Response to post-hearing questions from:
        Senator Risch............................................   144
        Senator Fischer..........................................   147
Johnson, Hon. Ron
    Kaiser Family Foundation and Health Research & Education 
      Trust Employer Health Benefits.............................    51
Katz, Lawrence K.
    Testimony....................................................    94
    Prepared statement...........................................    96
    Summary of Testimony.........................................   128
King, Howard ``Rocky''
    Prepared statement...........................................   162
Landrieu, Hon. Mary L.
    Opening statement............................................     1
    Report titled ``The Individual Mandate in Perspective: Timely 
      Analysis of Immediate Health Policy Issues''...............    58
    Background Memo: ``Facts About the National Federation of 
      Independent Business''.....................................    62
Lee, Jamal
    Testimony....................................................    70
    Prepared statement...........................................    72
Olafson, Meredith K.
    Testimony....................................................    29
    Prepared statement...........................................    31
    Response to post-hearing questions from Senators Risch and 
      Fischer....................................................   129
Plank Road Cleaners
    Letter dated August 1, 2013, to Senator Landrieu.............   153
Raetzsch, Jr., Hugh W.
    Prepared statement...........................................   154
Risch, Hon. James E.
    Opening statement............................................     4
Settles, Kevin
    Testimony....................................................    76
    Prepared statement...........................................    78
Small Business Majority
    Letter dated July 23, 2013, to Senator Landrieu..............   160
Society of Actuaties
    Report titled ``ACA Impact Will Vary `Substantially Across 
      State Lines' ''............................................   165
    Report titled ``Cost of the Future Newly Insured under the 
      Affordable Care Act (ACA)..................................   168
The Perkins Group, LLC
    Letter dated August 4, 2013, to Senator Landrieu.............   152

 
                    IMPLEMENTATION OF THE AFFORDABLE
            CARE ACT: UNDERSTANDING SMALL BUSINESS CONCERNS

                              ----------                              


                        WEDNESDAY, JULY 24, 2013

                      United States Senate,
                        Committee on Small Business
                                      and Entrepreneurship,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 2:35 p.m., in 
Room SR-428, Russell Senate Office Building, Hon. Mary L. 
Landrieu, Chair of the Committee, presiding.
    Present: Senators Landrieu, Pryor, Shaheen, Heitkamp, 
Markey, Risch, Vitter, Rubio, Scott, Fischer, Enzi, and 
Johnson.

 OPENING STATEMENT OF HON. MARY L. LANDRIEU, CHAIR, AND A U.S. 
                     SENATOR FROM LOUISIANA

    Chair Landrieu. Good afternoon and thank you all for 
joining us for this hearing. I call the Small Business 
Committee to order.
    The purpose of today's hearing is to better understand how 
the Affordable Care Act is being implemented in various regions 
of the country, how it is helping America's 27 million small 
businesses as they struggle to afford health coverage that for 
too long has been out of reach, unattainable, and 
unsustainable, including 22 million self-employed Americans, as 
well as any special challenges of businesses with between 50 
and 200 employees that are facing, as the implementation of the 
ACA continues.
    As it is well-documented, this law has no requirement for 
coverage or a penalty on businesses with fewer than 50 
employees, which comprise 96 percent of all small businesses in 
the country. In fact, it actually offers help to the smallest 
of those businesses who do want to provide coverage. In today's 
hearing we will also hear about those businesses with over 50 
employees, which is about 3 to 4 percent of businesses in the 
country, very important businesses, many restaurants and others 
that I have heard from who are also important job creators and 
very much appreciated entrepreneurs in our country today.
    During this hearing, we will hear from the Administration 
on the status of the implementation. We will also hear from 
small business owners who will be telling their own personal 
stories about how this Act is affecting them, their business 
plans, and their employees' access to quality care.
    In order to set the table for today's hearing on where the 
Affordable Care Act implementation is now and what it will look 
like in the future, I want to briefly take a look back at where 
we were just a few short years ago. In 2009, Congress took up 
the issue of national health care reform in earnest. It was not 
really, however, a new discussion. This issue had been debated 
in Washington for decades, going all the way back to President 
Theodore Roosevelt, and including Presidents and Congressional 
leaders from both parties.
    Given that history, we knew that getting a bill passed was 
going to be a long and hard road, and some in Washington even 
felt it would be too hard and contentious to try it all. 
Looking back, while it was hard and was difficult, I believe it 
was an important issue to address, particularly in face of 
highly unstable, unpredictable, and constantly rising health 
care costs, large and small businesses were struggling with how 
to provide affordable health care coverage to their valued 
employees, many of whom are like family.
    Many small businesses have paid historically, on average, 
of 18 to 25 percent more than large businesses for less 
coverage. They would see their health care costs increase 
faster than the price of their goods and services that they 
sold, four times faster than the rate of inflation, in fact, 
between 2001 and 2009.
    Average annual family premiums for workers at small firms 
in that year, 2009, before the Affordable Care Act was passed, 
increased by 123 percent, from $5,700 to $12,700, while the 
percentage of small firms offering coverage fell from 65 to 59 
percent.
    And it is absolutely no wonder at all to me that since 
1986, 24 years prior to the passage of the ACA, the number one 
concern for small businesses every year has been access to 
affordable health care, and this is according to the National 
Federation of Independent Businesses. I want to repeat, since 
1986, 24 years prior to the Affordable Care Act, this has been 
the number one issue of the National Federation of Independent 
Business.
    To address these concerns and many others during the 
passage of this Act, I held several hearings and round-tables 
to focus on how the current health care system then before ACA 
was undercutting our efforts to provide affordable health care 
to businesses and their employees, to curb volatile health care 
costs, and to ensure that small business had a voice in the 
legislative process.
    There was no doubt in my mind then, and no doubt in my mind 
now, that maintaining the status quo prior to the ACA of 
insecure, unaffordable, and unpredictable insurance was 
unsustainable for American families as well as small 
businesses. As Chair of this Committee, I take my role as 
advocate for the small business community very seriously. Once 
the amendment process began, I co-sponsored several small 
business amendments that did become part of the final law.
    I want to talk briefly about two of them that expanded the 
small business tax credit to more businesses and made the 
credits available immediately. First, to help small businesses 
bridge the affordability gap in providing insurance for their 
employees before the private marketplaces are up and running, 
the original bill created a temporary tax credit that would be 
phased in for small businesses with fewer than 25 or few 
employees with average wages of less than $40,000 beginning in 
2011.
    An amendment I co-sponsored passed the Senate and made the 
initial credit available in 2010 so more small businesses could 
immediately afford to provide health insurance, if they wanted 
to voluntarily, for their workers, particularly the smallest 
businesses that need the most help and could virtually find it 
nowhere in any affordable way, shape, or form prior to the ACA.
    Second, the original bill only made the full value of these 
credits available to businesses with ten or fewer full-time 
employees with annual wages of $20,000 or less. Another one of 
my amendments increased the wage limit to $25,000 for both 
temporary and marketplace credits to allow more small 
businesses access to full credit. It expanded the wage 
limitation for partial credit from $40,000 to $50,000.
    In all, these amendments made an additional $13 billion in 
tax credits for a total of $40 billion, which are helping small 
businesses today, in states that are cooperating, to provide 
quality health care coverage for their employees, including 
small business owners testifying today.
    The law also included the creation of a new health care 
private marketplace known as the exchanges for small businesses 
with under 50 employees, and eventually under 100 employees, to 
allow them to pool together and access more affordable health 
care coverage. That had always been available for large 
businesses in America for a long time, but never to small 
businesses, either those with under 25 employees, under 50 
employees, or between 50 and 200 employees.
    These new marketplaces, if implemented correctly, will give 
small employers the ability to band together, spread risk over 
a large number of people, giving them the same leveraging power 
and lower cost that large businesses enjoy. This means small 
businesses in these private marketplaces will no longer see 
huge rate spikes just when one employee gets sick. And we have 
heard this over and over and over again for small businesses. 
One employee gets cancer, the rates would go up 30 or 40 
percent. Those days are quickly coming to an end.
    Today these marketplaces are being implemented, either by 
the state or, in some instance, by the Federal Government. 
Ultimately, the Affordable Care Act that was enacted builds on 
our existing private health care system and seeks to help those 
small businesses who need it most by, one, lowering premium 
growth costs that I said has been rising spectacularly 20 years 
before the ACA was passed, increasing access to quality, 
affordable health insurance, and encouraging a greater voice in 
competition in the health care marketplace, and most 
importantly, at least to me, is reducing what I call job lock, 
which prevents individuals from starting a new business and 
makes them stay in jobs they would otherwise leave because they 
have to have health insurance.
    And in the previous world before ACA when only large 
companies could provide affordable insurance because of their 
buying power, many people were job-locked, unable to be 
entrepreneurs, unable to go out on their own because there was 
virtually no insurance available at an affordable cost. And if 
you had a health care challenge yourself or, let us say, your 
wife was in the second or third stages of cancer, or your child 
was born with Down's Syndrome, you were in job lock. No longer.
    Now the Affordable Care Act is the law of the land. It is 
in the process of being implemented. It is the role of this 
Committee to continue to ensure that we have oversight over how 
this law is either working or not working, to change what we 
can should it become clear to us that it is necessary, and to 
advocate on behalf of all small businesses.
    And most small businesses have less than 25 employees, but 
many have less than 100, and there are some very important 
businesses that will testify here today that have between 100 
and 200, and they are struggling with some of these 
requirements. I understand that.
    Just because the Affordable Care Act became law does not 
mean that the job of fighting to make it work is over for us. 
After the law was enacted, for example, I worked with my 
colleagues on both sides of the aisle to repeal the burdensome 
1099 reporting provision. I was happy to help lead that effort 
in a bipartisan manner. That was done and it was a great 
relief.
    There are other things that could potentially be done to 
improve this law. As this law moves forward, I will continue to 
listen to small business owners in Louisiana and across the 
country to continue to fight to make sure their voice is heard 
and that the law works the way it was meant to work.
    I look forward to a spirited discussion and debate in our 
Committee today from both sides of the aisle. I welcome Senator 
Pryor, Senator Risch, Senator Rubio, Senator Johnson, Senator 
Enzi and others that will be joining us, and I am particularly 
interested in hearing about the Administration's efforts to 
implement the law in a way that focuses on helping small 
businesses that have for decades been priced out of being able 
to afford quality health care to their employees, many of whom 
are like family.
    And they need to be able to compete for some of the best 
employees, to compete against some of the larger businesses in 
our country and internationally to help provide quality, 
affordable health insurance, which is important. I am also 
excited to hear some very compelling stories from small 
business owners who will be speaking to us about how this Act 
is working for them, some that have still questions and 
comments about how it is continuing to be a challenge.
    We have an impressive list of witnesses here to talk about 
the implementation of the Affordable Care Act. I now turn to my 
ranking member, Senator Risch, for his opening statement. We 
will then accept opening statements in writing from the other 
members and go into our first panel of questions. That will be, 
hopefully, one round, potentially two, five minutes each. 
Senator Risch.

 OPENING STATEMENT OF HON. JAMES E. RISCH, A U.S. SENATOR FROM 
                             IDAHO

    Senator Risch. Madam Chairman, thank you so much. Let us 
talk about how we got here to start with. When I first ran for 
this job back in 2008, America was focused on a real need to 
reform our health care system. Both parties were arguing that 
we should do health care reform. The problem is, it turns out 
that we were singing off of two different sheets of music.
    Our side was talking about redoing health care to lower 
costs and make it more affordable for every American. The other 
side was talking about expanding coverage. At that time, 87 
percent of Americans were covered by some sort of health 
insurance coverage and they wanted to move it to 100 percent. 
At the end of the day, of course, that did not happen. They did 
move the needle 7 percent so that 94 percent were covered after 
the adoption of Obamacare.
    In any event, we went through a spirited debate on the 
matter. The Democrats won; the Republicans lost. Indeed, the 
law was passed by an exact party line vote. And at the end of 
the day, we are saddled with Obamacare. Since Obamacare has 
come online, its difficulties, its problems, people who were 
disenchanted with it, grow every single day.
    And indeed, that is why I originally conceived the idea of 
holding a hearing like this, but it was going to be strictly on 
the Republican side, and I want to thank you, Madam Chairman, 
for expanding this and making it an official Committee hearing 
with both parties participating.
    We, on our side, are believing that this matter is a 
catastrophic failure and becoming more so every day. Indeed, 
the three groups that are affected by this, big business, small 
business, and individuals, average Americans, are learning 
every single day about what a horrible burden this is on them 
and how it is going to worsen the kind of medical care they 
get.
    As a result of that, we are being deluged, at least those 
of us on our side are being deluged, by complaints from average 
Americans, from small business, and indeed, from big business. 
I am sure that my colleagues here have had the parade of big 
business CEOs, small business CEOs, and individuals into their 
offices complaining about Obamacare as it has unfolded--and, of 
course, we do not know how it is going to completely unfold--
but as more and more is known, how it was going to affect them, 
detrimentally.
    Now, somebody was listening. The White House was listening. 
And what did they do? They gave relief, but they gave relief 
only and solely to big business. What about the rest of 
Americans? What about small businesses in America? They want 
relief, too, and that is one of the reasons why I asked to have 
this hearing.
    Hopefully, at the end of this hearing, everyone will agree 
that not only does big business need relief, so do the small 
businesses who this Committee is exactly dedicated to helping. 
They need relief, too. And small business should get the same 
relief that big businesses got. And the same is true with 
American individuals.
    The first rule that every school child can tell you about 
the delivery of health care and the first thing they learn 
about doctors is that they take an oath, and the oath they take 
is, ``do no harm.'' Well, we now know that Obamacare violated 
the very first principle--the very first doctrine of the 
delivery of health care services--and that is do no harm, 
because we are realizing every day that there is more and more 
harm being caused by this particular law.
    Now, you say, well, you are a Republican, you voted against 
it, your party voted against it. Well, let us talk to the 
people who actually supported this law. I have here a letter 
dated July 11th, 2013, from the International Brotherhood of 
Teamsters signed by its General President, James B. Hoffa, also 
by the UFCW and Unite Here, three unions in America.
    They start out by writing to Senate Majority Leader Harry 
Reid and House Minority Leader Nancy Pelosi, quote, ``When you 
and the President sought our help for the Affordable Care 
Act''--and by the way, they got it. They got it 
enthusiastically by these unions--``you pledged that if we 
liked the health plans we have now, we could keep them.''
    Now, those of us who were on the other side of this were 
saying, ``You know, I am hearing you guarantee that you can 
keep your health care plans, but how can you be talking out of 
one side of your mouth saying that, while out of the other side 
of your mouth saying, ``Yes, but all of the plans are going to 
be written by the United States Government.'' Indeed, nobody's 
health care plan would exist after Obamacare was enacted.
    In any event, they go on to say, ``On behalf of millions of 
working men and women we represent and the families they 
support, we can no longer stand silent in the face of elements 
of the Affordable Care Act that will destroy the very health 
and well-being of our members along with millions of other 
hardworking Americans.''
    They go on to say, ``We continue to stand behind real 
health care reform, but the law as it stands will hurt millions 
of Americans including the members of our respective unions.'' 
This is from the people who supported this law when the 
President brought it on board. Well, Madam Chairman, I would 
ask unanimous consent that the July 11th letter be included in 
the record, together with the response that Senator Hatch gave, 
dated July 18th, 2013, and I will have some more items for the 
record.
    Chair Landrieu. Without objection.
    [The information follows:] 


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    Senator Risch. At the end of the day, I hope, Madam 
Chairman, that you and your party will join us as we attempt to 
go back to the fundamental principle of this and that is to do 
no harm. That is, go back to what we had before. It was not 
great, there is no question about it, but by going forward with 
Obamacare, we are violating that standard of doing no harm. At 
the very least, every single American--every single small 
business--should get the same relief that the White House has 
given to big business, and put this off.
    I know it is only until after the election and I know that 
you hope that the brouhaha will calm down after that point, but 
I think if we give this time to reflect, maybe people will come 
to their senses and realize that we should do no harm. Thank 
you, Madam Chairman.
    Chair Landrieu. Thank you. I am happy for that spirited 
introduction, happy to know that you are an advocate for the 
Teamsters. I will be happy to share that with all the members 
of both the House and the Senate.
    Senator Risch. Madam Chairman, I cannot tell you how much I 
am an advocate for exactly what the Teamsters have said.
    Chair Landrieu. For the Teamsters, great. Our first panel 
is Mark Iwry as Senior Advisor to the Secretary of Treasury and 
is Deputy Assistant Secretary for Retirement and Health Policy 
at the U.S. Treasury Department. In that role, he is heavily 
involved in retirement and savings policy as a regulatory 
process relating to implementation of the Affordable Care Act. 
We welcome you, Mr. Iwry.
    Chiquita Brooks-LaSure is the Deputy Director of Policy and 
Regulation at the Center for Consumer Information Insurance 
Oversight. In this role, she oversees development and clearance 
of policy and regulation related to the implementation of 
private insurance reforms. We thank you for being here.
    And then finally, we have Meredith Olafson. Her role is 
Senior Policy Advisor to the Administration. She is responsible 
for overseeing the Small Business Administration education and 
outreach efforts around health care and the Affordable Care 
Act. And so we look forward to having all three of you.
    As we stated, Mr. Iwry, we will start with you and we will 
have five minutes for your opening statements and then a round 
of questions.

  STATEMENT OF J. MARK IWRY, SENIOR ADVISOR TO THE SECRETARY, 
                U.S. DEPARTMENT OF THE TREASURY

    Mr. Iwry. Thank you, Chairman Landrieu, Ranking Member 
Risch, members of the Committee, appreciate the opportunity to 
discuss implementation of the provisions of the Affordable Care 
Act that relate to small businesses.
    The Affordable Care Act provides benefits for employees and 
owners of small businesses.
    Chair Landrieu. Can you try to pull the mic a little bit 
closer to you? It is a little difficult, but you have got to 
press the button and speak directly into your microphone.
    Mr. Iwry. Is this better?
    Chair Landrieu. Better.
    Mr. Iwry. For years, many small businesses across America 
have struggled to provide health coverage to their employees. 
The Affordable Care Act helps small businesses by increasing 
their bargaining power and lowering their costs. Small 
employers with 50 or fewer employees will be able to pool their 
buying power and reduce their administrative costs by 
purchasing affordable insurance through the Small Business 
Health Options program, or SHOP, and small business owners will 
receive standardized information that will make it easy to 
compare insurance policies on an apples-to-apples basis.
    New market rules will ensure that premiums small employers 
pay for most health insurance plans will not vary based on the 
type of business that purchases the coverage, or the health 
status or their employees. While the Affordable Care Act makes 
it easier for small businesses to offer health coverage if they 
so choose, the great majority of small businesses will not be 
required to offer coverage.
    Those with fewer than 50 full-time employees are completely 
exempt from the law's employer responsibility provisions. That 
means about 96 percent of all firms in the U.S. are exempt from 
those requirements. And almost all businesses with 50 to 200 
employees already offer coverage, the great majority of those.
    The Affordable Care Act also provides tax credits for many 
small businesses that offer coverage to their workers. CBO has 
estimated that the tax credit will save small businesses around 
$14 billion over the current ten-year budget window. The small 
business qualifies for the credit if it employs fewer than 25 
full-time or full-time equivalent employees during the taxable 
year, and if those employees have annual full-time equivalent 
wages that average less than $50,000.
    During 2010 through 2013, the maximum credit is generally 
35 percent of the employer's contributions to premium, and for 
2014 and later years, generally 50 percent. The credit is 
phased out on a sliding scale between 10 and 25 full-time 
equivalent employees, and between an average annual wage of 
$25,000 and $50,000.
    The Administration's budget for the last two years includes 
a proposal to simplify and expand the small business tax credit 
in order to increase its utilization. In addition to the tax 
credit available to small employers, the Act provides for a 
premium tax credit that will help about 20 million Americans 
afford health insurance on the new health insurance 
marketplaces.
    The Act also includes insurance market reforms providing 
important protections for employees and other individuals. The 
Treasury Department recently provided transition relief with 
respect to the employer reporting and employer-shared 
responsibility provisions. These provisions affect only 
employers with 50 or more full-time employees, which constitute 
less than 5 percent of all U.S. businesses.
    So most businesses, and particularly most small businesses, 
are not affected by the employer reporting or employer 
responsibility provisions. Treasury announced that it would 
provide one-year transition relief with respect to the 
information reporting requirements for insurance providers, the 
information reporting requirements for applicable employers, 
and the employer-shared responsibility provisions. This does 
not affect the effective date of other Affordable Care Act 
provisions.
    The Affordable Care Act is projected to increase by nearly 
30 million the number of Americans with health coverage. The 
Administration is implementing this law to build on the 
progress already made toward better and more affordable 
coverage. We welcome the opportunity to further work with this 
Committee to achieve these objectives. Thank you, Chairman, and 
I look forward to answering your questions.
    [The prepared statement of Mr. Iwry follows:]


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    Chair Landrieu. Thank you. Mrs. Brooks-LaSure.

  STATEMENT OF CHIQUITA BROOKS-LaSURE, DEPUTY DIRECTOR, U.S. 
            DEPARTMENT OF HEALTH AND HUMAN SERVICES

    Ms. Brooks-LaSure. Chairwoman Landrieu, Ranking Member 
Risch, thank you very much for the opportunity to discuss the 
many benefits that the Affordable Care Act will provide for 
small businesses. Although many small businesses would like to 
offer their employees health benefits, they have faced many 
challenges. The way insurers have presented information may 
make it difficult for employers to comparison shop.
    Small businesses employing women, older workers, or workers 
with chronic or high-cost illnesses have faced higher insurance 
rates in most states. Changes in the age, health status, or 
gender mix of employees can add to the unpredictability of 
increases in a small group's premiums. The Affordable Care Act 
will remove these obstacles and help small employers provide 
their employees with high quality affordable health care 
coverage.
    On October 1st, 2013, the health insurance marketplaces 
will be open for business, giving Americans, including small 
businesses, a new way to shop for health insurance coverage. 
For small businesses the Small Business Health Options program, 
known as SHOP, will provide a new, streamlined way for small 
employers to offer health insurance to their employees. The 
SHOPs will offer the same level of benefits and coverage that 
have been available to larger employers while helping small 
employers better predict and control health care insurance 
expenses.
    There are signs that competition created by the SHOPs is 
resulting in lower prices for consumers. The lowest cost silver 
plan available to small employers in 2014 in the six states 
with available data is estimated to be 18 percent less 
expensive, on average, than the average premium that small 
employers would be paying for a comparable plan before the 
passage of the Affordable Care Act.
    The SHOPs will offer a single point of entry for small 
employers and their employees to apply for coverage, and, if 
eligible, the employer may qualify for a tax credit worth up to 
50 percent of the employer's premium contribution. In addition, 
small businesses will be able to choose from among many plans 
by making side-by-side comparisons of health plans, their 
benefits, premiums, and quality, expanding options as well as 
increasing transparency and competition.
    The SHOP employer and employee applications, models of 
which are already available online, are smart, dynamic tools 
that will ask an applicant only the questions relevant to 
establishing eligibility for that applicant based on his or her 
particular situation. Clear instructions will help applicants 
apply online and HealthCare.gov, the website for the Federally-
facilitated SHOPs, also includes information about what number 
to call in order to get help by phone if needed. HealthCare.gov 
will also link to state-based SHOPs and the applications used 
by those SHOPs.
    Both inside and outside the SHOPs, the Affordable Care Act 
also helps ensure that plans available to small businesses and 
their employees have a standard set of benefits and meet 
certain requirements. New market rules require that premiums 
for most health insurance plans available to small employers 
will not vary based on what type of small business they cover 
or the health status of the business employees.
    This means that the hardware store on Main Street will see 
similar premiums as the bakery down the street or a neighboring 
farmer. CMS is working closely with our partners at the Small 
Business Administration and the Department of Treasury to help 
educate and inform small businesses and their employees about 
the SHOPs, tax credits available to small businesses, recent 
insurance reforms, and other benefits of the Affordable Care 
Act.
    In June of this year, CMS relaunched a new consumer focused 
HealthCare.gov website and the 24-hours a day consumer call 
center to help Americans prepare for open enrollment and to 
ultimately purchase affordable health care coverage.
    To provide additional assistance to small businesses, CMS 
will open a SHOP call center next month. Until open enrollment 
begins, the call center will provide basic educational 
information about SHOPs for small employers. Beginning October 
1st, the call center will provide customer support, including 
enrolling employers in insurance plans and helping them access 
the application and enrollment system.
    Chair Landrieu. Please try to wrap up.
    Ms. Brooks-LaSure. The call center will assist agents, 
brokers, navigators, and marketplace assistors on behalf of 
small employers. We look forward to continuing to work with the 
Committee improve the health care options for American small 
businesses.
    [The prepared statement of Ms. Brooks-LaSure follows:]


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    Chair Landrieu. Thank you very much. Ms. Olafson, and 
please speak right into the mic.
    Ms. Olafson. Thank you. Can you hear me?
    Chair Landrieu. Yes.

STATEMENT OF MEREDITH K. OLAFSON, SENIOR POLICY ADVISOR TO THE 
       ADMINISTRATOR, U.S. SMALL BUSINESS ADMINISTRATION

    Ms. Olafson. Thank you, Chair Landrieu, Ranking Member 
Risch, and members of the Committee. I am pleased to be here 
today. America's 28 million small businesses are the backbone 
of our economy, creating two out of every three net new jobs 
and employing half of America's workforce. The U.S. Small 
Business Administration is committed to giving small business 
owners the resources they need to start and grow a business, 
including access to accurate, timely information about how the 
Affordable Care Act is opening up better health care options 
for small business owners and entrepreneurs.
    Many small business owners consider their employees to be 
part of their family, and providing benefits such as health 
care is one important tool they have to help retain their 
talented workforce and remain competitive. The Affordable Care 
Act helps these entrepreneurs provide insurance through 
measures designed to help small business owners have the same 
purchasing power and options as larger businesses.
    As my colleagues have mentioned, tax credits are also 
available for many small businesses to help cover up to 35 
percent of the premium costs of health insurance. Hundreds of 
thousands of small business owners have already benefitted from 
these credits and the credits will rise to 50 percent in 2014. 
Also beginning in 2014, the Affordable Care Act will give self-
employed entrepreneurs and small businesses, generally those 
with up to 50 employees, a better way to shop for insurance 
through the new individual and small employer marketplace.
    And the majority of small businesses will not be affected 
by the employer-shared responsibility rules which take effect 
in 2015. In fact, businesses with fewer than 50 full-time or 
equivalent employees are not subject to these rules. That is 
about 96 percent of our businesses.
    As the primary gateway for small business owners engaged 
with the Federal Government, the SBA is working closely with 
the Department of Health and Human Services, the Departments of 
Labor and Treasury, and others to ensure that small business 
owners know the facts about the Affordable Care Act. SBA is 
also partnering with HHS on the ground to leverage their 
expertise and connect them with small business owners across 
the country.
    As part of our outreach efforts, SBA disseminates a weekly, 
a biweekly interactive health care blog, as well as a direct e-
newsletter that reaches more than 1 million subscribers. We 
have also created robust online content at SBA.gov as well as 
Business.USA.gov. These two sites combined have more than 2 
million visitors per month.
    America's small business owners engage daily with SBA, HHS, 
IRS, and our other Federal partners through a variety of online 
sites. Therefore, as part of our ``no wrong door'' approach to 
online engagement, Business.USA.gov is leading the 
Administration's efforts to provide comprehensive health care 
information and easy to use tools for businesses across these 
sites. This ensures that small business owners get the 
information they need no matter their point of online entry.
    SBA has also developed a series of comprehensive small 
business webinar trainings for our staff, our extensive network 
of small business development centers, women's business 
centers, and SCORE, as well as staff from other Federal 
agencies. To date, we have trained more than 2,200 of these on 
the ground staff and partners so that they in turn can serve as 
resources for small businesses in their communities, and this 
training continues.
    At the same time, we are working with our regional and 
local partners to better educate small businesses that are 
served by SBA's 68 district offices. Since February 2013, SBA 
has helped to lead over 350 events serving approximately 24,000 
attendees. And just last week on July 18th, we launched a 
weekly Affordable Care Act webinar series in partnership with 
Small Business Majority. The goal of these webinars is to 
educate small business owners across the country and the 
webinars are open to all small businesses.
    We have also worked to educate and train leaders and 
members of a number of national trade associations about the 
Affordable Care Act such as the International Franchise 
Association, the International Association of Plumbing and 
Mechanical Officials, and the International Bakers Association, 
as well as state organizations like the Louisiana Restaurant 
Association.
    The Affordable Care Act allows small employers to offer 
coverage in a way that makes sense for their business and works 
for their bottom line. SBA is committed to leveraging our 
resources and Federal partnerships to ensure that small 
business owners have the facts and the resources they need to 
understand the law. Thank you.
    [The prepared statement of Ms. Olafson follows:]


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    Chair Landrieu. Thank you very much. We will start with our 
first round of questioning. Let me put something into the 
record and then start my question to you, Ms. Brooks-LaSure, if 
I could. 96 percent, underscore, of all firms in the United 
States, which is almost 6 million firms, have fewer than 50 
employees. They are exempt from any employer responsibility, 
correct?
    Of the 5.8 million firms, do you know how many workers they 
employ? It is about 34 million. Does that sound right?
    Ms. Brooks-LaSure. Yes.
    Chair Landrieu. In Louisiana, 67,000 small businesses have 
less than 50 employees. About 91 percent of all businesses in 
Louisiana are exempt from the requirements of this Act. 184,000 
small businesses in our state have between 50 and 249. All the 
Senators can get access to the information from their states 
from the census, which is where I got this, and in Louisiana, 
3,800 businesses only--that is a small number, it is a 
significant number, but relatively small--have between 50 and 
249 employees.
    So the point of this is that the vast majority of 
businesses, small businesses in America, do not have a mandate 
from the Affordable Care Act. So the implementation is 
happening really for businesses between 50 and above, and 
primarily between 50 and 249 employees. And that is what I want 
to ask about eventually.
    But for right now, my first question is this. The ACA 
created health marketplaces that you all have described where 
individuals can shop for health insurance. These marketplaces, 
including the SHOP Act which you all just talked about, the 
SHOP provision, will increase the--the idea is for it to 
increase competition in the private market and give small 
businesses individual choices that they never had before.
    How is HHS operating in states that choose not to set up 
their own exchanges? Because there have been some states that 
are busy cooperating and set up exchanges, others that have 
decided to sit on the sidelines. How is that happening? 
Chiquita, could you just talk for a minute about how small 
businesses are going to be helped in states that have not 
decided to engage in setting up exchanges?
    Ms. Brooks-LaSure. Absolutely. Thank you so much for the 
question. So in states that have chosen not to operate a state-
based marketplace, we will be setting up a marketplace both for 
the individual market as well as for the SHOPs. In many of 
those states, they are still working with us to work to certify 
the qualified health plans. Those will be the private plans 
that are offering health insurance coverage.
    And so, as part of our process right now, we are in the 
middle of reviewing the plans, working with the issuers to get 
plans certified. Starting on October 1st in every state where 
we are running the marketplace, individuals and small 
businesses will be able to go online, fill out an application. 
It takes about 15 minutes. And then they can choose a plan to 
offer to their employees.
    Chair Landrieu. Now, you testified that in one of the 
states, and I do not know if you want to identify what it is--
where you said the average of states that have cooperated and 
engaged in setting up these exchanges for small business, the 
rates have gone down by 18 percent. Is that what you testified 
and could you elaborate, please?
    Ms. Brooks-LaSure. I would be happy to. So states have 
different rules about when they make data available, and six 
states have made data available about their----
    Chair Landrieu. What states are those, please?
    Ms. Brooks-LaSure. I can get those for you. I do not have 
them, but we will get them for you for the record. And in those 
states, our research part of HHS did an analysis and looked at 
the silver plan that is being offered. That plan, when compared 
to an equivalent plan trended forward, before the Affordable 
Care Act, is 18 percent lower, and that report is on our 
website under the----
    Chair Landrieu. And can you quickly, because I have just 
got a few minutes left, describe just quickly what a silver 
plan would look like?
    Ms. Brooks-LaSure. A silver plan means it is about--it is 
70 percent. So it means that the plan itself pays about 70 
percent of the cost when you go to the doctor, on average, and 
an individual would pay about 30 percent. So there would be 
likely a deductible and co-pays when you go to the doctor, and 
then an out-of-pocket cap.
    Chair Landrieu. But it would be a fairly--would you 
describe it as a fairly generous, a silver plan, or how would 
you describe it----
    Ms. Brooks-LaSure. I would describe it as middle, silver. 
There is also bronze, which is a lower benefit, and we likely 
will see a lot of HSAs and high deductible plans. Silver is in 
the middle. Businesses will also be able to choose gold, which 
is 80 percent, which is the more generous benefit. And 
platinum. Those premiums will be higher.
    Chair Landrieu. Okay. I am going to add one more minute and 
give the same to my ranking member. I would like to ask you, 
Ms. Olafson, because there have been a lot of questions from 
small businesses that I represent, and I am sure many members, 
they do not seem to be getting a lot of information about what 
is going on and there is some uncertainty.
    You touched on this in your testimony, but can you describe 
in some more detail how you are obtaining and using information 
to get it out to small businesses, and explain a little bit 
more about what this ``no wrong door'' policy is?
    Ms. Olafson. Absolutely. Thank you, Chair Landrieu. So SBA 
is taking, which I highlighted in my opening statement, a 
three-prong approach to outreach. You know, we want to make 
sure that we reach business owners in their communities through 
various mechanisms and tools.
    So the three-prong approach, I mentioned online. You know, 
we disseminate the weekly interactive blog. We hear from a lot 
of businesses through that mechanism. And our e-newsletter is 
reaching more than 1 million subscribers. And then through 
SBA.gov as well as Business.USA.gov. Both of those sites 
together combined have more than 2 million visitors per month.
    The ``no wrong door'' approach is, we want to make sure 
that no matter where a business owner is going, whether it is 
to our site or to HealthCare.gov, they are not falling through 
the cracks. So they are getting the same consistent information 
across sites. Business.USA is working to leverage all of the 
content at those sites to provide information to business 
owners around the Affordable Care Act as well as----
    Chair Landrieu. So if they cannot get this through their 
regular business associations, there are many options and you 
are trying to make that more public?
    Ms. Olafson. Exactly.
    Chair Landrieu. Thank you. I am going to turn this over now 
to Senator Risch, and add 1:41 to you.
    Senator Risch. Thank you, Madam Chairman. First of all, I 
am glad you cleared up the record. 96 percent of businesses, is 
that correct, are exempted from Obamacare?
    Ms. Brooks-LaSure. Exactly.
    Senator Risch. Is that what I am understanding? Chairman 
Landrieu asked you that question, is that right?
    Ms. Brooks-LaSure. She did.
    Senator Risch. I am assuming that the question and your 
answer is to indicate that those 96 percent are exempt is a 
good thing?
    Ms. Brooks-LaSure. Most small businesses are exempt, yes.
    Senator Risch. Well, if it is such a good thing, why do we 
not go the other 4 percent of the way and exempt all business, 
100 percent of businesses, from Obamacare? That would be a 
great thing, would it not?
    Ms. Brooks-LaSure. The Treasury Department is responsible 
for overseeing employer responsibility. I will say, obviously, 
as part of the ACA, the idea is that both businesses, 
individuals have the responsibility to help provide coverage or 
to pay, because health care costs affect us all.
    Senator Risch. I am looking at--I am sorry.
    Ms. Olafson. If I may?
    Senator Risch. Sure.
    Ms. Olafson. For years, small business owners have been 
telling us that access to health care is one of their top 
concerns. They often have paid up to 18 percent more than their 
larger competitors for health care. The ACA is helping to level 
the playing field for small businesses. So the first thing we 
tell business owners is, Look at the facts and the 
opportunities around this law, the tax credits, the access to 
the affordable care markets, et cetera.
    Senator Risch. And by the way, I think that that particular 
provision of the law that allows the small businesses to pool 
was a good idea, and I think we probably would have gotten the 
bipartisan support to actually pass that here. Unfortunately, 
it was wrapped in 2,700 other pages that we did not 
particularly agree with. But the pooling seems to be a 
rational, reasonable idea that should be done.
    One of the difficulties I have is that we keep getting 
reports that the cost of health care keeps going up, 
notwithstanding the fact that everybody was promised it would 
go down, notwithstanding the figures, Ms. LaSure, that you had. 
I am looking at a table that was produced by Society of 
Actuaries. Now, they are not beholden to the Administration 
like an agency is. They are not Republicans, they are not 
Democrats, they are not Conservatives or Liberals.
    Their study shows that insurance premiums will go up quite 
substantially over the next few years. Senator Landrieu will be 
interested to hear that they are talking about a 28.6 percent 
increase in Louisiana. In New Hampshire, they are talking about 
a 36.8 percent increase. In North Dakota, they are talking 
about an increase of only 8.4 percent, so you are very 
fortunate there.
    Massachusetts is the big winner. They get actually a 
decrease of about 12.8 percent. Senator Johnson, I have got bad 
news for you. It is an 80 percent increase in Wisconsin. So 
these numbers, although we are hearing these statistics that 
you are throwing out, that is not what we are hearing from the 
Society of Actuaries, and, it is not what we are hearing from 
the witnesses who are going to testify here today.
    I hope you will stay around to hear the witnesses because 
you can look at the statistics all you want, but when you have 
live witnesses here who will tell you what is actually 
happening to their premiums, I think you will be interested.
    Chair Landrieu. And I want you to identify for the record 
the document that you are reading from, and----
    Senator Risch. Yes. It was produced by the Society of 
Actuaries.
    Chair Landrieu. What date?
    Senator Risch. Cannot give you the date.
    Chair Landrieu. No date?
    Senator Risch. No date.
    Chair Landrieu. Okay.
    Senator Risch. It is not 1932. It is a very recent study, 
Madam Chair.
    Chair Landrieu. I would like to know the date for the 
record.
    Senator Risch. Thank you. We will get you that. Thank you, 
Madam Chairman. I yield back.
    Chair Landrieu. Okay. Senator Shaheen.
    Senator Shaheen. Yes, thank you, Madam Chair.
    Chair Landrieu. Let me just say welcome to Senator Markey. 
This is your first meeting of the Small Business Committee. We 
would like to all welcome you to our Committee. Thank you for 
joining us today where the exchanges seem to be working fairly 
well. We are anxious to hear your perspective from 
Massachusetts. Senator Shaheen.
    Senator Shaheen. Mr. Iwry, last month the Administration 
delayed the employer responsibility provision for a year, made 
the associated reporting requirements voluntary until 2015. I 
would like you to do two things, if you would. Could you answer 
who that employer responsibility provision applied to? I assume 
it was all business, not just large businesses. And also, can 
you talk about why the Treasury made that decision?
    Mr. Iwry. Senator, I would be happy to. The employer 
responsibility provision applies to employers with 50 or more 
full-time employees, or full-time equivalents, and does not 
apply to employers with fewer than that number. The decision 
process was one that was thorough and conducted within the 
Treasury Department. As policy decisions are typically 
coordinated with the White House, this decision was also 
coordinated with the White House.
    It stemmed from concerns that were expressed to Treasury 
and the Administration in general from the business community, 
including small business and larger, about the need for more 
time for them to adapt and ramp up their systems for reporting; 
that is, collecting the information they would need in order to 
report, and then their systems were actually reporting that 
information to the Government and to the individuals.
    They indicated that in order to smooth the path toward 
implementation, it would be far better if they had more time to 
adjust their systems to either adapt or develop systems, as the 
case may be.
    And second, they expressed a concern that those reporting 
requirements were not as simple or streamlined as they might 
be, as businesses hoped we could make them, and they asked 
whether we could do our best to show the same kind of 
flexibility with respect to these reporting requirements, that 
is, the way Treasury applies and interprets them, that we did 
with respect to some of the employer responsibility provisions 
where we worked with the business community over an extended 
time, a lot of dialogue, to see how we could make the 
provisions, as applied on a regulatory level, as workable as 
possible consistent with the statute.
    So we responded to those two concerns, Senator, by first, 
looking at them objectively and weighing whether they were 
sufficiently weighty to justify transition relief that people 
were asking for.
    Senator Shaheen. And have you gotten feedback from business 
as the result of the decision to delay the employer 
responsibility provision?
    Mr. Iwry. Yes, Senator Shaheen. We have received, indeed, 
business has provided feedback not in particular to us as 
opposed to publicly. The major business--many major business 
groups, including the U.S. Chamber of Commerce and the National 
Retail Federation, National Restaurant Association, others have 
indicated that they thought that the transition relief in 
response to the concerns that they had expressed, and many of 
them had expressed concerns not focused only on the reporting, 
but had asked for more time regarding employer responsibility 
generally.
    With respect to reporting in particular, that drove our 
decision and the commended us for having listened and been 
flexible enough not to agree to postpone these provisions 
indefinitely, but simply to give them the transition relief 
that they asked for so they could adapt their systems and have 
as successful and smooth an implementation as possible.
    Senator Shaheen. Thank you. My time is up.
    Chair Landrieu. Senator Rubio.
    Senator Rubio. Thank you for holding this hearing, Madam 
Chair. Ms. LaSure, how are you? Good morning.
    Ms. Brooks-LaSure. Good.
    Senator Rubio. Afternoon. Feels like morning. I want to 
talk a little bit about the Small Business Health Options 
Program and how that is going. There is an article here from 
Forbes. It is an opinion piece dated July 8th of this year. And 
it writes as follows, and I want to know if this is true.
    It said, Maryland, one of the first states to embrace 
Obamacare, announced in April that it would delay the launch of 
its Small Business Exchange by at least three months. A recent 
GAO report said that all 17 states that are building their own 
exchanges are behind schedule, missing deadlines on 44 percent 
of the key activities needed to get them up and running. Is it 
true that 17 of the states that are building their own 
exchanges are behind schedule?
    Ms. Brooks-LaSure. I would say no to that. We are working 
very closely with the state-based marketplaces to make sure 
they are meeting their critical milestones. There are times 
where we adjust and make changes, but we are working very 
closely with the state-based marketplaces and expect them all 
to be up and running on October 1st.
    Senator Rubio. So you anticipate all the exchanges, 
including the Federal one, to be operational on October 1st of 
this year?
    Ms. Brooks-LaSure. Yes.
    Senator Rubio. Can you guarantee that?
    Ms. Brooks-LaSure. Of course I cannot.
    Senator Rubio. Okay.
    Ms. Brooks-LaSure. But we are working very hard to achieve 
that. We are working constantly, as I said, working with 
states. There may be, again, pieces where we take time and 
prioritize and may make some adjustments, but in terms of being 
open, the marketplaces will be open on----
    Senator Rubio. One of the concerns the article raises is 
that in some states this is--obviously, these exchanges are 
built on choice because the choice leads to competition and 
hopefully lower premiums. The article goes on to say that just 
one insurer signed up to provide coverage in Washington, in New 
Hampshire, and in North Carolina, and in Mississippi not a 
single insurance company signed up until recently. I think 
Humana finally stepped up.
    Are we going to see multiple choices in each of these 
insurance marketplaces on October 1st?
    Ms. Brooks-LaSure. We have been very pleased in the 
Federally-facilitated marketplace with the interest from the 
issuer community. We have said there have been over 120 issuers 
that we are working on. Certification happens in September. 
That is when we finalize the final actual agreements, and so 
that is when we will be able to announce what all of the 
choices look like.
    Senator Rubio. How confident are you that every exchange 
out there, the 17 states, the 33 Federal ones, that all of them 
will offer multiple choices for patients?
    Ms. Brooks-LaSure. I am very confident that we will have 
choice. Again, this is----
    Senator Rubio. In all of them? In all of them?
    Ms. Brooks-LaSure [continuing]. I cannot speak to specific 
states, but I will also say, this is a voluntary engagement. 
This is based on the private sector, and so we are working with 
them, and private sector companies make choices. But we think 
this is a very attractive option for them and expect many 
issuers to participate.
    Senator Rubio. If you are a worker at a small business, can 
we guarantee that none of them will lose their existing 
coverage if they are happy with it?
    Ms. Brooks-LaSure. Well, in terms of what they are being 
offered, small employers will have additional options. Again, 
there are changes being made which benefit small employers, 
meaning that their insurance companies have requirements about 
what they need to offer for them.
    Senator Rubio. But the point being, one of the problems 
that was made in this law was if you have insurance and you are 
happy with it, you will get to keep it. Can we guarantee that 
due to this law, no one will lose coverage that they are happy 
with?
    Ms. Brooks-LaSure. People will make choices about what kind 
of coverage they choose.
    Senator Rubio. So we cannot guarantee it? In essence, there 
will be people that will lose their existing coverage that they 
are happy with because their employer will make a change as a 
result of the requirements of the law?
    Ms. Brooks-LaSure. I cannot answer that question.
    Senator Rubio. Okay. What about doctors? Can we ensure 
everyone that has a doctor that they are happy with that they 
are going to be put on a plan that includes that doctor in the 
network?
    Ms. Brooks-LaSure. Doctors in this country make choices 
about whether they want to participate. Again, we are working 
with issuers, issuers are working and needing to meet certain 
state and Federal requirements about network adequacy.
    Senator Rubio. So is it possible that someone who today has 
an existing relationship with a doctor that they are happy with 
will no longer be able to see that doctor because they are now 
going to be moved to a plan that that doctor is not part of the 
network?
    Ms. Brooks-LaSure. No one is moved to a plan. People make 
choices about what kind of coverage they choose.
    Senator Rubio. Well, their employer may make choices, 
right, as a result of the law's requirements?
    Ms. Brooks-LaSure. The employer makes choices, exactly.
    Senator Rubio. I know I am running out of time. Just real 
quick, Ms. Olafson, I wanted to ask you about the tax credit. 
According to the General Accounting Office, the participation 
on it has been less than anticipated. Is that not correct?
    Ms. Olafson. So, you know, the tax credit is a significant 
part of the Affordable Care Act. I certainly have my colleagues 
here from Treasury to talk about the uptick on that, but we do 
know, as Chairwoman Landrieu said in her opening statement, 
that it is really targeted to those small business owners who 
most need help getting coverage.
    We know that hundreds of thousands of business owners have 
already taken advantage of it and that the credits will rise in 
2014 for those employers that are choosing to purchase coverage 
through SHOPs. So it is a critical part of this Act and we know 
that many of our businesses are taking advantage of it.
    Chair Landrieu. Thank you. Senator Heitkamp.
    Senator Heitkamp. Ms. Brooks-LaSure, I have a quick 
question. If there was no Affordable Care Act, would there be 
any guarantee that an employee would be able to keep the 
coverage that they currently have if an employer made a 
different decision?
    Ms. Brooks-LaSure. No.
    Senator Heitkamp. If there were no Affordable Care Act, 
would there be any guarantee that the employer would continue 
to offer the same kind of coverage that he or she or it is 
currently offering?
    Ms. Brooks-LaSure. No.
    Senator Heitkamp. So a lot of this is about the choice. A 
lot of this is about whether, in fact, employers make a 
different choice to go to a different plan and then whether 
employees make a choice to go to a different plan and whether 
the choice options have been broadened for those entities.
    Can you tell us what percentage of American businesses plan 
on, at least in your estimation right now, maintaining the same 
coverage that they currently provide?
    Ms. Brooks-LaSure. All the evidence that we have, based on 
previous experience, the experience we have seen with 
Massachusetts in implementing their exchange, is that employers 
want to offer coverage and employer coverage increases. And so, 
we fully expect employers to continue to offer and hope that 
more small employers will now see opportunities to offer.
    Senator Heitkamp. Many of the--Ms. Chairman, many of the 
businesses that I talk to in North Dakota who have, over the 
years, offered great plans, plan on sticking with the great 
plans that they have, and that is certainly what Blue Cross and 
Blue Shield, which is the majority provider in our state, 
anticipates, that a lot of their corporate accounts will stay 
very, very similar.
    And so, as we look, North Dakota is obviously a state where 
a lot of small businesses will not be subjected to the 
Affordable Care Act, if we want to use that word. And so, you 
know, the challenge in all of this, as we anticipate and we 
look forward to what the changes will be, is that we really do 
not know what choices people will make. There are a lot of 
assumptions, I think, on both sides about what those choices 
might be.
    I guess, you know, delaying the mandate for an extra year 
will make the opportunity to collect additional information and 
maybe will make changes even more apparent. But I want to just 
use what remaining time I have to talk to Ms. Olafson.
    One of the concerns that I have is small businesses that 
are not affiliated with a trade organization or an entity that 
may be like the Chamber of Commerce, do not necessarily have 
direct access, and that is key information. I encourage people 
to go out on Kaiser because I think that is a site that that 
has independent evaluation. People right now hear arguments on 
both sides. But I am curious, if Denver is a region that is 
affiliated with the Small Business Administration.
    What are you hearing or what are you focusing on in terms 
of our opportunities to get the information out to our rural 
small businesses, our small manufacturers who may not otherwise 
have access to information?
    Ms. Olafson. Thank you, Chairwoman--I am sorry--thank you, 
Senator. So as I said, we are leveraging all of the resources 
that are available to us. You know, many of our small 
businesses--and we know this from market research--do access 
information online, they coming to us, anyway, over 2 million 
visitors per month at our website.
    But for those businesses that want or need sort of more 
direct on-the-ground resources, we are leveraging our 68 
district offices. We have both trained those folks so they can 
serve as resources. We have trained our Women's Business 
Centers, our SCORE, our Small Business Development Centers, so 
that as our business owners come to us for counseling about 
access to capital, Government contracting, they also know they 
can get current, accurate information about the health care 
law.
    So we are trying to build out that network across the 
board, whether it is online, in person engagement, webinars, 
free webinars open to the small business community.
    Senator Heitkamp. Well, one of the concerns that I have is 
that where you saw in Medicare Part D a big public information 
campaign which was, in fact, funded by the Federal enactment, 
we do not see that in this situation. So it really is dependent 
on using available resources.
    And I would suggest taking a look at non-traditional ways 
of getting information out and making sure that that 
information has a level of credibility, because one of the 
concerns that we have is that every time you turn around or 
every time I visit with folks, I am in the spot of having to 
say, That is not the way I understand it. Can I get back to 
you? Can I get information out there?
    And so, some sites that are readily pointed to with some 
credibility I am frequently asked questions of could be 
enormously helpful.
    Ms. Olafson. Absolutely, and that is critical. You know, we 
know that business owners are not going to make decisions based 
on misinformation. And so, our role--we really view our role as 
providing facts, cutting through the misinformation, and 
helping business owners make the decision that is best for 
their individual circumstances.
    Chair Landrieu. Thank you, Senator Heitkamp. Let me just 
interject here that I really appreciate you pointing out that 
there were no guarantees before the ACA, there are very few 
guarantees after, but there are a few important guarantees. One 
of them is that there are going to be no lifetime caps come 
January on policies.
    The other one that is--well, lifetime caps is now. The 
other is there will be no annual caps come January. And the 
other is that there is, pre-existing conditions are, you know, 
irrelevant now and that people--so there are some guarantees. 
But the guarantees that Senator Rubio asked about were doctors, 
which is a legitimate question, were not in place before or 
after the Affordable Care Act.
    And just to clear the record, the Ranking Member submitted 
a document and I want to just make this clear, that we have 
gotten some more information about this, Senator Risch, and the 
study was published in March of 2013, according to this 
document that I am going to put into the record. It was an 
article written about it on April 18th.
    The person that ran the study was Kenny Clan, who is the 
Chief Actuary at a Maryland-based CareFirst Blue Cross/Blue 
Shield. He is not independent. He works for a large insurance 
company. They are actuaries, but most of the actuaries work for 
insurance companies. And that is just the record. If you want 
to submit anything else, that is fine.
    Chair Landrieu. Senator Johnson.
    Senator Johnson. Thank you, Madam Chair. There actually was 
one guarantee that certainly sticks in my mind and that was 
President Obama repeatedly promised that if we passed the 
health care law, the average cost of a family plan would 
decline by $2,500 a year by the end of his first term. In fact, 
it has increased by about $2,370 from 2009 to 2012. Is that 
correct, Ms. Brooks-LaSure?
    Ms. Brooks-LaSure. Again, I do not believe so. For years, 
health insurance rates have been increasing faster than wages, 
and in the last few years, we have seen that it has slowed. I 
think it is very critical that when we look at these studies, 
that we are making apples to apples comparisons about the 
benefits.
    Senator Johnson. What do you disagree with, though? That 
President Obama did not make that promise repeatedly?
    Ms. Brooks-LaSure. No, I am sorry. You had said that rates 
were going up----
    Senator Johnson. Premiums for family plans are up almost 
$2,500, according to a Kaiser study, and we can submit that to 
the record.
    Ms. Brooks-LaSure. Okay. I guess what I wanted to make 
clear are two points. One, that rates have been going up over 
time. In the last few years, we have seen rates starting to 
slow. I believe the President described that this morning. And 
second, that it is important to compare apples to apples; that 
when talking about the cost of plans, it is important to 
compare what benefits were being offered in the original plan 
versus the future plans. So there may be----
    Senator Johnson. Right now, we are comparing apples to 
apples because when the President made that promise, the 
average premium was somewhere around $13,000. Now it is over 
$15,000 for the same plan. So that is an apple to apple 
comparison. That is a promise. That is a guarantee that was 
broken.
    Mr. Iwry, you talked about information that the businesses 
are not able to report to the Government. Specifically, what 
information, after three-and-a-half years of the implementation 
of this law, are they unable to comply with?
    Mr. Iwry. Senator, the business community has told us that 
the information reporting requirements under the law----
    Senator Johnson. Yes. What type of information? I want to 
know the type of information.
    Mr. Iwry. That the information reporting requirements, 
which include the month-by-month determination of who are full-
time employees of the employer, and whether they were offered 
affordable, minimum-value coverage by the employer, and related 
information to determine whether the employer responsibility 
provision is satisfied and whether the individuals have 
coverage from the employer or not, that that information was 
something that their systems could, with more time, more 
smoothly and readily provide.
    They also did ask sir, and recognizing where your question 
is coming from, they did ask us whether we could simplify or 
streamline those information requirements consistent with the 
statute.
    Senator Johnson. Here is some information that I am 
concerned that is not going to be gathered. Senator Shaheen 
talked about the delay in the employer mandate. I am concerned 
about the delay in basically a verification of income, 
verification of qualification for the subsidies, that that is 
just being waived for the first year of implementation.
    So basically, people could self-report. Is the Treasury 
Department a little concerned about fraud in that waiver?
    Mr. Iwry. Senator, the Treasury Department is not too 
concerned about the risk of fraud in connection with the 
verification provision that you are referring to because the 
people at HHS, the officials at the Centers for Medicare and 
Medicaid, have advised us that the verification adjustment, and 
I will defer to Ms. Brooks-LaSure to explain, that the 
adjustment for one year, for 2014, in the verification 
procedures is rather limited.
    Ms. Brooks-LaSure. So if I could just, Senator----
    Senator Johnson. I want to know who in the end is going to 
verify those numbers. What agency within the Federal Government 
is going to verify the qualifications of individuals for 
subsidies?
    Ms. Brooks-LaSure. We start, and so, when someone comes to 
the marketplace, they go through a process that is determined 
whether they are eligible. We use data systems from the IRS, 
SSA, other systems, private insurance--a private system where 
we get data from employers. So we are verifying income.
    We were never using the data that Treasury gets in terms of 
employer reporting because that data is available in 2015 for 
the first year and we need the data at the beginning of open 
enrollment. So on October 1st, we will start verifying whether 
people are eligible for tax credits.
    Senator Johnson. So HHS will now have information from the 
IRS on an individual's income because of the Affordable Care 
Act. Now HHS has that very private income information.
    Ms. Brooks-LaSure. There are strict privacy standards.
    Senator Johnson. Well, that gives me a lot of comfort.
    Chair Landrieu. Thank you very much. Senator Enzi.
    Senator Enzi. Thank you, Madam Chairman. Appreciate you 
holding this hearing. I am not only on the Small Business 
Committee. I am also on the Finance Committee and on the 
Health, Education, Labor, and Pensions Committee which handles 
this, so I have been to a number of hearings on it. And every 
time I go to one, I get a little more confused.
    I can tell you that in all of the Committees, there is a 
whole lot more interest in what is going to happen, and that is 
because starting January 1st, all the Senators, all the 
Congressmen, and all of their staff are going to have to go on 
the exchange to get their insurance, and there are a lot of 
unanswered questions about that. So both sides of the aisle are 
rather intense on this exchange.
    Some of the questions that they have asked is because we 
were told that it was beta tested, the exchange is beta tested 
already, so one of the people on the other side of the aisle 
asked, Who tested it and if they could have a list. And that is 
apparently not available.
    Ms. Brooks-LaSure. In terms of our testing, thank you, 
Senator, for the question, we are undergoing very rigorous 
testing. So we at HHS are testing with our Federal partners. 
That has been ongoing for the last year.
    Senator Enzi. How do you write the program without having a 
basic plan defined? That is another question that has been 
asked in all three of these Committees.
    Ms. Brooks-LaSure. So I am not sure if I am understanding 
your question.
    Senator Enzi. You give the silver plan as being 70 percent, 
gold 80 percent, and bronze. But what does that consist of?
    Ms. Brooks-LaSure. It is based on our standards and our 
regulation and then states are----
    Senator Enzi. Can you send me the list of the exact things 
that are on that, not just the general ones like that?
    Ms. Brooks-LaSure. Certainly, but then plans are submitting 
that data to states. They are entering it into SURF and that is 
where the data is.
    Senator Enzi. So far, nobody has provided us with that. 
Small businesses have complained that they have spent thousands 
of hours attending seminars to try and find out how they are 
going to be taken care of on, and, of course, now that has been 
put off for a year. But what they do not understand is what 
happens to their employees now if they do not offer the 
insurance, employees have to go into the exchange. But the 
amount that they used to subsidize will not be subsidizable 
tax-free anymore, the way we understand it.
    But, Mr. Iwry, you raised something that was new to me, I 
guess. You talked about the full-time equivalency, I guess 
relating to the number of employees that an employer has. I 
thought it was just strictly full-time employees, not full-time 
equivalencies. Am I wrong?
    Mr. Iwry. Senator Enzi, for purposes of determining whether 
an employer is one of the 96 or so percent that are not subject 
to this employer responsibility provision because they are 
below 50 employees in size, the statute provides for counting 
the full-time employees, as you say, plus counting the full-
time equivalents.
    So if I may answer with an example?
    Senator Enzi. No, I do not need an example. I know what 
full-time equivalency means. I just had not----
    Mr. Iwry. Yes.
    Senator Enzi. That is going to be a surprise to a number of 
them, just as the 30 hours is a surprise. So actually, part-
time is only 29 hours. If they hit that 30-hour mark, they are 
full-time. How come it is 30 hours? Forty hours has always been 
full-time. Thirty hours has always been part-time. A number of 
employers are pretty concerned about that number.
    Mr. Iwry. Senator, I was not involved in the crafting of 
that particular provision that set the number at 30. My 
understanding is that one of the reasons that 30 was selected 
in the legislative process was that there was concern that 
employers not be induced unduly to reduce employees' hours 
from, for example, 40 to 39 if the level had been set at 40, 
and that because there is a lot of variation and diversity in 
practices among small business and larger business, that that 
might be a very easy thing for employers to do.
    Whereas, while, of course an employer could reduce an 
employee's hours from 30 to 29, and there has been talk about 
that, because a majority of the full-time workers were, I 
think, thought to be working more than 30 hours, that that kind 
of gaming to avoid employer responsibility might be more 
difficult to do or less readily available with 30.
    Senator Enzi. It is not working very well for you, I do not 
think, and it is not working well for the employers or the 
employees. I know a lot of businesses that have--they have cut 
back to the 29, although there are a lot that cut back to the 
30 thinking that would not be it. They are not aware of the 
full-time equivalency yet, so if they reduced two employees 
back to that, they still have one.
    But the 29 versus 30 hours is very troublesome. I realize 
that is in the law. It is one of those things that people did 
not know until after they had passed out. Thank you, Madam 
Chair.
    Chair Landrieu. Thank you, Senator. Senator Fischer and 
then we will get to Senator Vitter and then we are going to 
move to our second panel.
    Senator Fischer. Thank you, Madam Chair, and thank you, 
Ranking Member, for holding this hearing today. It is a vitally 
important hearing.
    In Nebraska, small businesses represent 96.6 percent of all 
employers and they employ 50 percent of the private sector 
labor force. So the impact of the Affordable Care Act on this 
sector of my state's economy, not to mention the economy of our 
country, is of great concern to me. I had heard from many small 
business owners and employers who are not seeing the positive 
effects of the ACA. Hours are being reduced, fewer people are 
being hired, and small businesses are afraid to expand with 
this uncertainty that is facing them.
    Ms. Brooks-LaSure, because of the Administration's delay of 
the requirement to provide employers with a choice of health 
plans, in your testimony you mentioned that the Federal SHOP 
Exchanges will allow--will allow--employers to choose one 
qualified health care plan to offer their employees.
    I have read that the Administration cited ``operational 
challenges'' as the reason for this delay. Can you tell me what 
these challenges were?
    Ms. Brooks-LaSure. Sure. Thank you so much, Senator, for 
the question.
    Senator Fischer. And thank you all for being here. I 
appreciate it.
    Ms. Brooks-LaSure. During our comment process where we 
worked through our regulations, we sought comment on employee 
choice, which we certainly think of as a very important part of 
the SHOP. During that comment process, we did receive comments 
from a variety of stakeholders, and based on those comments, we 
learned that many issuers felt that they needed more time to 
develop the apparatus, basically, necessary to implement 
employee choice, and we were concerned about making sure that 
there were many options available in the SHOPs.
    And so, as a result, we decided that for the Federally-
facilitated marketplace, as were operating in many states 
across the country, we would wait one year before implementing 
employee choice because we thought more issuers would 
participate. And some states who are implementing state-based 
marketplaces are implementing employee choice this year.
    Senator Fischer. Do you think this one-year delay in 
implementation is going to make a difference, or are we going 
to be looking at another delay coming up?
    Ms. Brooks-LaSure. We are committed to 2015. That is what 
our regulations say. That is what we are working on. We just 
wanted to give all stakeholders more time because we want it to 
work well.
    Senator Fischer. Would it be fair to say that all 
stakeholders need more time and maybe we should have a delay 
for individuals as well as businesses?
    Ms. Brooks-LaSure. We have been working very hard 
throughout the implementation and the passage to really listen 
to stakeholders. We have given flexibility in many instances 
where we had administrative authority to do so. But we are 
fully prepared for the individual market October 1, and for 
SHOP for October 1.
    Senator Fischer. You mentioned earlier that the 
marketplaces will be open by October 1st. Did I hear you 
correctly on that?
    Ms. Brooks-LaSure. Yes.
    Senator Fischer. Can you tell me if they are going to be 
open in Nebraska by October 1st and where we are there? Because 
I know there is tremendous uncertainty in my state, and 
observing part of our legislative session back home this year, 
things are not settled.
    Ms. Brooks-LaSure. We are operating the Federally-
facilitated marketplace in Nebraska. We are on track, as I 
mentioned. We are in the process of certifying plans now, 
working with them. Plans will start to see their data next 
month and start to be able to make sure it is correct. And then 
in September, we will sign issuer agreements and October 1, 
people will be able to see them and enroll.
    Senator Fischer. Thank you. Ms. Olafson, first of all, I 
want to let you know that I met with a number of the staff at 
the SBA in the Omaha metro area and had a great conversation 
with them recently. And so, I would thank you and thank them 
for being open for that.
    Ms. Olafson. That is great to hear. Thank you, Senator.
    Senator Fischer. You acknowledged in your testimony that 
the SBA has devoted considerable time and resources to the 
promotion of the ACA through events such as Small Business Week 
and agency-funded resources such as this website. There is no 
line item to fund this. And so, can you tell me the amount and 
the origin of the funds that have been used to support these 
efforts?
    Ms. Olafson. So as I mentioned earlier, SBA is leveraging 
all of the resources in our network, all the resources we have 
at our disposal to get the facts out to the small business 
community.
    Senator Fischer. Are you taking from other programs, you 
know, stealing from Peter to pay Paul so you can promote this?
    Ms. Olafson. So again, we have a robust network within SBA 
of our counselors, for example, that are meeting every day with 
small business on a variety of issues. This is one of the most 
critical issues that our counselors are getting questions about 
and our staff, so we are building and leveraging those 
resources.
    So that if a business owner is coming to us to talk about 
access to capital or health care, we can provide them with that 
information and those facts and tools to let them know where to 
go to get more information.
    Senator Fischer. If I could submit some questions to you, 
could you address just what programs are being affected by it, 
though?
    Ms. Olafson. Certainly. We would be happy to talk with you.
    Senator Fischer. Okay. Thank you so much.
    Chair Landrieu. Senator, we are going to try to move along. 
Let me ask you, did the State of Nebraska choose to set up an 
exchange or you are having to wait for the Federal Exchange?
    Senator Fischer. On the Federal.
    Chair Landrieu. Senator Vitter, do you want to go? And then 
Senator Scott. And then we are going to have to move on to the 
second panel.
    Senator Vitter. Thank you, Madam Chair, and I am eager to 
hear from the actual small businesses as well. I just want to 
briefly say, I share the concerns that have been expressed 
about this implementation. I think it is nothing short of a 
train wreck, and that is not my phrase. It is another member's.
    I echo the feeling that if business is being given a 
reprieve for one year or more than individuals, families, 
middle class families, workers should be given the exact same 
treatment. And also, this is a completely unrelated issue, but 
it is an important Louisiana priority for both the Chair and 
me.
    If the President has that administrative authority here, I 
would also ask him to use exactly the same authority and delay 
the implementation of completely unworkable flood insurance 
premiums under bigger waters, and I would specifically ask 
that. But again, I join the Chair in begin eager to hear from 
small businesses and I look forward to the second panel.
    Chair Landrieu. Senator Scott.
    Senator Scott. Thank you, Senator. I will make this a short 
question. Ms. Olafson, I believe there was a survey done by the 
NFIB earlier this year that found that the impact of the tax on 
providers, the $100 billion to tax, started, I think, next 
year. It starts at about $8 billion and it goes up over the 
years.
    If the small business community is, in fact, the economic 
engine that we see of recent, their survey suggests that 
private sector employment should fall about 146,000 to 262,000 
because of the new tax. How is the Small Business 
Administration going to respond and how do we help change that 
direction?
    Ms. Olafson. So, thank you, Senator, for your question. You 
know, I think--and I cannot emphasize this enough. We have been 
hearing for years that access to affordable health care is one 
of the top concerns for business owners, and that as you have 
heard from many of us today, that often, historically, small 
businesses were paying as much as 18 percent more.
    And so, we know that there are many mechanisms and reforms 
within this law that help to bring down costs for small 
business, including the rule that requires insurance companies 
to cover--to spend at least 80 percent of dollars on health 
care, and the rate review mechanisms.
    As far as that particular provision you are talking about, 
I believe it is the health insurance assessment. I would 
certainly defer to my colleagues at Treasury for more nuanced 
information about that. But we know that--you know, we have 
been hearing this concern from the business community and the 
Affordable Care Act is helping to level the playing field for 
the first time for small businesses.
    Senator Scott. I would just suggest that having owned a 
business, and I was an Allstate agent for the last 14 or 15 
years in business ownership, I will tell you that the notion 
that the ACA is somehow going to create a more competitive 
environment is inconsistent with the reality faced by many of 
the businesses that I have been talking to, and I quote one 
specifically, a guy named Gary Chastain, who owns a bunch of 
Moe's franchises in Charleston, when you talk to him about 
talking to insurance agents about what they anticipate on the 
market looking like, he gets six different answers from six 
different agents.
    So very consistently, the thing that seems to be most 
consistent about the ACA and its impact on small businesses is 
the lack of consistency that they are receiving. So I think we 
are in for a hard road as we see the inconsistencies of the 
Act, and its impact on businesses will be, I think, dire.
    Ms. Olafson. Well, and part of the challenge is, you know, 
really to make sure that business owners understand the facts, 
because as I have said before, we talk to business owners every 
day. There is still a lot of misinformation. I mean, a lot of 
business owners still think that they may be impacted by 
something like share responsibility without realizing sort of 
what are the exact facts around that.
    And that is our mission. You know, we are here to give that 
information to the hands of business owners, recognizing these 
are business decisions at the end of the day, but we need them 
to have the right information and the tools to make the best, 
most informed decision.
    Senator Scott. I think the fact that the regulatory 
environment seems to be still in creation is a part of the 
challenge that many business owners face today as it relates to 
the ACA and the inability to understand what has not yet been 
filled in on the pages of the regulations, perhaps, provides a 
great opportunity for discontentment than does the lack of 
clarity going forward on the plans that will be available, 
though that in and of itself is still uncertain as well.
    Mr. Iwry. Senator, may I?
    Senator Scott. Chime in, yes, sir, absolutely.
    Mr. Iwry. Treasury has issued a comprehensive proposed 
regulations on the employer responsibility provisions generally 
out of concern for the point you are making, that we do want 
small businesses and employers generally to have guidance that 
is clear and comprehensible and workable for them.
    And, Senator, we had four rounds of guidance in writing at 
the sub-regulatory level and then written comments on those 
concepts from the small and large business community and all 
stakeholders who were interested in the public process, and it 
was tremendously useful to get that feedback from small and 
larger businesses in order to enable us to put rules out that 
would enable them to go ahead and make their own best decisions 
about how to comply.
    Senator Scott. Yes, sir. I would say that I do not question 
the good intentions. There was some statement sometime about 
the road somewhere is paved with good intentions. I am not 
quite sure where that road leads, but I will tell you that from 
the folks--Senator Risch, you may know where that road leads.
    Senator Risch. I do.
    Senator Scott. Well, we will talk about that later. What we 
have learned, however, is that when you talk to business owners 
about the implementation and the challenges that they face, I 
spoke with a CPA just yesterday at a small firm with about four 
or five employees. And their coverage is leaving South Carolina 
because of the inability to understand the path forward.
    So the number of insurers available in states are becoming 
fewer insurers are available in states, not more, and I believe 
will cause more pressure on the rates in states. And so, you 
will see, in the end, higher rates. You will see the new health 
insurance tax, the HIT, coming into play which is only a pass-
through down to employers that will help to pay for a part of 
their employees' premiums.
    And so, the pressure on small businesses will only 
increase. But I think I am out of time.
    Chair Landrieu. Yes, but thank you so much. I think it has 
been an excellent line of questioning and I think we have 
gotten some things very clear. As we go to the next panel, I 
want to just put some things into the record to clarify 
statements that were made, and if the Minority wants to put 
anything in addition to this record, because while we are all 
entitled to our opinion, as Chair of this Committee, I really 
would like to get some facts on the record about small 
business.
    The Ranking Member referred to a study. I am going to put 
the entire study into the record. It is here. The date on it is 
clear. The study focused solely on claims and not actuarial 
premiums which consumers will be paying. Kristi Bohn, the 
actuary who worked on the study, acknowledged it did not 
attempt to estimate the effects of subsidies, insurance, 
insurer competition, or other factors that could offset the 
increases. I am going to put the entire study in the record and 
some articles that were written about it. People can make their 
own determinations.
    [The information follows:]


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    Chair Landrieu. Secondly, I am going to refer to something 
that Senator Scott referred to. He talked about an NFIB study. 
We have some information about that I am going to submit. It 
says that the NFIB, the study that he referred to, was funded 
by the Group for Health Insurance Industry that worked on the 
repeal of the Affordable Care Act.
    [The information follows:]


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    Chair Landrieu. And then thirdly, this urban study that I 
referred to, which is the average business with fewer than 50 
employees, if they choose to offer coverage, would find cost 
per person reduced by 7.3 percent. I want to put into the 
record, this was done by four health economists, Linda 
Bloomberg, Matthew Buettgens, Judy Feder, and John Holahan, and 
that general spending as a group was reduced by 1.4 percent.
    [The information follows:]


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    Chair Landrieu. Now, if there is anything that you want to 
put into the record before we move to the next panel, Senator 
Risch?
    Senator Risch. Not at this point.
    Chair Landrieu. Okay. Thank you all very much and we will 
go to the second panel. Senator Johnson, if you will permit the 
Kaiser study, to put your Kaiser study reference in the record, 
please, the entirety of it.
    Now, members, I think we are going to have a vote at 4:30 
or 5:00, so I am going to try to move this along as quickly as 
I can. I do want to give everybody an opportunity for 
questions, so we may just do three minutes, but let us see. We 
have a large panel that I am happy to hear because these are 
small business owners.
    If we could move as quickly as we can just because our time 
is getting short, I would appreciate it. So let me begin. We 
have six distinguished witnesses joining us for today's second 
panel. Thank you all for being here today.
    Let me start by just referencing and introducing Mr. 
Lawrence Katz. Senator Vitter will do a broader introduction in 
a minute. But he is from our home State of Louisiana. He is the 
owner of Dot's Diner with six locations in Louisiana. He is the 
President of the City Park, incoming President of City Park 
Board. I welcome him. I am going to turn it over to Senator 
Vitter for a brief introduction.
    Senator Vitter. Thank you, Madam Chair. First I want to 
recognize the testimony of another of our constituents, Hugh 
Raetzsch. He is not here, but his testimony is being passed out 
to members. Hugh is President of the Lyons Speciality Company 
in Port Allen, Louisiana, and his testimony not only represents 
his personal experiences as a small business owner, but also 
his experiences serving as the Chairman of the American 
Wholesale Marketers Association.
    And then, Madam Chair, as you said, I also certainly want 
to welcome, recognize, and introduce Larry Katz, the Founder 
and President of a great small business in Louisiana, Dot's 
Diner. And I think we will also see Larry's testimony goes 
right to the bottom line for small business, and it is very 
compelling.
    Larry and Dot's Diner are true Louisiana success stories. 
Seventeen years ago, he took his life savings and opening his 
first Dot's Diner restaurant, a small diner with about 20 
seats. Through hard work and determination, Larry's business 
has grown to six locations employing about 85 employees, of 
which 65 are full-term.
    Through this expansion of the business, Larry has received 
numerous awards, including Best Diner in New Orleans and Best 
Value in New Orleans. His experience and the threats he now 
faces in terms of increased costs and mandates under Obamacare 
are exactly what is facing millions of small businesses 
throughout Louisiana and around the country.
    Chair Landrieu. David, try to make it brief.
    Senator Vitter. And so, I really appreciate his sharing his 
experience because it is better than any study, better than any 
press report. It really goes to the bottom line of what this 
means to small business. So thank you, Larry, for being here.
    Chair Landrieu. I would like to introduce Jim Houser. Mr. 
Houser opened Hawthorne Auto Clinic 30 years ago. Hawthorne 
Auto Clinic offers full health care for all 12 full-time 
employees and their families. He also serves on the Oregon 
Individual Employer Consumer Advisory Committee and he will 
share some of his story with us today.
    We are also joined by Jamal Lee, owner of Breasia Studios 
and Audio, Lighting and Video Production Company in Laurel, 
Maryland. Mr. Lee is going to share with us a heart-wrenching 
story about his wife and business partner of 30 years, suffered 
from a life-threatening illness, and how the Affordable Care 
Act has affected their business.
    Our next witness is Nancy Clark, a small business owner 
from New Hampshire. I will now turn it over to Senator Shaheen 
to introduce Ms. Clark.
    Senator Shaheen. Thank you, Madam Chair. We are very 
delighted to have Nancy Clark, who is from North Conway, New 
Hampshire, here today to testify at this hearing. Nancy is the 
owner and president of the Glen Group, which is a full-service 
advertising agency in a small town in rural New Hampshire. The 
company employs nine employees in North Conway and they all 
receive health insurance from the company, which has benefitted 
from the premium health care tax credit in the Affordable Care 
Act.
    In addition to her experience as a small business owner, 
Nancy brings a unique perspective because she is a member of 
the Health Exchange Advisory Board in New Hampshire. She is 
also a board member of the New Hampshire Business and Industry 
Association where she chairs a health care committee and served 
on the Executive Committee of the Mount Washington Valley 
Economic Council. So we are delighted to have you here and I 
look forward to hearing your perspective and the perspective of 
everyone who is on the panel. Thank you.
    Chair Landrieu. Kevin Settles joins us here today from 
Idaho. Mr. Settles is a small business owner who was appointed 
by Governor Otter to serve on Idaho's Exchange. I will now turn 
it over to my Ranking Member, Senator Risch, to do a further 
introduction.
    Senator Risch. Thank you, Madam Chairman. We are glad to 
have Kevin Settles here with us--Kevin, we are glad to have you 
here. Kevin owns Bardenay Restaurant and Distillery with 
locations in Boise, Eagle, and Coeur d'Alene, Idaho. He has 
been written up in USA Today, Wall Street Journal, many other 
publications. He has been on TV. In 2011, he was named the 
Idaho Restauranteur of the Year.
    More importantly than all of that, or at least equally as 
important with all of that, he is a member of numerous 
organizations dealing with small businesses. He is also a 
Commissioner for the Idaho Human Rights Commission, and a Board 
member for the Idaho Health Insurance Exchange that is 
attempting to make this monstrosity work. We thank you for your 
service in Idaho.
    Mr. Settles is angry. I am just really disappointed that 
the representatives of the Treasury Department, the Department 
of Health and Human Services, and the Small Business 
Administration, who just gave us all these glowing stories 
about how wonderful Obamacare is, could not stick around for 
just a few minutes to hear that that is all baloney and how 
this is actually working on the ground. Kevin, thank you for 
coming, and I know you are going to be very candid with us 
about your thoughts on this.
    Chair Landrieu. And our final witness today is William 
Dennis. Mr. Dennis is currently a Senior Research Fellow with 
the National Federation of Independent Business Research 
Foundation in Washington. As part of that employment, he spent 
five years as a staff member for the U.S. House of 
Representatives. And what member was that, Mr. Dennis?
    Mr. Dennis. Vernon Thomson from Wisconsin.
    Chair Landrieu. Great. Ms. Clark, why do we not go ahead 
and start with you? And if we could try to limit your opening 
remarks to four minutes each? You can submit it to the record. 
If you could summarize your remarks so we can really get our 
questions in?

     STATEMENT OF NANCY CLARK, PRESIDENT, GLEN GROUP, INC.

    Ms. Clark. Sure. Thank you very much for the opportunity to 
be here. I can tell you, I am part of the 96 percent. I am the 
96 percent that has benefitted from the Affordable Care Act. I 
have nine employees. I am currently recruiting for two more, 
which is fantastic, and I have long been an advocate of the 
improvement in our health care system, because as a small 
business owner, I really believe that a healthy workforce is a 
more productive workforce.
    And that helps me ensure the success of my business and 
allows me to continue to retain jobs and create new jobs. I 
absolutely believe that health care should be a right, not a 
privilege.
    So I instituted a health care plan when I bought my 
business in 1997 and have never, ever considered not offering 
that, even in the darkest hours of the recession, and my 
industry like many others got hit pretty hard. When we 
literally had to turn down the heat and shut off the lights, 
health care was never, ever on the chopping block.
    And it is a big expense for me. That is a struggle. Short 
of payroll, it is my second largest expense. But the good news 
this year, after seeing six years of rising premiums, my 
premiums actually went down for every single employee including 
the family plans. So that, to me, is a really nice step in the 
right direction.
    And I am a supporter of the Affordable Care Act because I 
believe it is a step towards a solution. It is a proactive step 
towards no matter what side of the aisle you are on, it is a 
step towards fixing the health care system in our country. And 
what matters most to me is that we are moving forward. We are 
taking these steps forward and we are continuing to provide a 
mechanism so that small employers can offer health care.
    And I have taken advantage of the tax credit ever since its 
inception three years ago. Now, it has been about $1,100 each 
year, which is not meaningful to a lot of businesses, but it is 
to mine. And it is meaningful to me for two reasons. One, 
because we had a rough few years, and so it has contributed to 
the bottom line of my business. We are not quite break-even 
yet, but we will be in 2013.
    And secondly, as I mentioned just a minute ago, it is 
meaningful because it truly helps businesses where it matters 
most, in our bottom line. But thirdly, I hope once I break even 
that I can give it back to my employees, which I believe was 
the intent of the tax credit, that I can help offset some of 
their expenses.
    So I am very pleased that I was appointed to the Health 
Exchange Advisory Board in New Hampshire, both as a small 
business member, but also I was appointed as a consumer member. 
And we have this diverse great group of people on that Board 
and we are all committed to implementing the exchange component 
of the Affordable Care Act.
    So I am delighted to be a voice at that table and to 
encourage those initiatives to improve our health care in the 
U.S. So thank you so much for your time today. I do really look 
forward to answering questions you might have as a real 
business, boots-on-the-ground owner in the store. So thank you 
very much for your time.
    [The prepared statement of Ms. Clark follows:]


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    Chair Landrieu. Thank you, Mrs. Clark. Mr. Lee.

 STATEMENT OF JAMAL LEE, DIRECTOR AND CHIEF ENGINEER, BREASIA 
                          STUDIOS, LLC

    Mr. Lee. Okay. Thank you so much. Thank you so much, Chair 
Landrieu and Ranking Member Risch, as well as the Committee 
members. It is an honor and a pleasure to be a part of this. 
This is an opportunity that allows us to speak our words about 
very serious issues, this particular issue.
    So my name is Jamal Lee and I am the owner of Breasia 
Productions. We are an audio, lighting, and video streaming 
production company in Laurel, Maryland. I also sit on the 
Network Council for the Small Business Majority. The Small 
Business Majority is a national small business advocacy 
organization that works to find solutions for the larger 
problems that smaller businesses face today.
    I volunteer my time and entrepreneurial expertise to help 
the Small Business Majority find pragmatic solutions to many 
issues concerning small businesses today. That is kind of what 
I wanted to talk about today.
    I started my career in movie production in movies like 
Runaway Bride and Wedding Crashers, and I worked my way up to 
be the head audio producer and engineer for the Washington 
Nationals baseball team, and then I eventually opened up 
Breasia Productions, which has been enormously successful at 
this point.
    Although Breasia Productions has gained a lot of 
recognition in regard to the kind of work that we do for the 
MEs and the inaugural galas and things of that nature, a 
feature on Oprah Winfrey and that sort of thing. But as a new 
business owner, I knew I could not afford $400 to $600 in 
premiums for health care for my employees. With great regret, I 
chose against, at the time, having health insurance because the 
prices were astronomical, in my opinion. In fact, I did not 
have coverage since college in my mid-20s or early 20s.
    When I needed a medical procedure done, I actually left the 
country and flew to a neighboring country to have my procedures 
completed. And I would vacation and I would shop and I would 
dine and I would have the procedures done and it would still be 
less, the whole trip would be less than what I would pay for 
the procedure here in my own backyard. That is a hard pill to 
swallow for me because I am a patriotic and I love my country. 
I believe we live in the best country on the planet.
    I considered it a blessing to learn of Governor O'Malley's 
Working Family and Small Business Health Care Coverage Act of 
2007. I was eligible for the small business grant that helped 
me to make health insurance more affordable, and I am fortunate 
to live in Maryland. Maryland is a state that has made small 
business coverage a priority.
    Beyond this, for me, it is very personal, this entire issue 
because of my business manager, Nailah Govern. She fell ill 
last year and she needed emergency surgery, and I found her 
face down on the floor and she was gasping for air. In fact, 
she was dying.
    The doctor said that if I had not rushed her to the 
hospital when we had gotten her there, that she would not be 
with us. Without the Affordable Care Act, she would have been, 
I believe, shifted around from medical system to medical system 
receiving--not receiving the immediate treatment that I believe 
she required at the moment.
    Because of that support of the affordable health care, 
today she is with me and I actually made her my wife. I think 
she had to marry me because I saved her life.
    So in all that to say, I really appreciate the time that we 
have here today. Ask any questions. We are right in the midst 
of the firing squad, if you will, and it is difficult, but we 
are here to help grow the economy and build our workforce, and 
I believe that we are the backbone of the economy right now. So 
we really need the assistance of what we have in place. Thanks.
    [The prepared statement of Mr. Lee follows:]


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    Chair Landrieu. Thank you, Mr. Lee. To make this more fair, 
you all sat sort of pro and con. I am going to go to Mr. 
Settles and then come back. So, Mr. Settles, please proceed.

    STATEMENT OF KEVIN SETTLES, PRESIDENT AND CEO, BARDENAY 
                    RESTAURANT & DISTILLERY

    Mr. Settles. Chairwoman Landrieu and Ranking Member Risch, 
members of the Committee, I would like to thank you for your 
time today. My testimony today will focus on some of the issues 
that my company has been struggling with while trying to 
understand the health care law. I want to ensure that my 
company, Bardenay, is fully compliant with the law while 
remaining healthy and vibrant.
    These issues are the definition of a full-time employee; 
(2) employee classifications, and that is full-time, part-time, 
variable hours, seasonal; (3) auto-enrollment; and (4) non-
discrimination rules. After more than three years, there is 
still a tremendous amount of uncertainty surrounding the laws. 
This uncertainly has been a key factor in extending the longest 
time period without expansion in all my years as an independent 
businessman.
    Bardenay is operated for the long run. We do not make long-
term commitments to unmanageable expenses, and we cannot know 
how to manage for PPACA until all of its rules are known. While 
the law's definition of a full-time employee of 30 hours has 
been published for some time now, how it actually applies to my 
operation is trickier to calculate.
    My restaurants are very busy places and it takes a well-
trained staff of restaurant professionals to make them run. We 
are also very much affected by the seasons. The number of 
people it takes to run my restaurants in the winter is much 
lower than in the summer. While we do hire some people to work 
just through the summer, we have many more that want to work 
year-around, but vary the hours that they work to fit the 
seasons.
    This is where the Federally defined classifications of 
full-time, variable hour, and seasonal come into play. These 
rules will affect our ability to allow our employees to have 
the variable hour schedules that they find so attractive. The 
hours they work are often based upon their needs. Maybe they 
are returning to college. We have a lot of parents who are 
splitting child care duties.
    This is the freedom that has caused a number of my 
employees to decline health insurance because to get it through 
my company, you have to work a fixed schedule and that does not 
fit their lifestyle. And in our industry, lifestyle is a 
critical factor in attracting employees. It is our ability to 
use the work schedules to determine--pardon me.
    Our ability to use it when determining work schedules is 
diminished under the law. With the significant added cost to 
insurance and penalties for not offering it, we cannot let them 
inadvertently slip between part-time and full-time. Since many 
of our employees like to work about 30 hours a week, their 
schedules will have to be managed very closely.
    When it comes to auto enrollment, this is the specific 
provision that has stopped me from looking at expanding. While 
I now know that we are exempt from it for now, it is the 
uncertainty regarding how this rule would be applied, combined 
with not knowing what a policy is going to cost, that has 
stopped me from looking into expansion.
    As an employer, life gets a lot more complex when you pass 
50 full-time equivalents in employees. I have discussed this 
issue with the CEOs of the three largest health insurance 
providers in Idaho and they have confirmed that you need to be 
covering at least 400 employees to get the best rates.
    For now, Bardenay is subject to the requirements to offer 
coverage under the health care law, but we do not qualify for 
the best rates and yet, we are too large to take advantage of 
the Exchanges that are being set up.
    When it comes to the non-discrimination rules, I have to be 
careful that I do not offer a better policy to my CFO, who has 
an M.B.A., than I do to any other employee. Today's restaurants 
are very sophisticated businesses and its employees must have a 
variety of skill sets for it to succeed.
    Restaurants are the place where many people learn to work. 
Our staff varies from young people, working their first job, to 
industry veterans with college degrees. I need to ensure that I 
can retain my highly skilled staff by providing them with the 
benefits that they expect.
    To meet the law's requirements, we may end up asking 
participating employees to contribute financially. The law 
allows for this and sets out the terms for calculating the 
maximum employee contribution. The danger is that we need a 
certain percentage of the eligible employees to participate or 
the carrier will decline to bind coverage. In Idaho, that rate 
is generally 75 percent to 80 percent of the eligible people 
that will have to participate.
    Since the law has passed, Bardenay has thrived, yet we have 
been conservative in our actions. We have sat on the sidelines 
and worked on our internal system so that we are ready to grow 
if that still seems prudent once we know the full impact of the 
law.
    Chair Landrieu. Can you try to wrap up, Mr. Settles?
    Mr. Settles. In closing, I would like to state that I am 
not against offering health care coverage. We have offered it 
to our salaried staff since shortly before we opened and we 
picked up 100 percent of the cost. Since the health care law 
has passed, the cost of that policy has doubled, and it would 
have gone up higher except we have allowed the deductible to 
triple--actually, it has gone up fourfold.
    So that kind of price increase is not sustainable. More 
than three years after the law's enactment, we still do not 
know if it will make it easier for employers like me to cover 
more employees or not, and we do not know--for those of us with 
the goal of growing a business, and the thing has just gotten 
much more complex. Thank you.
    [The prepared statement of Mr. Settles follows:]


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    Chair Landrieu. Thank you.
    Mr. Katz.

 STATEMENT OF LAWRENCE K. KATZ, PRESIDENT AND CEO, JOMAR CAFE, 
                     INC., DBA DOT'S DINER

    Mr. Katz. Good afternoon, Madam Chair Landrieu, Ranking 
Member Risch, and the other distinguished members of the 
Committee. My name is Larry Katz and I am the owner of the 
Dot's Diner Restaurant Group based in Metairie, Louisiana. I 
would like to thank Senator Vitter for his invitation to appear 
today.
    While there is no question that the Federal Government 
needs to reform and strengthen our health care system, I 
believe that the law as currently written will negatively 
impact job growth, start-up expansions, and raise prices, not 
just of health care, but of all products and services that we 
buy.
    It certainly has had a direct effect on my company, and I 
anticipate it will leave me in a position of being less 
competitive than other local restaurants going forward. I will 
detail these observations, but first of all let me tell you a 
short history of Dot's and me.
    After college, I moved to New Orleans and took a job with a 
clothing manufacturer, eventually becoming President. In 1996, 
the company was sold. Not wanting to continue with the new 
concern, my dream was to own my own company. I cashed in my 
whole life insurance, calculated credit card availability, and 
emptied my entire savings into my dream.
    With less than $200,000, I opened the first Dot's Diner 
Restaurant. Well, fast-forward 12 months. I had stopped 
sleeping, was down to less than $10,000 in savings, and at that 
point, I had just a few options. Second-mortgage our home or 
declare bankruptcy. The third option of admitting to my wife 
that I had made a mistake was off the table.
    By the grace of God, perseverance, and some good luck, we 
broke even that week. It was in April 1997 and I can remember 
the day like it was yesterday. The following week we made a few 
hundred dollars and the tide had been turned. Today I own six 
diners, employ 85 people, and I am proud that I constantly get 
calls from landlords asking us to consider opening a store in 
their area.
    We offer paid holidays, vacation, dental, vision, term 
life, and health insurance. We currently employ 65 FTEs and, 
thus, will not be able to benefit for most of the subsidies and 
tax credits offered to similar companies under the ACA. And in 
addition to not benefitting, we will be hurt by virtue of being 
over the 50 employee limit.
    Smaller restaurant companies will now have their employees 
covered by the Exchanges at little or no cost to them, while 
larger companies generally offer health insurance and will not 
be impacted as much. Well, we are caught in this unintended 
donut hole and, thus, will be saddled with the options of 
either dropping our current health insurance plans and pay the 
penalty, or cover 100 percent of our employees and incur its 
result in much higher cost.
    While I have, unfortunately, made the decision to quit 
offering coverage as soon as the employer mandate kicks in. As 
the penalty, while huge, is less than the cost of offering the 
required coverage to all of our employees. So beginning January 
1, 2015, my employees and I will become part of the Federal 
system and the company will be saddled with a $70,000 after tax 
penalty. At inception, I will be forced to raise my prices 
between 2 and 3 percent to cover these expenses.
    The biggest issue to me, though, is the two major business 
decisions I am facing. One option is either selling or closing 
the two least profitable diners. This action would jettison 12 
FTEs. At that point, I would juggle the hours of the remaining 
employees to get us under the 50-person limit. And sadly, I 
have made the calculation that the corporation would be better 
off if I were to do exactly this, as the penalty owed would be 
less than the profit I would lose if I were to close them.
    So is it not a shameful position to be put into? I, the 
business owner, am now forced to put 16 people out of work just 
to save himself from the negative effects of the ACA. Fearful 
of the future, I am also currently in the process of having 
Dot's valued and will consider selling the entire company based 
on what I learn from this evaluation.
    So after 17 years, the first few facing bankruptcy, the 
next eight investing 100 percent of our profits back into the 
company to fuel growth, I now strongly am considering getting 
rid of my life's work and dream. As to expansion, that option 
is off the table. I want no part of adding employees over the 
50-person limit.
    I recently went to look at a new restaurant location. The 
rent, the demographics would be perfect. My instincts tell me 
that it would be our best location, and with all that, I 
decided not to open a restaurant there. Why? Because I 
determined that the prospect of adding 15 more employees and 
permanently assuring myself of being over the 50-person 
employee limit would be more harmful than the profits I might 
gain from opening the diner.
    So in conclusion, with all the benefits that one side of 
this Committee truly believes will happen, I wanted to point 
out the very real side effects to this Act, the loss of jobs, 
the raising of prices, no expansion, and the forcing of 
employees into the Federal Exchanges. Thank you all for the 
opportunity today to speak about this critical issue facing our 
country and its small businesses.
    [The prepared statement of Mr. Katz follows:]


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    Chair Landrieu. Thank you, Mr. Katz. Mr. Houser.

  STATEMENT OF JIM HOUSER, OWNER, HAWTHORNE AUTO CLINIC, INC.

    Mr. Houser. Thank you, Chair Landrieu, Ranking Member 
Risch, and esteemed Senators. My name is Jim Houser. I am an 
ASC certified master automotive technician and co-owner of 
Hawthorne Auto Clinic of Portland, Oregon. I am also co-Chair 
of the Main Street Alliance of Oregon, and a member of the 
Executive Committee of the Main Street Alliance National 
Network, a nationwide network of state and locally-based small 
business groups.
    When my wife and I opened Hawthorne Auto Clinic 30 years 
ago, we made the commitment to offer those who worked with us a 
good benefits package, including comprehensive health 
insurance. We are in a high skill field where being able to 
offer good benefits to keep good people is very important. We 
would not want our best customers to even think of going 
anywhere else, and the same holds true for our staff.
    The business case for our decision to offer full health 
insurance coverage is underscored by the fact that the average 
tenure of our full-time staff is now almost 20 years. Plus, we 
are an aging profession. These factors make health care 
coverage critically important for the success of our business.
    Before the Affordable Care Act, in many ways, the health 
care cost dilemma for our business resembled the case of the 
proverbial frog in the pot of cold water gradually heated. By 
2009, health care costs for our nine full-time employees and 
their families had doubled in just eight years, to equal over 
20 percent of payroll. That year we paid over $100,000 for our 
insurance coverage. This increase far exceeded increases for 
any other business cost and was not possible to pass on to our 
customers.
    Clearly, we could not cut our employees' pay by passing the 
cost on to them and still expect to retain the loyalty we had 
earned over the past many years, so we kept paying even as 
rates rose rapidly, often by double digits, from one year to 
the next.
    Now, however, we have seen a reversal of the trend of 
skyrocketing rates that we had absorbed from 2000 to 2010. In 
2011, and again in 2012, for the first time in my memory, our 
health insurance premiums actually declined and by over 3 
percent.
    In Oregon, 22 different insurance carriers have applied to 
and been accepted by Cover Oregon. That is our Exchange. And 
many of these carriers have already lowered their premium 
requests in order to match the competition created by our new 
Exchange. I have the privilege of serving on the Consumer 
Advisory Committee of Cover Oregon and I am proud that we are 
setting an example for how the Affordable Care Act, when fully 
implemented, can help small businesses and consumers afford 
quality coverage.
    Rate review rules are giving states new tools to protect 
small businesses and other insurance customers from 
unreasonable rate increases. United Health customers save $274 
per person when the Oregon Insurance Commission knocked back 
their 16 percent proposed increase to 10 percent. The 80/20 
Rule is ensuring that small businesses get real value for our 
premium dollars.
    Requiring insurers to issue rebate checks when they fail to 
spend at least 80 percent of premiums on medical care, has 
returned millions of dollars to consumers throughout the 
country in the form of lower premiums and rebates. In Oregon, 
Regents had to return $499 per rate payer.
    Thanks to the law's small business health care tax credit, 
our business received a credit of $12,900. The Kaiser Family 
Foundation reports that the percentage of employers with 
between three and nine employees offering health care coverage 
has risen from 46 percent in 2009 to 59 percent in 2010, in 
part due to the small business tax credit.
    Here is the bottom line. The Affordable Care Act has been 
like a time machine for our small business. Insurance premium 
decreases, combined with the small business tax credit, have 
rolled our health care costs to what we were paying in 2007. 
Our customers have been returning, our business has been slowly 
recovering from the recession, health insurance pricing 
certainty has now enabled us to add two more full-time 
employees, including an Afghanistan war vet, an almost 25 
percent increase in our prior staffing.
    We cannot go backward, we must go forward, and thank you 
very much.
    [The prepared statement of Mr. Houser follows:]


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    Chair Landrieu. Thank you. Mr. Dennis.

 STATEMENT OF WILLIAM J. DENNIS, JR., SENIOR RESEARCH FELLOW, 
          NATIONAL FEDERATION OF INDEPENDENT BUSINESS

    Mr. Dennis. Thank you, Madam Chairman, Senator Risch, 
members of the Committee. On July 2nd, the Administration 
announced a one-year delay in the reporting requirements of the 
employer mandate, and hence, the mandate itself. I think the 
first small business reaction was one of relief. Small 
businesses were pleased because there has been so little 
specific information from which to make concrete business 
decisions.
    The law is complex. There are many non-decisions, important 
provisions of the law on which there has been no guidance, no 
regulations. And the communication has been terrible, quite 
frankly, for the small business population.
    But there was a second reaction and that second reaction 
was that nothing has happened. The substance has not changed. 
The lack of confidence, which is continuing to dampen economic 
output, in part caused by the uncertainty surrounding ACA, has 
not changed either. So small business continues with minimal 
hiring, minimal investment, and not performing particularly 
well economically.
    The one thing the delay did was provide an opportunity to 
assess the problems and make revisions to the Act itself, and I 
hope you will take the opportunity to think about some of these 
things. I have listed just five potential issues. Some of the 
gentlemen here have also listed some as well. I do not want to 
repeat, so let me just say first, the definition of full-time, 
part-time is an obvious issue, both for employers large and 
small, and employees as well as employers.
    I also have some questions about Section 6055 and Section 
6056, reporting requirements that Mr. Iwry made some comments 
about. There have never been any rules put forward on these 
sections, but the law lays out substantial reporting 
requirements. Clearly, those that must offer are covered by the 
mandate.
    However, we also think that small employers who are not 
covered are going to have substantial reporting requirements 
because the information they have is necessary for some other 
parts of the Act. So if someone else is going to provide the 
information, fine. We will be more than happy. But I will 
believe it when I see it.
    Business aggregation rules. I think this is the sleeper. 
Few know about them. The issue is what is a single business, 
and in a sense, it is quite simple. If I own a business here 
and if I own a business there, I just add up the employees for 
purposes of ACA. If I am over 50, I have to offer.
    The problem is that there are many businesses that have 
multiple owners and many owners have multiple businesses. So 
that leaves us to the tender mercies of the ERISA rules, and 
the ERISA rules are some of the most complex we have, requiring 
very fine interpretations by employee benefit specialists. I do 
not know where small business owners are going to get advice 
from that.
    We have the $100 billion HIT tax. If you can believe it or 
not, this was an idea to make insurers pay for extra business 
that was generated by ACA. The practical effect, however, is to 
pass those costs on to those in the small group market. Now, do 
not trust me. The Joint Tax Committee, the CBO, and most 
economists will tell you that.
    We tax only those offering small firms, precisely the firms 
that we want to encourage. Precisely the behavior we want to 
encourage we are taxing.
    Chair Landrieu. Try to wrap up, please.
    Mr. Dennis. Okay. In essence, the primary issue about this 
is cost, and I am sure we will talk a little bit about health 
insurance cost and how we get to it as we proceed in the 
discussion. Coost clearly remains a problem. Thank you.
    [The prepared statement of Mr. Dennis follows:]


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    Chair Landrieu. Thank you all very much. There still have 
not been votes that have been called. I intend to try to keep 
this hearing open at least until 5:00 or 5:15, if that is okay 
with the members. We are just going to go through a round of 
questioning three to four minutes each and we will try to do 
the best we can.
    Mr. Katz, let me start with you. I really, really 
appreciate the story of which you have built your business, and 
as I opened my--I mean, the risk that you took to open your 
business and the success of your business in Louisiana, we are 
very blessed to have so many people like you in our state that 
are working hard.
    When I opened this hearing, I called out specifically that 
you would be, I think, in this group of businesses in 
Louisiana. There are 67,000 small businesses with fewer than 50 
people that will not be affected at all. You referred to those 
in your testimony. And then there are 3,800 businesses, yours 
included, that have between 50 and 249 employees, and you fall 
in that group.
    Now, you testified that you did provide health insurance to 
your--and dental and vision. I read your testimony. Did you 
provide before the Health Insurance Act, insurance for all your 
employees or just a portion of your employees?
    Mr. Katz. We offer it, Senator.
    Chair Landrieu. You offered it before the Affordable Care 
Act?
    Mr. Katz. Some of the benefits we pay for. The health 
insurance is the employees' options.
    Chair Landrieu. So try to clarify that.
    Mr. Katz. Sure.
    Chair Landrieu. You did not provide health insurance for 
your employees before?
    Mr. Katz. We do not pay 100 percent of it. The ones who 
elect to take it pay about a third. We pay two-thirds.
    Chair Landrieu. Okay. So for those that chose to pay it, 
they paid a third and you paid two-thirds----
    Mr. Katz. Correct.
    Chair Landrieu. [continuing]. Before the Affordable Care 
Act. And what percentage of your workers chose to participate?
    Mr. Katz. Of the eligible workers, today it is about 50 
percent.
    Chair Landrieu. So 50 percent did not, for whatever 
reasons. They did not think they could afford it?
    Mr. Katz. Some were covered by their spouse.
    Chair Landrieu. Some were covered by their spouse, et 
cetera, et cetera.
    Mr. Katz. Either they could not afford it.
    Chair Landrieu. I want to acknowledge that even as the ACA 
passed, I had some, you know, serious concerns about the group 
of companies like yours that would get caught. It is a small 
number, but it is an important number, between 50 and 240. As 
you said, the larger companies can take advantage of the lower 
rates for groups. The smaller companies will be able to pool 
their assets through the Exchange. And then companies like 
yours will have a challenge.
    So I am going to really read the testimony that you have 
submitted to this and see if we can come up with some solutions 
to help you all, because we most certainly do not want 
businesses to close, we want businesses to expand, and we want 
to be very focused on some of the issues that you raised.
    Mr. Settles, let me ask you this. You did testify sort of 
in opposition to the bill. I want to just be clear that in your 
testimony, though, you did serve on the Idaho Health Care Law. 
You did advocate for the creation of the Exchange. Have you 
changed your position or could you try to clarify that for me?
    Mr. Settles. Chairman Landrieu----
    Chair Landrieu. You advocated for the creation of the 
Exchange?
    Mr. Settles. I did. You know, historically, Idaho has had 
some of the lowest health care rates in the Nation, and so it 
did not make any sense to me to let an organization that had 
much higher average rates take over our state system. So I was 
very involved in the Governor's task force that looked into 
this. Although we still, we lose a lot of control, we are able 
to make a few decisions that we think can help us drive down 
the cost.
    An example of that is that--there are fewer participating 
in the Federal Exchange, there is a 3.5 percent fee that is 
attached to all policies to help cover that, and they are not 
just the policies in the Exchange because all policies have to 
be priced the same in and out of the Exchange. In Idaho, we set 
that at 1.5 percent and we are hoping we can drive it lower.
    Chair Landrieu. So by setting up your own Exchange as 
opposed to sitting on the sidelines and letting the Federal 
Government do it, you were able to drive down cost?
    Mr. Settles. Absolutely. You know, you have people that are 
saying, Well, we are just going to kill this thing, but I am a 
business owner that has a significant out-of-pocket cost as 
this thing goes forward, and I cannot just stand back and say, 
I am going to kill it. I am going to be there to try and 
minimize the cost and take----
    Chair Landrieu. And try to make it work? And I think that 
is admirable. How many employees do you have?
    Mr. Settles. We issue about 200 paychecks every pay period, 
but about 60 of those would be considered full-time under the 
law.
    Chair Landrieu. Okay. My time has expired. Senator Risch.
    Senator Risch. Thank you. First of all, Mr. Katz, your 
story is compelling. I cannot apologize for the Federal 
Government. If I could, I would. We could have killed that bill 
with one vote in this body. One vote would have stopped that 
bill from becoming law and you would not have had to have been 
in the position that you are in. It is really heartbreaking to 
hear what you went through living the American dream and now 
winding up in the position that you are in.
    Mr. Settles, so that we do not leave any question about 
this, there was a dynamic argument in Idaho whether or not to 
adopt the state Exchange, is that right?
    Mr. Settles. Oh, it was ugly, very dynamic.
    Senator Risch. Even the people that voted for it did not 
really want it, but the Federal Government told them, they 
said, ``Do you want to be shot or do you want to be hung, 
either way, you are going to have an Exchange.'' Is that a fair 
way to look at it?
    Mr. Settles. You know, it was the Supreme Court ruling when 
you finally heard a lot of people say, Okay, we do not like 
this, we are going to plug our nose and vote for it.
    Senator Risch. Do what we have to do to----
    Mr. Settles. Yes.
    Senator Risch [continuing]. To cut our losses. People in 
Idaho were pretty happy, were they not, with what they had 
compared to what they are facing now. Is that a fair statement?
    Mr. Settles. You know, like I said, historically, mandates 
are what make a policy more expensive. Our neighboring state 
has over 100-something mandates added to their policies, things 
that have to be covered. We had four total. That is about as 
low as you can get. So under health care now, we have to add 
some things that were not in. Every policy in our state is 
going to have a component for pediatric dental. I have not had 
a baby tooth for years. But it is built into the cost of all 
policies. So those are the kind of things that we really want 
to try and have some control over.
    Senator Risch. And this business about being able to keep 
your policy if you like your policy, that is all out the 
window.
    Mr. Settles. Well----
    Senator Risch. That was a joke, I guess, at the time it was 
promoted.
    Mr. Settles. I actually asked the CEOs of two of our 
largest carriers. The day before I flew out here we were in a 
meeting for the Health Exchange Board. They actually have a 
fair number of clients that have the Legacy policies. For me, 
the first year it passed I was looking at a 50 percent increase 
if I did not do something. So I gave up the right to have a 
Legacy policy.
    What is the advantage of having a Legacy policy if you are 
going to be subject to those kinds of price increases every 
year?
    Senator Risch. I am told that with the Exchange being set 
up, there are some issues with choice, that there is only going 
to be one choice of plan. Am I right or am I wrong on that?
    Mr. Settles. You know, I think that our carriers are going 
to be very competitive getting into the market, and the choice 
part, there is a component under the law that allows Exchanges 
to be set up so an employer could allow their employees to 
choose a certain metal plan, silver plan, but from different 
carriers.
    I am not sure I really see the value of that. It is called 
dis-aggregation and it is one of the first things that was 
backed away from the Federal Exchanges because it is so hard to 
manage, because then all of a sudden you start to figure out, 
how does the money get from the person paying the policy to the 
insurer?
    Does it start to have to flow through our health Exchange? 
And if our health Exchange actually has to start collecting 
premiums, it becomes a much bigger monster.
    Senator Risch. Mr. Settles, on behalf of all Idahoans, 
thank you for trying to diminish the tremendous damage that has 
been done by this law. Thank you very much. I yield back my 
time.
    Chair Landrieu. Senator Shaheen.
    Senator Shaheen. Thank you, Madam Chair. Mr. Settles, I was 
interested in your comment about pediatric dental coverage 
because I do not have any baby teeth either, but my 
grandchildren sure have a lot. So I assume that the policy you 
are referring to would require coverage for children as opposed 
to adults, but that everybody might be paying towards that.
    Mr. Settles. When they start to--when they calculate what 
they want to charge for a plan, they have to figure out all 
their potential costs, and because of the--the plans have to be 
like-like inside and out of the Exchange, et cetera, the 
discussion has been, Well, this plan has to have pediatric 
dental, so we have got to bury it in there. If this plan has to 
cost the same, then it has to be in all policies.
    And so, maybe they will drive down the ultimate rate for 
pediatric, but everybody picks it up. It is just like the 3.5 
percent. You are paying to support the health care Exchange 
whether you can use it or not.
    Senator Shaheen [presiding]. You know, listening to the 
panel, it really struck me that this is a law that is working 
very well for some people, to the extent that it has been 
implemented to date, and for other people it is not working 
very well. Mr. Settles and Mr. Katz, I can tell you that many 
of the concerns you have raised I have heard from small 
business people, particularly in the hospitality industry in 
New Hampshire.
    I guess my hope is that we can look at what is not working 
very well and try and address that in a way that is much more 
positive, but recognize that the system that we had sure was 
not working for an awful lot of people. It was not working in 
terms of coverage and it was not working in terms of cost. In a 
lot of places, it was not working in terms of quality either.
    So that is certainly my hope going forward and that is what 
I intend to work on. But let me go back to you, Nancy, and I 
wonder if you could talk about the--you talked a little bit 
about this in your statement, but the challenge of health care 
costs in general as a small business. What other options, in 
the absence of ACA or some other option to address health care 
costs, how you would try and control that and whether you would 
be able to stay competitive without some way to control health 
care costs.
    Ms. Clark. I can--I would control my expenses other ways. I 
have no--I had no control over health care costs at all. It was 
a necessary evil to doing business. So that is why I was 
delighted that my premiums went down this year. But in order 
for me to be competitive as a professional industry in rural 
New Hampshire, I have to offer that as a benefit, likewise I 
offer 401(k) as well.
    But I control other expenses, not health care, but as I 
said, this year, and I am positive about the Exchange offering 
more choice down the road. Thank you.
    Senator Shaheen. And can you talk a little bit about--
because the earlier panel talked about some of the efforts 
under way to make sure that businesses know about what is in 
the health care law and how to take advantage of what can be 
helpful and how to understand other requirements. Can you talk 
about how you learned about the tax credit and how hard that 
was to implement?
    Ms. Clark. How I learned about the tax credit is because I 
am so involved in health care and fixing the health care 
system. And I have an accountant who does my taxes, so it is 
not at all hard to implement, for him at all, and if it was 
hard for him, I would have moved to a different accountant. So 
we hire experts. I hire people that are smarter than me. So 
yeah, it has not been an issue at all.
    Senator Shaheen. Thank you. Thank you, Madam Chair. Senator 
Vitter.
    Senator Vitter. Thank you. Thank you again, Mr. Katz. I 
think your testimony went right to the bottom line of a lot of 
small businesses. I would like to ask you to summarize what you 
went over in terms of the unfortunate cut-backs, sales, a 
possible closing two restaurants you are facing.
    And then spend more time, focus on a different category. If 
these impediments and costs did not face you, absent the 
Obamacare law, what would you probably be doing in terms of 
opportunities, in terms of the new location you described, et 
cetera.
    Mr. Katz. Well, I think along with Mr. Settles, I would be 
aggressively expanding at this point, Senator. Part of the 
problem is the cost. The other problem is the uncertainty, and 
we just do not know. And the issue--my concern today is, I 
almost think it is a house of cards, because we know the 
penalty is going to be $2,000, but it is irrational to think 
that it is going to remain that.
    And so, if I have to put my faith in myself to keep me in 
business or the Federal Government to not set rates to put me 
out of business, I am going to make my own decisions. And so, 
we have talked about it a little bit, but the global issue to 
me is, I never--I grew up thinking to be in the 96th percentile 
was good and the 4th percentile was bad, and I never knew how 
true that was until I have heard today, because I really want 
to get into the 96th percentile and get out of the 4th.
    Chair Landrieu. [presiding]. I would like to help you.
    Mr. Katz. And whether, if it cannot be done away with, 
whether that is increasing the definition of what a full-time 
employee is, maybe expanding to help some of these small 
businesses. The biggest issue to me is what I am faced with. 
You get the 48 or 49 people, do you want to go any higher? Do 
you want to hire anyone? Do you want to open another business? 
And you have got to have an awfully profitable business in 
order to say yes to that question.
    So my 15 or 16 employees, it is a crime, but that is going 
to happen tens of thousands of times. There are lots of people 
like me making these same decisions today, and that is my 
biggest concern, is what is going to happen going forward.
    Senator Vitter. Thank you. That is all I have. Thank you.
    Chair Landrieu. Senator Rubio.
    Senator Rubio. Thank you. Mr. Katz, I, too, am inspired by 
your story. It really is the epitome of what it means to 
succeed in America. This story is amazing. So you basically 
cashed out your life insurance, you took out your credit card 
availability, you emptied your life savings, and with that, you 
opened these restaurants and then you struggled at the 
beginning to make it. But today, you own six diners, you employ 
85 people, 65 of them full-time, right?
    Mr. Katz. Correct.
    Senator Rubio. And you offer them today paid holidays, 
vacation, dental, vision, term life, and health insurance?
    Mr. Katz. Correct.
    Senator Rubio. Is it correct to say your employees are 
happy with that coverage that they are getting?
    Mr. Katz. I think so. We have very low turn-over for our 
industry.
    Chair Landrieu. It is 50 percent that have it. You offer 
it, but 50 percent have it.
    Mr. Katz. Correct, correct.
    Chair Landrieu. But the other 50 percent do not.
    Mr. Katz. Well, most of them are ineligible because of the 
hour requirement, Senator.
    Chair Landrieu. But they do not have--50 percent of your 
employees have it, 50 person do not.
    Mr. Katz. Yes. I would think a percentage of those do. Some 
of are covered by Medicaid. Some have other ways, through their 
spouses, of having coverage.
    Chair Landrieu. But they do not have your coverage.
    Mr. Katz. They do not have my coverage, that is correct.
    Senator Rubio. But the point is, you have a large number of 
employees that are currently covered by health insurance and 
are happy with that insurance?
    Mr. Katz. Correct.
    Senator Rubio. Okay. When the mandate kicks in, what are 
you going to do with that insurance?
    Mr. Katz. Day one, I am going to have to drop it.
    Senator Rubio. Okay. So is it fair to say that these 
employees that now have coverage and are happy with it are no 
longer going to have that coverage?
    Mr. Katz. Not through our company, correct.
    Senator Rubio. Earlier I heard statements made that that 
would be a choice, that people would make that choice. So let 
me ask you, were it not for Obamacare, would you have made that 
choice?
    Mr. Katz. No. We would have continued it.
    Senator Rubio. You have also discussed in your testimony, 
in your written testimony that I have read, about some of the 
decisions you are going to have to make. You described that one 
of your options is that you may have to close or sell two of 
your diners, right?
    Mr. Katz. Correct.
    Senator Rubio. Is that because of Obamacare?
    Mr. Katz. Correct.
    Senator Rubio. How many people would that--how many people 
will lose their jobs if you have to make that decision?
    Mr. Katz. Sixteen FTEs will get me to 49 and that is 
apparently the magic number.
    Senator Rubio. So 16 people may lose their jobs if you have 
to make----
    Mr. Katz. Slightly more than that because some of those are 
going to be part-time people.
    Senator Rubio. So is it fair to say that 16 people could 
potentially lose their jobs because of Obamacare?
    Mr. Katz. Well, it is not just fair. It is an accurate 
statement, sir.
    Senator Rubio. And you also, like most businesses, would 
like to grow, right?
    Mr. Katz. Correct.
    Senator Rubio. In fact, you have identified a location that 
you may want to expand to, right?
    Mr. Katz. Correct.
    Senator Rubio. And everything you know about your business 
tells you, I should expand, this is exactly the right location?
    Mr. Katz. Correct.
    Senator Rubio. Are you going to do that?
    Mr. Katz. No, sir.
    Senator Rubio. Why?
    Mr. Katz. Because that will permanently--if I add 15 
people, the after-tax penalty is going to be $30,000. So you 
are looking at roughly $42,000, $45,000 in profit that is going 
to go to that. I am looking at--my gut tells me it will be 
good. It could be unsuccessful. But the least, it might make us 
$40,000, $50,000.
    So I am looking at the option. Do I want to open a 
restaurant, invest a half million dollars or more to make 
$50,000, $60,000, $70,000 knowing that almost 50 of that is 
going to go to the Federal Government? So the odds are not in 
my favor.
    Senator Rubio. If you open that new restaurant, how many 
new people would you hire?
    Mr. Katz. Fifteen to 20 people, at least 15 FTEs.
    Senator Rubio. Okay. So there is a new business that is not 
going to open at least because of Obamacare?
    Mr. Katz. Correct.
    Senator Rubio. And there are 15 or 16 people that are 
potentially unemployed today or looking for a job that will not 
be able to find one because of Obamacare?
    Mr. Katz. Correct.
    Senator Rubio. There are 15 or 16 jobs that are not going 
to be created because of Obamacare?
    Mr. Katz. Correct.
    Senator Rubio. Had it not been for Obamacare, you would 
have probably created those jobs?
    Mr. Katz. Yes, Senator.
    Senator Rubio. Okay. Thank you.
    Chair Landrieu. Thank you, Senator Rubio. I would just 
mention that there are three other businesses that are 
expanding because of the Affordable Care Act, one that is 
decreasing, and Mr. Settles, we are not sure what you are 
doing, but you are just trying to make it work in Idaho, and 
Mr. Dennis, you are opposed to it completely.
    This has been a very, very instructive panel and I really 
do appreciate all the witnesses here testifying.
    Senator Risch. Madam Chairman, to comment----
    Chair Landrieu. Could I finish, please? I really appreciate 
all the businesses that have testified, you know, how it is 
affecting you positively, how it is affecting you negatively. 
It is a debate that is continuing to go on in this Congress.
    As the Chair of this Committee, I really hope that we can 
continue to improve on a law that will provide, hopefully, 
affordable insurance for every family and every business with 
the shared responsibility for individuals, for business, and 
for the Government. So I thank you all very much. Senator 
Risch.
    Senator Risch. Madam Chairman, you know, I think it is a 
shame and really an embarrassment for the United States of 
America when the Federal Government passes laws that create 
winners and losers in the marketplace. It ought to be governed 
by the marketplace. It ought to be free people. It ought to be 
Americans that decide this, not the Federal Government doing 
this.
    I am glad to hear that you want to help do something about 
this. You can help us move this to where we do no harm. Let us 
go back to what we had, which does not do the harm that has 
been described by these people here. The situation in America 
today is that it is just disgusting that the Federal Government 
having botched this as badly as it has. And we are going to 
work at it.
    Thank you all for what you do in the free enterprise 
system. God bless you and keep up the good work.
    Chair Landrieu. Thank you, Senator Risch, but we are not 
going to go back to the time before people had affordable 
insurance, and there are many businesses that are growing and 
expanding their employment because of this Act. There are some 
glitches that need to be fixed. There are some, probably, good 
ideas. Mr. Katz suggested a few. We are going to follow up with 
you to see how that is done.
    We will not go back to a time when businesses cannot afford 
insurance and cannot grow because of it, or lose their coverage 
because they get sick or they have a disabled child and their 
whole firm loses coverage because one child is born with Down's 
Syndrome. I can assure you we are not going back. Thank you.
    Senator Risch. Madam Chairman, I sincerely hope you can fix 
this mess.
    Chair Landrieu. The record is closed.
    [Whereupon, at 4:58 p.m., the Committee was adjourned.]





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