[Senate Hearing 113-347]
[From the U.S. Government Publishing Office]
S. Hrg. 113-347
AFFORDABLE CARE ACT IMPLEMENTATION:
EXAMINING HOW TO ACHIEVE A SUCCESSFUL ROLLOUT OF THE SMALL BUSINESS
EXCHANGES
=======================================================================
HEARING
BEFORE THE
COMMITTEE ON SMALL BUSINESS
AND ENTREPRENEURSHIP
UNITED STATES SENATE
ONE HUNDRED THIRTEENTH CONGRESS
FIRST SESSION
__________
NOVEMBER 20, 2013
__________
Printed for the Committee on Small Business and Entrepreneurship
Available via the World Wide Web: http://www.fdsys.gov
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COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP
ONE HUNDRED THIRTEENTH CONGRESS
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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 MICHAEL B. ENZI, Wyoming
KAY R. HAGAN, North Carolina RON JOHNSON, Wisconsin
HEIDI HEITKAMP, North Dakota
WILLIAM M. COWAN, Massachusetts
Jane Campbell, Democratic Staff Director
Skiffington Holderness, Republican Staff Director
C O N T E N T S
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Opening Statements
Page
Landrieu, Hon. Mary L., Chair, and a U.S. Senator from Louisiana. 1
Risch, Hon. James E., Ranking Member, and a U.S. Senator from
Idaho.......................................................... 8
Heinrich, Hon. Martin, a U.S. Senator from New Mexico............ 18
Witness Testimony
Nold, William, Deputy Executive Director, Office of The Kentucky
Health Benefit Exchange, Frankfort, KY......................... 11
Hickey, Martin, M.D., CEO, New Mexico Health Connections,
Albuquerque, NM................................................ 18
Allen, David, President and CEO, David Allen Enterprises, LLC,
Boulder, CO.................................................... 24
Greenblatt, Drew, Owner, Marlin Steel Wire Products, Baltimore,
MD............................................................. 31
Salter, Sheila A., Founder and CEO, EARLY2SURG, Chapel Hill, NC.. 43
Evans, Connie, President and CEO, Association for Enterprise
Opportunity, Arlington, VA..................................... 50
Kofman, Mila, Executive Director, D.C. Health Benefit Exchange
Authority, Washington, DC...................................... 58
Borzi, Hon. Phyllis C., Assistant Secretary, Employee Benefits
Security Administration, U.S. Department of Labor, Washington,
DC............................................................. 79
Cohen, Gary, Deputy Administrator and Director, Center for
Consumer Information and Insurance Oversight, Centers for
Medicare and Medicaid Services, U.S. Department of Health and
Human Services, Baltimore, MD.................................. 87
O'Brien Markowitz, Marianne, Regional Administrator, Region V,
U.S. Small Business Administration, Chicago, IL................ 98
.................................................................
Alphabetical Listing and Appendix Material Submitted
Allen, David
Testimony.................................................... 24
Prepared statement........................................... 27
Barker, Andy
Letter dated November 15, 2013, to Senator McConnell......... 253
Borzi, Hon. Phyllis C.
Testimony.................................................... 79
Prepared statement........................................... 81
Additional comment for the record............................ 205
Cohen, Gary
Testimony.................................................... 87
Prepared statement........................................... 89
Dayton, Mark
Letter dated November 20, 2013, to Chair Landrieu............ 239
Department of Health & Human Services
ASPE Issue Brief............................................. 259
Enzi, Hon. Michael B.
Prepared statement........................................... 112
Evans, Connie
Testimony.................................................... 50
Prepared statement........................................... 52
Greenblatt, Drew
Testimony.................................................... 31
Prepared statement........................................... 33
Heinrich, Hon. Martin
Opening statement............................................ 18
Hickey, Martin
Testimony.................................................... 18
Prepared statement........................................... 21
Kaiser Family Foundation
List of Total Health Insurance Exchange Grants............... 256
Kofman, Mila
Testimony.................................................... 58
Prepared statement........................................... 60
Landrieu, Hon. Mary L.
Opening statement............................................ 1
Meredith, Griffin L.
Letter dated November 19, 2013, to Senator McConnell......... 252
Nold, William
Testimony.................................................... 11
Prepared statement........................................... 13
Documents submitted for the record........................... 133
O'Brien Markowitz, Marianne
Testimony.................................................... 98
Prepared statement........................................... 100
Pickering, Kathy
Letter and report titled ``Understanding the Implications of
the Affordable Care Act: Enrollment, Education and Taxes''. 206
Politico
Article titled ``Only 5 Enrollments Completed in D.C.
Obamacare Exchange''....................................... 255
Risch, Hon. James E.
Opening statement............................................ 8
Responses to post-hearing questions from:
Mila Kofman.............................................. 118
Hon. Phyllis C. Borzi.................................... 120
Gary Cohen............................................... 122
William Nold............................................. 127
Marianne O'Brien Markowitz............................... 131
Rubio, Hon. Marco
Prepared statement........................................... 116
Salter, Sheila A.
Testimony.................................................... 43
Prepared statement........................................... 45
State by State Enrollments, Cancellations, and Premium Increases
November 20, 2013.............................................. 241
AFFORDABLE CARE ACT IMPLEMENTATION: EXAMINING HOW TO ACHIEVE A
SUCCESSFUL ROLLOUT OF THE SMALL BUSINESS EXCHANGES
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WEDNESDAY, NOVEMBER 20, 2013
United States Senate,
Committee on Small Business
and Entrepreneurship,
Washington, DC.
The committee met, pursuant to notice, at 10:00 a.m., in
Room 428-A, Russell Senate Office Building, Hon. Mary L.
Landrieu (Chair of the Committee) presiding.
Present: Senators Landrieu, Shaheen, Heinrich, Booker,
Risch, Vitter, Scott, Fischer, Enzi, and Ron Johnson of
Wisconsin.
OPENING STATEMENT OF HON. MARY L. LANDRIEU, CHAIR, AND A U.S.
SENATOR FROM LOUISIANA
Chair Landrieu. Good morning, everyone, and if we could
take our seats and welcome to this important hearing this
morning.
The purpose of today's hearing is to explore the success
stories of the rollout of the Affordable Care Act in states
throughout the country where teamwork and cooperation has
proven to be exceedingly effective.
We will also hear from a federal panel that will talk about
the federal rollout and some of the challenges that have
presented themselves. Normally, we have the federal panel first
and the state panel second. But at the discretion of the Chair,
I reversed it but required the federal leaders to be here to
hear from the state exchanges and from individual business
owners about how the situation could be improved.
I would like to begin by quoting, I think it was Mark Twain
who said, ``A lie can get halfway around the world before truth
gets out of bed in the morning and puts its boots on.''
So, this morning we are going to try to give truth a
chance.
Thank you for joining us for this hearing. The Affordable
Care Act passed, as we all know, in March of 2010 and was
signed into law by the President three days later. That was
over three and a half years ago.
Last year, the Supreme Court upheld one of the essential
components of this law, including the no free rider provision,
requiring full participation through private and public health
insurance marketplaces.
The goals of the Affordable Care Act at the time we passed
the law were implemented for creating a workforce that was
healthy because only a healthy workforce can be a strong
workforce and America needs the strongest workforce we can get
so we can continue to have the strongest economy in the world.
Those were the goals three and a half years ago. That is
the hope and promise today.
There were four specific goals of the Affordable Care Act.
One, to slow skyrocketing health care costs and reduce what
America spends on health care as a share of our GDP. It was
rising from 15 percent to 16.5 and headed very soon to 19. That
trend has been reversed.
To use the power, not of the government but of the private
sector competition, the proven power of private sector
competition to rein in costs and improve quality care and
coverage.
To provide the first opportunity in the history of our
country, whether union or nonunion, middle, high, or low income
wage earner, whether self-employed, small or large business to
access affordable quality health care.
And one of the most exciting and under appreciated features
of the Affordable Care Act and one that this Committee has
focused a great deal of work is that it provided for the first
time a key to Americans to unlock them from job-lock which
prevents individuals in every state, including my own, from
starting a new business because the risk associated with
leaving full and good employment with full and good health care
coverage causes them to stay sometimes in companies where they
themselves might even do a better job starting their own
providing disruptive technology or good services.
I am proud to hand many of our entrepreneurs that key and
intend to do so.
According to the Robert Wood Johnson Foundation, nearly 1.5
million Americans, including 25,000 Louisianians, will become
self-employed thanks to this bill, allowing them to fulfill
their dream of becoming entrepreneurs, to pursue their dreams,
to create the product or the system or service that they have
dreamed about and have health insurance which was not possible
before the Affordable Care Act.
Fourth, to provide coverage to millions of low income and
working-class families that work 40, 50, and 60 hours a week
and worked for decades and yet could not afford health care in
the United States of America.
The way that this bill has been crafted, they will, if the
governors would expand Medicaid, to be able to choose their
hospitals, doctors, and have health care. Unfortunately, many
of our governors are standing in the way.
This is the hope and vision that we fought for. It is still
worth fighting for now.
The focus of today's hearing will be specifically, though,
on coverage options and access to our small businesses or
businesses regardless of size, and I want to be clear. This is
about the self-employed, about the growing percentage of our
population that call themselves contractors because of the way
our economy is structured to be very flexible and independent,
small businesses below 50 and small businesses above.
Now, we all know the rollout of the federal marketplace for
individuals as not worked as well as we had hoped. We know that
there are many challenges. We will hear about those today.
But thank goodness there are bright examples throughout the
United States where the ACA's vision is working and we are
going to hear from those states today.
Specifically, we are going to hear from representatives
leading the implementation of the SHOP marketplaces now open at
the state level to understand both the challenges and the
successes experienced by those states who accepted the
responsibility to build their own exchanges, who accepted the
challenge of the Federal Government to say we cannot always do
things right. Here, we will give you the option to do it.
Some of our governors were brave enough to do so; others
were not.
Usually, this Committee hears from federal officials, as I
said, but I have asked them specifically to be in the room
because they need to hear the best practices about what is
going on around the country so they can get a better
understanding of what we are trying to do. We will also be
hearing from representatives of federal agencies, et cetera.
Now, let me go into a few more things and the time that I
take will be given equally to the minority.
Before we begin, I would like to take a moment to put
today's discussion into context. As we were debating the Health
Reform Act in 2009 and I was here and robustly engaged in that
debate and helped to design the system that we have now which
was a compromised system between a government-run, single-payer
system and a medical savings account system with no floor or no
safety net, we designed this.
It was particularly for 96 percent of all businesses that
employ fewer than 50 people who were struggling to remain
competitive and we were focused on helping them.
Small businesses were paying an average of 18 percent more
than big business for health insurance that was not the same
quality and they saw their health care costs increase faster
than the prices of products and services they were selling. The
record says four times faster than the rate of inflation
between 2001 and 2009.
After the number of employers offering coverage remained
relatively flat in the 1990s, average annual family premiums
for workers at small businesses increased by 123 percent, from
5700 in 1999 to 12,700 in 2009.
So, in the rate of increase was going up substantially
before the Affordable Care Act which is one of the reasons it
was passed to try to taper down those rates and get them lower.
The percentage of small firms offering coverage started
falling from 65 percent to 59 percent, and it was spiraling
downward. It is no wonder that since 1986 one concern for every
small business every year has been access to affordable care
and this is not from a liberal think tank. This is the finding
of the National Federation of Independent Business. They have
testified before our Committee on many occasions.
This made reform, in my mind, imperative and the small
business health care marketplace an important tool towards
increasing choice and competition, reducing costs for small
business and providing coverage to their employees that serve
as the backbone of this American economy and a model for the
world.
A SHOP is an online marketplace where small businesses with
50 or fewer employees can purchase health insurance for their
employees voluntarily because under the Affordable Care Act
they are not required, the businesses are not required,
employees can. Functioning SHOP marketplaces will give small
business owners the tools they need to be smart consumers as
they choose affordable options for their businesses without
damaging their bottom line and leveling the playing field with
large businesses through improved access to affordable health
benefit options for their employees.
Many are like family. I cannot tell you how many small
business owners have come up to me over the course of the last
several years and said, Senator, I would love to offer my
people insurance but I cannot find it anywhere; and because my
best friend to help me start this businesses wife has cancer,
we are now completely priced out.
How am I going to keep my business because I feel badly
because I do not want to ask him to leave? If he would leave, I
could get insurance for my businesses.
That is a choice I do not think Americans should be making
and I do not want anyone in Louisiana to make that choice or
have to make that choice.
At the end of this month, small businesses with 50 or fewer
full-time equivalents will be eligible, but not required, to
purchase and provide coverage to their employees. Beginning in
2006 (sic), all SHOPs will be open to employees with up to 100
individuals.
Pooling these eligible, or FTEs, pooling these eligible
small businesses and larger groups will spread risk, allowing
insurers to stop charging higher premiums that accompany the
greater uncertainty about the likely health care costs of small
groups.
The new SHOP marketplaces will allow small businesses to
compare plans easily which was never, hardly ever possible
before, taking the administrative burden off employers and
allowing them to get back to running their businesses which
they do best, not filing paperwork to get health insurance.
It was a broken market. We intend to fix it.
According to a 2009 Business Roundtable Report, the
administrative costs to small businesses through the exchanges
would be reduced by as much as 22 percent.
I would like my staff to put up what is happening around
the states, and I would like people's eyes to focus on what is
happening in a good way and still challenging ways.
This is the United States of America. You will recognize
it. Declared state-based exchanges are in red. Planning for
partnership exchanges are in the gray area, and those states
that defaulted to the Federal Government, and I want to
underscore this because mine is one of them, states that had a
chance to set up an exchange for their small businesses that
were given every opportunity, and in the case of my State was
also attached with a check for $16 billion to help make it
work, was rejected by my governor and by many governors.
And instead they defaulted, at their own choice, not my
choice, at their own choice, not at President Obama's choice,
to let the Federal Government set up their exchanges and then
did nothing of virtually to help. It is no wonder some of them
are not working.
But today we are going to have the opportunity to talk to
those governors and those states, both Republican and Democrat,
that did step up and lead, that did take what was offered to
them and set up exchanges that could work for their small
businesses.
Each state has the flexibility to decide how they want to
operate their health insurance marketplaces. As you can see on
this map, there are four different categories that each of the
50 states and the District of Columbia fit into.
Some states have what they call federally-facilitated
exchanges which means that they are not choosing to set up
their own market and leaving it to the Federal Government.
Unfortunately, that would be mine. I wish I had been given that
choice but unfortunately that was one mistake in the bill,
leaving it up to governors, maybe not a mistake but in some
cases it was it seems.
Other states are operating partnership exchanges where the
Federal Government operates the marketplace in conjunction with
the state. Some states chose a partnership with the Federal
Government. We will see how that is working.
And another group of states have split exchanges where the
Federal Government runs the individual marketplace and the
state runs the SHOP marketplace.
The final category is made up of states that run both,
their own individual and small business marketplaces. These
states cover approximately one third of the population of the
United States.
This is a big country, and it goes way beyond the Beltway
of Washington D.C. You are going to hear today about one third
of the population that is either working really, really well or
it is working to some degree and with some changes could work
better and a few places where they are having some serious
challenges. But you are going to hear from people that are at
least trying.
Kentucky and the District of Columbia are included in this
category. We will be hearing from representatives of these
exchanges during our first panel this morning. In total, there
are 18 states plus the District of Columbia running their own
SHOP exchanges.
And for the record, since this is so important, I want to
put these states in the record. California, Colorado,
Connecticut, the District of Columbia--not a state yet, maybe
one day--Hawaii, Idaho, Kentucky, Maryland, Massachusetts,
Minnesota, Nevada, New Mexico, New York, Oregon, Rhode Island,
Utah, Vermont, and Washington State.
In all parts of our country, some with Republican
governors, some with Democratic governors, some with Republican
legislators, some with Democratic legislators, but all with
people who need leadership to help them find health care that
they can afford.
Nearly 40 percent of all the Nation's small employers are
in these states. That is who we are focused on today.
We all know that the rollout of the individual insurance
exchange website has been disappointing to say the least, but
today's hearing is focused on implementing the rollout of the
SHOP exchanges which is the focus of our Committee where we had
a lot of input into how this bill was designed to emphasize the
need for a better rollout, not just for individuals but for
small businesses.
Today, as I said, we are joined by states who accepted this
challenge and responsibility to create state-based exchanges
and did it well, as well as those who are having difficulty.
For those states that have made the decision to operate
their own SHOP marketplaces, we are already seeing evidence. I
am not going to repeat everything that is in the testimony but
I will say that for Kentucky, I was completely happy to see and
I spoke to Governor Beshear, Kentucky did what I thought we
should do and I have a bill to correct this, to use their
licensed health agents to sell the policies which is a
brilliant idea. We did not do that unfortunately.
And so, they hit the ground running because their agents
were already licensed and understood the market well and were
able to sell. We will hear more about that. That is Kentucky,
and you will hear more about Kentucky.
In D.C., between October 1 and 13, they had more than
84,000 visitors to their website. What I loved about the
testimony from D.C., and you will hear more about it, is that
instead of the Chamber of Commerce dragging its feet, he says,
the D.C. Chamber of Commerce, the Greater Washington Area
Hispanic Chamber, and the Restaurant Association partnered to
build this exchange and put their muscle and their brainpower
behind it, and it is probably one of the most successful in the
country. Nearly 700 employer accounts have been created using
their site.
Finally, in New Mexico, and our senator is here, has seen
similar success as well. They accepted the leadership
challenge, and today 1,143 small businesses with 3,192
employees have been registered, required information with the
New Mexico exchange.
If they all fully enroll with the average number of
dependents, that would be a potential total of 8,000 members,
and it has just been opened for a very short period. We will
hear more about that.
Making the ACA work the way it was intended is what I
intend to try to do. There are others that have different
goals. Ensuring that these marketplaces work the way they were
intended when we passed the Act is vital to helping the
businesses in our country and families that depend on these
businesses to get the help that they need to stay healthy.
And most importantly for me as a mother, not just to stay
healthy physically but to be mentally free of the worry that
any day your business is one day away from bankruptcy or your
family is one accident away from bankruptcy.
There is no price that you can put, in my view, on peace of
mind. I do not know any economist in the world that could price
it but I could tell you as a mother that it is very costly.
The SHOP marketplaces need to work so that small-business
owners can easily and efficiently compare the different plans
available for themselves which they were never able to do, and
their employees can pick the plan that makes the most sense.
Now, opponents of the law, and there are many, are fixated,
fixated on the problems of the law as opposed to the promise
that it holds. I believe this is wrong.
These problems, while challenging, are fixable. We have
fixed many things in the United States, big things, bold
things, and great things. This is something we can fix.
And regardless of how we voted for the ACA, whether we
liked it or not, it is the law of the land; and in my view, it
deserves to be fixed, not repealed. We have the responsibility
to make the Affordable Care Act work, not because of politics
but because of the people.
This is not about President Obama. It is about the people
of the United States of America. It is about the millions of
small business owners who want desperately to provide quality,
affordable health care to their employees who dreamed about
building a business, who love the people that they work with,
and they were never able to find something that they could
afford or count on.
And if they did, they had to compromise below their
standards because I know Americans pretty well and they are
very generous people. And it is about people like Kiwi
Armstrong from Baton Rouge, and independent construction
worker. He works on big projects in both oil and gas onshore
and off. We have a lot of those people.
Because of the nature of his employment, he works on
several different projects throughout the course of his year
and he is not a member of a labor union. In 2012, he got nine
different W-2s. He works hard every day.
But the shifting nature of his employment means he cannot
get coverage through his employers. When he tried to get Blue
Cross Blue Shield through his last steady job, they denied him
because of type II diabetes.
Because of the Affordable Care Act, he can get coverage on
the health insurance marketplace. It will be there when he
needs it, and give him flexibility to work any project he wants
without worrying about whether it will provide coverage or not.
This is why we are having this hearing today. We are having
this hearing to make sure we are doing everything possible to
make sure that this Act works for small business owners and
their employees.
My goal for this hearing is it will not be occasion for
grandstanding but rather an opportunity to focus on the work
before which is fixing what is broken.
And to do that, we have to be honest with each other and
open to hear testimony about what is working, what is not
working; and when we find something that is not working, how it
can be fixed.
Some of our witnesses today are also small business owners
that have yet to realize the benefits that their colleagues in
states where these exchanges are working. Some of these
businesses are in states where the governor has basically said,
no, we are sorry, we do not want to help you. I am sorry that
you all are in those states but that is the situation.
I am going to add one thing for the record and turn it over
to my Ranking Member. There was a study that came out yesterday
that I want to put into the record, a tax study, I have it
here.
This study came out this week. The Supreme Court's ACA
decision and its hidden surprise for employers. This report is
about Medicaid expansion, and the key finding is, states that
do not expand Medicaid leave employers exposed to higher shared
responsibility of payments under the Affordable Care Act. The
associated cost to employers could total $876 million to $1.3
billion each year in the 22 states that have opposed or leaning
against or remain undecided. By way of example, the decision in
Texas to forgo Medicaid expansion may increase federal tax
penalties on Texas employers by $299 to $448.
Now, this is from a completely nonpartisan Jackson Hewitt,
I think they prepared tax returns. I do not think they are a
stakeholder group to anyone.
So, because of the decision that Governor Perry made, his
decision, not President Obama's, is going to cost his
businesses more.
Now, I am going to turn this over to Senator Risch. He can
have as much time as I did which I think is probably about 20
minutes, 25 minutes, and then we will go to, your statements
will be submitted to the record and then we are going to go
directly to our testimony. I thank all of my colleagues for
coming this morning.
OPENING STATEMENT OF HON. JAMES E. RISCH, RANKING MEMBER, AND A
U.S. SENATOR FROM IDAHO
Senator Risch. Well, thank you very much, Madam Chairman.
First of all, I commend you for holding this hearing, but
probably not for the reasons that you think. Certainly, when
you throw hundreds of billions of dollars against the wall,
something is going to stick; and to try to use the handful of
things that actually have worked in this 3,000 pages of
legislation and nobody knows how many pages of regulations and
say, okay, well, it is working because this small part is,
really is to ignore the overall problem.
Again, I commend you for your courage in holding this
hearing; and more importantly, Madam Chairman, I commend you
for your statement that you helped to design this system that
we have today.
I suspect that as we go forward trying to find people who
will admit to having had some part in this is going to be like
trying to find somebody that admitted voting for Richard Nixon.
This has been a catastrophic failure across America. And
you talked about the truth and you know, the American people,
they do not understand all the niceties and all the
complexities of health care and health care insurance and what
have you.
But they know when they have been lied to, and the polling
is incredibly strong, indicating that they believe that they
have been lied to. And once the American people believe they
have been intentionally lied to, it really causes difficulties
in trying to solve problems. This does not bode well as we go
forward.
You provided your list of successes and one of them was
Idaho. When I was Governor, I appointed the gentleman who now
sits as the Director of the Department of Health and Welfare.
My successor kept him on and he is a really good guy. He came
out of the insurance industry.
I am not exactly sure if you were boasting that Idaho is
one place where Obamacare is working. But I can tell you that
it is a disaster in Idaho. Perhaps it is not in Louisiana, but
it is a disaster in Idaho.
I know that you brought in some people from Kentucky to
talk about some of the good things. I believe that Kentucky is
working better than other places, although that is not a very
high bar.
I have got a couple of letters I want to put into the
record from insurers who are working in this area in Kentucky,
and I am just going to read parts of them as an indication of
what is actually happening in Kentucky.
This is from Houchens Insurance Group from Bowling Green,
Kentucky. This is written by their Executive Vice President.
He says, ``We are writing to you to explain what we are
seeing here in Kentucky and throughout other parts of the
country that Houchens Industries, Incorporated, and the
Houchens Insurance Group serves regarding our clients'
implementation of the Affordable Care Act.''
``While Houchens, with over 18,000 employees, is not a
small company, our insurance group, HIG, serves over 1000 small
businesses with their insurance needs throughout Kentucky and
the United States. The remainder of this letter lays out what
we are seeing. For an agency to represent its' customers
responsibly, we need to be able to share all options available.
At this point, Kentucky's Healthcare Connection, Kynect,
presents us with more challenges than solutions. To date we
have not enrolled any groups in the Small Business Health
Options Program, SHOP, primarily because of the confusion the
system has created. Business owners are anxious and frustrated
as to what they have to do in order to get pricing. Creating an
account within Kynect and then assigning an agent takes a
considerable amount of time and is not something they should
have to do while managing their business.''
He then goes on to list many more of the problems with
Kentucky's system.
The other letter comes from The Benefits Firm, another
company in Kentucky. And again, their Senior Vice President
writes, ``Kentucky has been viewed by other states and people
in Washington, D.C., as a state that most things have gone
correctly with the Health Insurance Market place. While it is
true that Kynect has been operating properly, especially
compared to the Federally Facilitated Marketplace, there are
still many unresolved problems. In particular, I would like to
address the SHOP exchange. Logistically and technologically, we
are not having the same success with the SHOP exchange as we
are with individuals in Kynect in Kentucky. This week, I have
reached out to numerous employee benefit brokers in Kentucky,
none of which have finished a SHOP exchange application. While
I do believe that the technical hindrance is part of the
problem, it is not the primary obstacle to the success of the
SHOP exchange. I firmly believe there are flaws to this system
that the current law cannot overcome. Numerous businesses that
I have worked with decided that with PPACA there are advantages
to their business through Kynect. However, the advantage to
their business is to drop their employer-sponsored health plan
and allow each of the individuals and families to enroll in
Kynect.''
And then he goes on and explains why that is a very good
financial decision for small businesses.
So, there is no doubt you are going to find some things
that happened here that are good. But, like I say, when you
throw these kinds of hundreds of billions of dollars at
something, you are bound to find that.
Lastly, I would like to focus on what has been something
that has really undermined the confidence of the people of
America in this. When the President stood up as many times as
he did, and particularly Democrat senators stood up as many
times as they did, looked in the camera and said, if you liked
your health care plan, you can keep it, those of us who
listened to that the first time said that that is impossible.
Where the government was going to lay out all of these new
requirements in the new health care plans, no plan would exist.
So, I do not know how the President of the United States
could stand up and say that, and then repeat it over and over
and over again, when his people had to tell him that the
policies no longer existed. Somebody should have said, ``Mr.
President, stop saying that. You are going to get hit over the
head with this.'' And of course now, the chickens have come
home to roost.
And that is where we are. You know, we tried to change
this. My good colleague, Senator Enzi, introduced Senate Joint
Resolution Number 39, and we had a vote on the Senate floor on
September 21, 2010.
And that resolution which, if passed, would have become the
law of the United States said, if you like your plan, you can
keep it. But we were not able to pass that were we, Senator
Enzi? There was a straight partyline vote with all Republicans
voting for Senator Enzi's bill saying just like the President
had promised and every Democrat voting against that promise.
It is really unfortunate that it has come to that. Well,
here we are again trying to apply lipstick to this pig; and no
matter how many times it is said, the American people are not
buying it.
The numbers are deteriorating every day as far as the
confidence of the American people--not only in what has
happened here, but particularly in going forward--what we are
going to do about this catastrophe.
And that is a problem that I think you and your colleagues
are going to have a very, very difficult time wrestling with.
But the good news is we are Americans and we are free.
We are going to have an election next November and the
Americans again are going to have a say in this. And everybody
is going to be able to stand up and say, look, I did this, I
helped design this system, I had my hands involved in this. So,
put me back there and see if I cannot do a little bit better
next time, and the American people are going to decide whether
or not that is enough.
And that is exactly as it should be in America. And, as
with all other issues we have had in America, even though this
is what someone would call a man-made disaster, we will get
through this. We are Americans. We know how to fix these
problems and we will do it.
With that, I yield back, Madam Chair.
Chair Landrieu. Thank you very much, Senator.
Let us begin on the panel with our first panelist, and then
I am going to call on Senator Heinrich to introduce the
gentleman from his State.
But let me start with Mr. William Nold, Deputy Executive
Director of the Office of Kentucky Health Benefit Exchange.
Then we have Mr. David Allen, President and CEO of David Allen
Enterprises. I am sorry. We are going to go in the order of Mr.
Nold, go ahead. I will come back and introduce everyone else.
Go ahead. Thank you.
STATEMENT OF WILLIAM NOLD, DEPUTY EXECUTIVE DIRECTOR, OFFICE OF
THE KENTUCKY HEALTH BENEFIT EXCHANGE, FRANKFORT, KY
Mr. Nold. Chairman Landrieu, Ranking Member Risch, and
members of the Committee, we really appreciate the
opportunity----
Chair Landrieu. You are going to have to speak into your
mic. Just lean into it. Thank you.
Mr. Nold. We appreciate the opportunity to come over here
to D.C. this morning and to share Kentucky's experience with
our exchange which we call, as Senator Risch said, we call it
kynect. It is a combined exchange in the sense that both our
SHOP and our individual, for administrative purposes, operates
under one name.
My name is William Nold, and as the Senator said, I am the
Deputy Executive Director of the Office of the Kentucky Health
Benefit Exchange. It is a long title and we have got a lot of
responsibilities. I have submitted a written statement and also
some other documents that I assume will be made part of the
record.
Chair Landrieu. We do. That will be part of the record and
you have four minutes and 10 seconds.
Mr. Nold. Yes, ma'am. My next note was time is limited. But
I think a little time should be spent to talk about the
landscape in Kentucky as it has existed for a number of years.
Our population is about 4.4 million. 640,000 of those
individuals are uninsured. Of grave concern to our governor,
however, is the health status of our State.
We are 44th in overall health status, 50th in smoking, 40th
in obesity, 41st in diabetes, 50th in cancer deaths, 49th in
heart disease, 43rd in cholesterol counts, 48th in heart
attacks.
You know, we began our implementation of this law
immediately after it was passed. But as you know, many of the
provisions in the law were related to insurance matters early
on and the exchange seemed like it was far off, year 2010, and
the exchanges really do not have to be operational until 2014.
But we began immediately to try to bring consensus among
all the stakeholders in Kentucky about what we were wanting to
do with this exchange when the time came. Everyone in our State
wanted us to do a state-based exchange, everyone.
I think Deb Moessner, who is the President of Anthem in
Kentucky, probably said it best. She said, ``If I am going to
be regulated, I want to be regulated across the Kentucky River,
not the Potomac River.''
And that kind of said it all, I think. Although a lot of
the stakeholders were opposed to this law, they realized that,
you know, at least until the Supreme Court would make its
decision that we were stuck with it. And it is a good thing
that we are stuck with it. That is the way we found it anyway.
So, of course, we continued to meet with Governor Beshear
along the way, making decisions about what we were going to do,
and so he wanted to wait until after the Supreme Court had
ruled to really dig into this and get moving on it and that is
what he did.
And so, we presented all the pros and cons to our governor
about what we should do or what we should not do, and he kind
of stopped us. He said look, he said, and he is a lawyer, he
had read the bill.
He said this bill provides a unique opportunity for
Kentucky to improve these health statistics. I want you to do
everything that you can do to use this bill, not let this bill
use me, but to use this bill to improve our health. And that
has been the charge that we have accepted and have gone with
ever since.
You know, my time is getting short here. I do want to share
with you, you know, we went live on October 1, down for a few
hours, not down, slowed up for a few hours. Got that all
straightened out and we have been running ever since and
helping people get enrolled, not only in our SHOP but also in
the individual market.
So, I guess the message from our governor is that he was
very strong in his opinion that the best way we could improve
the health of our State was to go the state-based exchange
route. And then also what we have done is that we have gotten
agents involved. Right now, 94 percent of the small insurance
policies in our State, small employer insurance policies, are
offered through agents.
Chair Landrieu. Try to wrap up please.
Mr. Nold. Yes, ma'am.
Well, to summarize, and again this is in particular with
regard to the SHOP, since we went live on October 1, we have
had 193 small businesses that have started applications to be
eligible for an employer coverage.
[The prepared statement of Mr. Nold follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chair Landrieu. I am sorry. I am going to have to stop you
there. We have so many people to testify, and I really
appreciate and you have a wonderful statement. We have put it
in the record. Thank you, Mr. Nold, but we are going to have to
go to our second panelist.
Senator.
OPENING STATEMENT OF HON. MARTIN HEINRICH, A U.S. SENATOR FROM
NEW MEXICO
Senator Heinrich. Thank you, Chair Landrieu for holding
this hearing on the rollout of the Affordable Care Act small
business exchanges.
With attention squarely focused on implementation
challenges at the national level, a deep understanding of how
our small businesses are fairing in securing meaningful,
affordable health insurance coverage for their employees is
timely and essential to the economic well-being of Americans.
Just an introduction, okay. Well, I am delighted and
honored to be here today to introduce one of our invited
panelists, Dr. Martin Hickey. He will describe to you in detail
the success of the New Mexico SHOP.
Dr. Hickey is not only a member New Mexico Health Insurance
Exchange Board but he is also the CEO of the New Mexico Health
Connections, a co-op, not-for-profit plan formed under the
Affordable Care Act to provide health insurance to small groups
and individuals in New Mexico.
He is also a general internist who first practiced on the
Navajo Nation, and he has dedicated himself to developing rural
health programs.
Over the past three decades, he built a distinguished
career in health systems administration and delivery system
reform across the country and we are fortunate to have him in
New Mexico.
I give you, Dr. Hickey.
Chair Landrieu. Thank you.
Dr. Hickey, please and you have five minutes.
STATEMENT OF MARTIN HICKEY, M.D., CEO, NEW MEXICO HEALTH
CONNECTIONS, ALBUQUERQUE, NM
Dr. Hickey. Chairman Landrieu, Ranking Member Risch, and
distinguished Senators, thank you for the opportunity to
testify today about the early success of the New Mexico small
business exchange.
New Mexico legislated a state-based exchange board in March
of just this year. The board consists of 13 highly
representative members of groups including small business,
consumers, Native Americans, Hispanics, physicians, hospitals,
health insurers.
Within five months, the board and it's very capable CEO and
team selected an experienced private exchange vendor, developed
a statewide plan for marketing, trained over 500 health care
guides, set the rules for an open market exchange, and
succeeded in launching a fully operational enrollment website,
Be Well New Mexico, on October 1.
In this time of national glitches and confusing rhetoric,
the board, our very supportive governor, Susanna Martinez, the
exchange health insurers, and all New Mexicans are very proud
of the early enrollment successes that I will detail.
You got a background on myself. I have been CEO and a
senior manager in insurance companies, medical groups,
hospitals. I have seen this business from every single side.
And what I am so proud of is that I have always dwelt to on
fixing access to care, and I can tell you that this board that
has come together from literally both sides of the aisle in New
Mexico, has come together passionately to assure access to
care.
New Mexico is 23 percent uninsured, second only to Texas,
has 200,000 uninsured and 118,000 of them are eligible for
financial assistance.
And the Board gets this. Only 47 percent of the population
has employer-sponsored insurance, the lowest in the Nation
which has an average of 58 percent.
Our State exchange is unique from most others and we call
it a hybrid. Because the exchange formed so late, we did not
have time to implement an individual exchange this year. We
were, however, able to procure a competitive contract with Get
Insured, an information technology company with seven years of
experience in building private exchanges.
Next month, they will begin work on implementing the
technology for an individual exchange which will be ready to
rollout for enrollment in October of 2014.
In the meantime, we have had to depend upon the federal
exchange, but Be Well New Mexico has a calculator, is
educational; and when the federal exchange becomes fully
operational, people will be informed.
The small business exchange is also unique in that it not
only offers employers a choice of plan but offers choice to
each of their employees as well.
The employer enters the site, selects a metal level and a
reference plan. The employer designates a percentage of
premiums that will be covered. That then creates a dollar
amount made available to the employee for premium support in
whatever plan the employee chooses.
Thus, the employees have a choice of any plan of any
carrier at that metal level at whatever cost. That is what is
so great about New Mexico health insurance exchange for small
businesses and their employees. Choice, choice, and choice.
You know what? Even better it works, and it is easy. I did
it for my family last week and it was like going down a water
slide. There is even a calculator to help an employee choose
the right plan based upon generalized use of health care in the
past.
I think the following quote from a small business in
Albuquerque, an attorney with four employees, sums it up best.
``I was very pleasantly surprised. I thought it was going
to be an administrative nightmare and it literally took me 15
minutes. They gave me a quote that would save me $1,000 over
what I was paying. I thought this was going to be an all-day
thing so I had a Diet Coke handy, was well rested and had a
good lunch, and it was almost disappointing that it was so
easy. I was blown away.''
So, to date, as you said, Senator, 1,143 small businesses
in our little State with a number of employees is essentially
propelled us to a potential, once all the enrollment finishes
up by the end of the month, of over 8,000 members which already
meets the goal that the board had set for the State, and we
still have got the rest of the year and all next year to go.
So, as I said, about 500 personal assistors and brokers are
very heavily involved as well.
The other thing you emphasized was cost, and basically I
will tell you that our superintendent estimates that the rates
for next year will be no more than five percent of what they
were this year, when the American Society of actuaries said it
would be a 34 percent increase. He also set up a very
competitive process. I know. I had to go through it.
So, New Mexico small employers now have a great opportunity
to cover their employees and do so with a sense of choice and
low rates and a system that works.
[The prepared statement of Dr. Hickey follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chair Landrieu. Thank you, Dr. Hickey. My only question is
are you available to come to Washington?
[Laughter.]
Chair Landrieu. All right. We will go now to Mr. David
Allen.
STATEMENT OF DAVID ALLEN, PRESIDENT AND CEO, DAVID ALLEN
ENTERPRISES, LLC, BOULDER, CO
Mr. Allen. Madam Chairperson, members of the Committee,
thank you for the opportunity to speak with you today about the
affects of the Affordable Care Act on my small business and our
experience with the Colorado State insurance exchange.
I am the owner and operator of Flatirons Practice
Management. We are an independent medical billing company in
Boulder, Colorado. We provide medical billing and practice
management services to several hundred health care providers in
eight states.
I currently employ 33 full-time personnel. Obviously, we
are well below the employer mandate threshold of 50 FTEs yet we
provide company-paid health insurance to our employees anyway
under a small-group plan and have for many years.
We do so because we can and we feel that it is the right
thing to do. I myself worked as an employee for other companies
before choosing self-employment and I relied on my employers
for access to health insurance.
Unfortunately, it has been increasingly hard for me to
continue to provide health insurance for my employees. Second
only to payroll, health insurance is our next largest expense.
Even with annual inflation rates in the one to two percent
range, our premiums have increased every year by 20 percent or
more.
As much as I wish I could simply pass this along to my
customers, they too are experiencing the same pressures to
manage rising expenses in their small businesses.
We have done some creative things over the years to reduce
the magnitude of the premium increases while maintaining the
integrity of our coverage and have been successful in
continuing to pay for 100 percent of the cost of the premiums
for our employees.
One such tactic was to select an insurance policy that
covers only generic pharmaceuticals. Anyone who requires a
pharmaceutical that is only available as a brand name product
has to purchase it out-of-pocket. As a result of the Affordable
Care Act, our carrier has discontinued this policy as it does
not meet the minimum standards as stipulated under the law. Due
to this one change, our premiums are now scheduled to increase
by 52.3 percent in January 2014.
Clearly, absorbing this expense in order to continue to
provide the same benefit to my employees is entirely
unrealistic. I will have no choice but to require my employees
to contribute substantially to the cost of their premiums. The
irony is that none of my employees currently take any brand
name prescriptions or expect to in the foreseeable future.
This law has turned what was a potential expense for my
employees into a guaranteed expense for my employees for
something they neither need nor want.
Since the Affordable Care Act is what caused this problem
for me, I decided to embrace it and turned to the state SHOP
insurance exchange in hopes that it would provide me with more
affordable and appealing options.
The first obstacle I encountered was that the website would
not allow me to create an account. After my fourth failed
attempt, I initiated an on-line chat with one of the exchange
support personnel and was told after close to an hour of
waiting that they were having technical difficulties with
creating accounts and I should try again later.
I did eventually create an account and download the census
template. I then began the frustrating experience of attempting
to upload the census. I tried unsuccessfully several times and
received nonsensical errors such as ``wrong file type'' when
the file I was attempting to upload was the very template that
I downloaded from the website.
After initiating my second on-line chat, it eventually came
out that my web-browser might be at fault. I find it
unfortunate that the website did not disclose any browser
limitations before I wasted yet another hour spinning my
wheels.
Upon switching browsers, I was able to get the website to
acknowledge the file that I was attempted to upload but it
ultimately rejected the file on the basis that the date of hire
field was not formatted correctly.
My third on-line chat resulted in validation that my data
was, in fact, formatted correctly and the website was again
experiencing technical difficulties.
Growing increasingly impatient, I resorted to having my
assistant manually type the information into the website. What
should have taken us minutes to complete instead took us hours.
Having finally uploaded our census, I received 34 insurance
plan options from which to choose. I found it challenging to
objectively compare and contrast them with our current plan and
its 2014 equivalent because we currently offer a tolerable $750
annual deductible to our employees and the lowest annual
deductible available to us under the state exchange is $1,500.
In short, the only way we can markedly reduce the cost of
our health insurance through the state exchange is to select a
policy with a dramatically higher deductible thus shifting the
financial burden from me to my employees.
Frankly, I could do this on my own without the assistance
of the exchange and have consciously chosen not to pursue high
deductible plans in the past because of the financial strain
that it would create for my employees. Instead, we opted to
make concessions that did not cause a financial strain such as
forgoing brand name pharmaceuticals.
On the surface, my company stands to benefit from the
Affordable Care Act on the basis that more people will consume
health care services provided by my clients thus resulting in
more business for me. But this theory hinges on the
affordability of the insurance available to the populace.
If my experience is any indication of the unintended
consequences of this law, it would appear that the Affordable
Care Act accomplished the polar opposite of what the law was
designed to do.
Thank you for your attention.
[The prepared statement of Mr. Allen follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chair Landrieu. Thank you. Our next witness is Mr. Drew
Greenblatt. Please identify your state and the kind of exchange
you have.
And Mr. Allen, just for the record, you are in Colorado
with a state-run exchange that is obviously, according to your
testimony, has some difficulties.
Mr. Greenblatt, what is your state and what kind of
exchange do you have?
Mr. Greenblatt. Maryland state and we have the SHOP
exchange but it is starting in April.
Chair Landrieu. And is it a federal exchange?
Mr. Greenblatt. I believe Maryland State is trying to do it
on its own but I am not positive.
Chair Landrieu. A state-run exchange?
Mr. Greenblatt. State run.
Chair Landrieu. Okay.
STATEMENT OF DREW GREENBLATT, OWNER, MARLIN STEEL WIRE
PRODUCTS, BALTIMORE, MD
Chair Landrieu. Chairwoman Landrieu, Ranking Member Risch,
and members of the U.S. Senate Committee on Small Business and
Entrepreneurship, thank you for the opportunity to testify
before you today.
I am Drew Greenblatt, and I am president and owner of
Marlin Steel Wire Products, based in Baltimore, Maryland.
Marlin is a manufacturer of wire baskets, wire forms and
precision sheet metal fabrications. We make it 100 percent in
the USA. We make it here and we ship it to 36 countries, and my
favorite is we export to China.
I am pleased to testify on behalf of the National
Association of Manufacturers. I am on the Executive Committee
of National Association of Manufacturers.
Since you are the Small Business Committee, I thought you
would be interested to know that our average member has 35
employees. 97 percent of us provide health insurance for our
employees. I mention this because the health and safety of our
workers is critical to manufacturers.
As a matter of fact, at Marlin, my company, we hit a huge
milestone two weeks ago. We have gone 1800 days without a lost
time accident, the thing that I am most proud of in running
this company.
This commitment to a safe workplace and the overall health
of our employees is critical. To me, offering high-quality
health care coverage is part of that mix. Finding this good
coverage is personally important to me because my family is in
the same plan as all of my employees. So, we are all in this
together.
Generally, I have come to expect my health insurance costs
to go up about 8 to 12 percent a year. I was startled, I was
shocked when our health insurance went up 49 percent this year.
I want to provide health insurance for my employees and
their families. We have been doing it for 15 years since I
bought the company. But now because it is so high, our plan, in
effect, is not viable because it is not affordable.
Ultimately, we were able to secure an alternative coverage
plan for my employees because our term ended December 1. My
premium, however, is still going up 10 percent. The plan I
purchased includes benefits I do not really need nor do my
employees want. This is key. The affordability, it has gone up.
The cost has gone up despite all the promises our costs would
go down.
If I told my clients we are raising your prices 49 percent,
they would laugh at me. 49 percent is out of control. Even if I
sat down and explained to them, listen you are going to have
some new features, they do not want to hear about it; and this
is the environment we are in.
I recently discovered the SHOP exchange of Maryland was
delayed until April. I am not sure what products it offers.
This is the kind of instability that is harmful to our economy.
See, we do not know how much our employees are going to
cost this year. We do not know how much they are going to cost
next year. How do I quote jobs against my competitors in China?
How can I win jobs that are three-year and five-year contracts
when I do not know how much my costs are going to be?
I know that the ACA law is not going away and any change is
going to have to happen through bipartisan legislation. I urge
legislators on both sides of the aisle to look at all the
health care laws that are not working and please fix them.
This will not get better with finger-pointing. This is not
going to get better with rhetoric or regrets over broken
promises. We need practical approaches right now.
Cost was and is and remains our main issue. Reducing the
cost of care makes a health care delivery system more efficient
and directly impacts the access to coverage.
Chair Landrieu. Please wrap up. I am sorry. You have 56
seconds.
Mr. Greenblatt. 56 seconds. Driving up the cost of coverage
and then providing subsidies to some just camouflages the
underlying problem. I may not be a supporter of the current
system but I would support changes that allow me to continue to
provide high quality health care to my employees at a
reasonable price.
Thank you for the opportunity to testify today.
[The prepared statement of Mr. Greenblatt follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chair Landrieu. Thank you, Mr. Greenblatt, for your
excellent testimony, and I am not seeing well with my cold but
you did a very good job and I thank you for focusing on fixing
it as opposed to the rhetoric associated with another proposal.
All right. Ms. Salter.
STATEMENT OF SHEILA A. SALTER, FOUNDER AND CEO, EARLY2SURG,
CHAPEL HILL, NC
Ms. Salter. Good morning, Madam Chair Landrieu, Ranking
Member Risch, and other distinguished members of the Committee.
I am honored to be here today and to share my negative impact
Obamacare has had on my small business and me.
My name is Sheila A. Salter and I am the sole proprietor of
early2surg. I reside in North Carolina and that is a state that
has defaulted to the federal exchange.
My company is a marketing/consulting business and the
mission is to improve or accelerate the development and
commercialization of surgical devices. My primary customers are
startup device companies.
I have been in health care for over 35 years. I am well
aware of the weaknesses and strengths within our health care
system. I do not think there is a person in this great country
of ours who does not wish for every individual to have
affordable health care.
Obamacare has negatively impacted my business and filled me
with uncertainty. I am my business. I planned for many years to
have my own business. I invested my time and my money to begin
early2surg this past February.
Now, because I have no employees, I am not eligible for
SHOP at this time but it would be a reality if and when I could
afford to expand. That is in my business plan.
Now, I would like to direct you to either the screen or you
have in front of you a chart that I submitted. You know, I was
shocked back in September when I received notice from Blue
Cross Blue Shield that my health care plan was going to be
canceled and it was going to be replaced by one that had been
chosen for me at the tune of $584 a month.
Now, if you look at the chart, we all need to be clear on
this. There is one health care plan. When I hear people talk
about, oh, you know, go to the exchanges, shop, shop, shop. You
have one plan. Okay. That plan includes the benefits listed in
the left-hand column.
Now, you can see Sheila's plan. Sheila's plan was the one
that I chose. I chose my services. I have done that all these
years. I chose those services, chose that deductible for $202 a
month.
Now, with Obamacare, I have to have those 10 essential
benefits. Now, I challenge anybody in this room to look at the
services that I selected for myself, noting that I am 61. I
know I do not look it and I have no children or history of
alcohol or drug abuse yet. Okay.
[Laughter.]
But does anybody here really think that I need all these
services on the left-hand column? I do not think so. To have
those choices removed from me, to have the government tell me,
Sheila, this is what is best for you, I really, I mean shocked
is not the word. It is unacceptable.
It is unacceptable now. It is going to be unacceptable 12
months from now and I am going to never accept for someone to
make my health care choice for me.
The only thing that exchanges do, and I have gone on the
exchanges, you have the selection of what is your deductible,
what is your co-pay, what you are going to do for prescription,
are you going to be in network or out of network.
But I do not care if you are a man or a woman, you are
going to have maternity and newborn care, you are going to have
pediatric services, and you are going to have services that you
may or may not need.
You know, that I think there should be a fix to it. I am
open to work with anyone to fix that.
So, how has it affected my business? Well, it has impacted
how am I going to establish my business, grow my business,
expand my business. All of that is going to be delayed.
And as you know, the website is not working exactly up to
par but I am concerned with the security of the website. You
know, if I have identity theft, if any of us have identity
theft, we all know what the consequence of that is. You know,
it could wipe me out to the point I would never recover.
So, you know, in our health care business we have a motto,
first do no harm. I want to see everybody have affordable
health care. That is a given but, you know, there are some
fixes that need to be made and I am happy to help with that.
Thank you again.
[The prepared statement of Ms. Salter follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chair Landrieu. Thank you very much.
Ms. Evans.
STATEMENT OF CONNIE EVANS, PRESIDENT AND CEO, ASSOCIATION FOR
ENTERPRISE OPPORTUNITY, ARLINGTON, VA
Ms. Evans. Good morning, Chair Landrieu, Ranking Member----
Chair Landrieu. Welcome back.
Ms. Evans. Thank you very much for having me back. Ranking
Member Risch and members of the Committee, my name is Connie
Evans and I am the president and CEO of the Association for
Enterprise Opportunity, AEO, the national member organization
and the voice of micro-business in the United States.
For more than 21 years, AEO and its more than 450 member
and partner network of non-profit lenders and business
development organizations have provided critical services,
access to capital and business counseling to under served
entrepreneurs in micro-businesses all across the country.
The importance of our topic today, health insurance and its
value to micro-businesses can not be overstated. Similarly, our
discussion of how certain elements of the Affordable Care Act
are changing the health care landscape could not be timelier.
Before we proceed to the topic, however, I would like to
give the Committee some statistics about micro-businesses,
those businesses with under five employees, that AEO released
just last week.
The report, Bigger Than You Think, the Economic Impact of
Micro-Business in the United States, tells a powerful story of
how the Nation's smallest businesses make an outsized
contribution to our economy.
There are 26 million micro-businesses in the United States
or about 92 percent of all businesses. The ripple effect of
direct, indirect, and induced economic activities of these
firms is quite impressive.
Total employment of more than 41 million Americans, total
economic impact of nearly $5 trillion, and total revenue
contributions of $135 billion to federal, state, and local
governments just in 2011.
In other words, although these main street businesses are
small, their combined impact is quite significant. Despite
advantages, however, many would-be entrepreneurs are reticent
to leave their jobs due to concerns about health care access.
For decades the inability to obtain health insurance has
been a barrier for those who are interested in starting a
business. It is well documented that access to health insurance
drives employee decisions.
Before the ACA removed pre-existing conditions as a barrier
to obtaining health insurance, employees often chose to stay
with employers even though they were unhappy with their
employment. The inability to access health insurance prevented
those who might have otherwise left their jobs and start
businesses.
As the Chair expressed this morning, indeed, the Robert
Wood Johnson Foundation does project that nearly 1.5 million
Americans, including 25,000 just in the Chair's home State of
Louisiana, will become self-employed thanks to insurance
reforms of the Affordable Care Act.
The entrepreneurs and micro-businesses that AEO members
serve have had the unfortunate choice of hamstringing their
revenues by providing health insurance to their employees or
losing their employees to larger companies who can provide that
insurance.
The ACA he reforms to the health insurance market, in our
opinion, were necessary and we hoped that these changes would
lead to better prices and more choices.
Our optimism is based largely on the exchanges, also
referred to as new marketplaces, which allow individuals or
small businesses to pool together statewide to obtain
insurance.
It is with profound disappointment that the federal rollout
of this program is in complete disarray. While most of the
government's attention has been focused on fixing the
individual exchange, and the small business exchange or SHOP
has been treated as a secondary concern.
We fear that implementation of the federally facilitated
SHOP will continue to suffer delays. Even though the law
requires individuals to obtain health insurance by March 2014,
many plans for individuals and businesses end at the end of
2013.
Decisions about coverage have to be made whether or not the
Federal Government can successfully rollout the exchanges. We
note that many individuals have received notices saying that
their coverage will be discontinued because that plan does not
comply with the ACA and the insurance companies have advised
these customers to shop in the exchanges but, of course, the
exchanges are not up and running so there is much frustration
over what to do in the meantime.
Do they just go without insurance and allow a gap in
coverage? What do they tell their employees?
In closing, our message is not based on any political
leaning or philosophical notion regarding health insurance. We
just want it to work. We urge the Congress and the
Administration to come together to make it work for the 26
million micro-businesses on the front lines of our economy.
Thank you for the opportunity to appear before you today
and I look forward to answering any questions the Committee may
have.
[The prepared statement of Ms. Evans follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chair Landrieu. Thank you very much and all of you for your
testimony. It was all helpful to helping us work forward to try
to fix this bill for the benefit of our small businesses and
individual contractors and self-employed.
I am going to take five minutes for questions. We will do a
five-minute round alternating--I am sorry, Mila. I am so sorry
to miss you. I will tell you this cold is really knocking me
for a loop.
Ms. Mila, go right ahead, Ms. Mila Kofman.
STATEMENT OF MILA KOFMAN, EXECUTIVE DIRECTOR, D.C. HEALTH
BENEFIT EXCHANGE AUTHORITY, WASHINGTON, DC
Ms. Kofman. Thank you. Thank you very much, Madam
Chairwoman Landrieu and thank you Ranking Member Senator Risch,
and members of the Committee.
My name is Mila Kofman and I am the Executive Director of
the District of Columbia's Health Benefit Exchange Authority,
otherwise known as DC Health Link.
Senator Landrieu, thank you so much for your leadership and
advocacy on behalf of the Nation's small businesses, both for
your home State and nationwide. It is truly I appreciated all
the work that you have done through the years for the small
business community.
It is my honor to be here today to share with you what we
have done here in the District of Columbia. The District was an
early leader with the Affordable Care Act implementation.
In March of 2012, Mayor Gray signed legislation creating
the DC Health Benefit Exchange Authority. We are a private-
public partnership with seven voting members who are small
business owners and experts in health insurance and health care
financing. We also have four government members who serve as
nonvoting.
In the District, it really did take a village to bring
success to date. We had a very strong partnership with all of
our agents, government agencies. We also had a very strong
partnership early on in our policy decisions. We had policy
workgroups, stakeholders who helped us make our policies and
set our priorities.
We had strong support from Mayor Gray and his entire
administration as well as the City Council and Congresswoman
Norton. We had the political support we needed to move forward.
We also had strong relationships in collaboration with the
business community here in the District, business associations
who represent the small business owners here. We also had
strong support from the Federal Government and especially Gary
Cohen and his entire team.
On October 1, we opened for business; and as you know, it
was reported that we were one of four states that opened on
time and did not go down and we have not gone down. We are
fully open for business and we welcome everyone, every
individual who lives in the District, every small business that
is in the District, and now I look forward to serving many of
you and your staff. It was a great pleasure to be designated as
a provider of health benefits to all of you.
I want to know that we had very strong partnerships with
our insurance industry. We have four major insurance companies
selling to small businesses through DC Health Link and I think
the best insurance companies in the Nation, Aetna, United,
CareFirst Blue Cross Blue Shield, and Kaiser Permanente.
They offer 267 different products to small businesses,
something for everyone. If you want zero deductible plan, it is
there. If you want an HSA high deductible health plan, it is
there, and everything in between at all price points.
Our carriers offer nationwide physician and provider
networks as well as very robust local and regional networks,
and we are very proud to offer full employer and employee
choice.
So, when a small business comes in, it is very easy to
create an account. DCHealthLink.com is our web address. When a
small business comes in, the small business decides how much to
contribute and what options to offer to employees.
For the first time, a small business can offer the types of
options that only in the past have existed for the large
employers. A small business can pick what to contribute and
pick a level of benefits like the gold level and employees have
112 different products to choose from.
The small business gets one invoice and we clearly say how
much the small business has to contribute and how much to
withhold from the paychecks of employees.
We also did not, we decided to take advantage of the
private market innovations so we did not negotiate rates or
benefits. We let the insurance companies compete and, boy, did
they compete.
After we made all of their premiums public, one company
came back in lowering their rates twice. Another company came
in and lowered their rates once and a third company came in and
lowered their rates and offered additional product.
So, we have seen real private market competition work. When
insurance companies compete, small businesses and individuals
benefit from that competition.
Chair Landrieu. Please try to wrap up please.
Ms. Kofman. Thank you, Madam Chair.
I just want to note and thank the D.C. Chamber of Commerce,
the Greater Washington Area Hispanic Chamber of Commerce, and
the Restaurant Association of the Metropolitan Washington area.
They had been our strong partners, and they are part of our
success.
I also want to note that the insurance brokers especially
of the National Association of Health Underwriters has also
been a critical part to our success.
I look forward to answering any questions you may have.
[The prepared statement of Ms. Kofman follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chair Landrieu. Thank you very much.
Before I start my line of questioning, I would like to
submit for the record a letter from the State of Minnesota, the
governor, Mark Dayton, who was a member of the Senate, and he
quotes, and I will put the rest in the record, Mnsure, which
is--sure's focus on small business as a result of our State's
decision to create a Minnesota-made exchange that best provides
for the needs of Minnesotans. Virtually every health care
organization, business organization or respected expert
strongly supported our state exchange in designing something
that would work for us.
And he could not be here. Minnesota could not testify, but
they have some excellent information. I would like to submit
that to the record with no objection.
Let me respond in my time first to my good friend and
Ranking Member's reference to my not supporting Senator Enzi's
amendment. Senator Enzi is here. He can most certainly explain
his amendment.
But I want to say for the record the reason that I voted
against it, and I remember the Democratic caucus, is because it
would have eliminate the cap on lifetime limits.
So, people could basically exceed their limits and I
thought that was wrong and it would also have knocked young
adults off their parents plans which is one of the strongest
features of the Affordable Care Act.
So, I would say Senator Enzi, of course, can defend himself
in his rebuttal. His bill which I voted against and many
Democrats did not keep the promise. It gutted in the bill.
Now, I have a bill that will actually keep the promise and
happily last week in the House of Representatives both
Republicans and Democrats overwhelmingly voted to support some
version of the Keep Your Promise Bill that would extend that
for a year. That would help you, Ms. Salter, because you could
actually keep your plan.
So, I wanted to put that in the record.
My first question would be to you, Ms. Salter. When did you
start your current business?
Ms. Salter. I just started my business this past February.
Chair Landrieu. Okay. So, you have been in business about
nine months.
Ms. Salter. Uh-huh.
Chair Landrieu. And you are just starting.
Now, I want to put into the record that not only if my bill
could pass, and I hope that you could support it or a version
of it, you could keep the plan that you want. But if you chose
to go to another plan, I want to put in the record, if you make
$27,500 a year in your business, assuming you have no
additional income, you will actually save $4,986 because of the
premium that you and your business will receive.
If you make $32,000 a year, your annual cost of your
premium, even in North Carolina where the State itself chose
not to help you by setting up their own exchange--they let it
be set up by the Federal Government--so, your State made that
decision, not to us--you would save, you would pay every year
$919 and you would save $4,257.
If your business makes $35,000 in your first year and it
goes up to 40 or 45,000, your premium, you would still save
$2,823. So, I am sorry that your exchange is not working as
well. That is what we are here to do. But there are some
benefits that hopefully you can come to appreciate as we move
forward.
Ms. Kofman, let me ask you. The D.C. exchange has gotten
some very good feedback, and as you said, both bipartisan,
Republican and Democrat. It is understood.
What would you say are the two most important features that
caused your exchange to be so beneficial to your small
businesses? Was it the way it was designed, was it the
cooperative nature, what was it and what would you recommend to
others trying honestly to fix this and to make it work for
their small businesses?
Ms. Kofman. Thank you, Madam Chair.
There were several elements that were critical to us. We
wanted to build the exchange from the ground up, community-
based effort, priorities, policies that we adopted were very
much stakeholder driven. The decisions we made reflect the
stakeholders who were involved in helping us build DC Health
Link.
The other critical part to us is the huge choices that are
available to small businesses, 267 different products,
everything, HMOs, PPOs, no deductible, high deductible,
everything from all of the major insurance companies.
And our value proposition is we want to make it as easy as
possible to small businesses to be able to offer coverage and
offer small businesses the kind of clout they never had in the
past, the clout that large employers have enjoyed for many,
many years.
That as well as the business community in the District
stepping up to the plate, putting politics aside and helping us
make hard decisions and helping us to build this DC Health Link
to provide services that small businesses need and want and are
desperate for in terms of affordability and predictability and
an opportunity to offer great options to their workers.
So, it took a village and the small business community was
definitely a strong part of it.
Chair Landrieu. Thank you so much.
Senator Risch.
Senator Risch. Madam Chairman, back to the Enzi proposal
again. I heard your explanation. You voted against it because
it eliminated lifetime caps that were required under Obamacare
and it eliminated the 26-year-old coverage which was required
under Obamacare. But this is exactly the point.
You did not promise us that if we politicians like your
policy, we are going to let you keep it. You said, if you like
your policy, you can keep it. There were a lot of people that
wanted to buy policies that cost less and that did not have
lifetime caps lifted, and there were a lot who wanted to buy
plans that did not cover their 26-year-old.
But you did not let us do that and that is the problem. The
American people want to be free. We are smart people. We can
make our own decisions. We do not need the Government telling
us what we have to have. And that is the biggest complaint I
get from Idahoans, from Americans, saying why are the
politicians in Washington, D.C., constantly telling us what we
should do for ourselves.
And that is the basic problem with all of this. Whenever
you try to socialize an industry or nationalize an industry
like has been done here, it has never worked. It has been tried
in every communist country in the world. It has been tried in
all kinds of socialist countries, and it never works, and it is
not going to work here.
Well, let me ask a couple of questions. First of all, Mr.
Nold, I am told that there have been 150,000 small group plans
that have been canceled in your state. Is that true?
Mr. Nold. Sir, I am not familiar with the number there. At
the Department of Insurance is the agency that handles the
mechanisms for that. I will be glad to provide that information
to you.
Senator Risch. Well, I have got it. They said there are
150,000 small group plans that have been canceled. On the other
side of the ledger through November 8th, 309 have signed up
again. That is a big problem it seems to me. We have 150,000
canceled and 309 signed up.
Mr. Nold. Certainly with the small group, it is to note
that the open enrollment period that affects individuals is not
the same with small groups. There is a continuous open
enrollment period available to small groups. They can sign up
anytime during the year.
Senator Risch. Got it.
Ms. Kofman, first of all, let me say that it is really
encouraging to hear that you were one of five, did you say,
that made the rollout work October 1. Is that what you said?
Ms. Kofman. In the morning of October 1, Bloomberg news was
reporting we were one of four jurisdictions----
Senator Risch. Four.
Ms. Kofman [continuing]. That went live without a glitch
that morning.
Senator Risch. That is really good to hear that they were
working. People were able to sign up. They were able to get on
and do what they wanted to do. That is a really, really good
thing.
What is the population of the District?
Ms. Kofman. We are a small population jurisdiction, about
640,000.
Senator Risch. I am told that in the first month with you
up and running, no glitches, everything is working well and
with that kind of a population, that you had only five
enrollees in the first month. Is that true?
Ms. Kofman. No, that is not true.
Senator Risch. What is the number?
Ms. Kofman. I can provide your office with the exact
numbers. We did issue the most recent numbers as of November
13. We had close to 700 employer accounts created. In terms of
individuals who completed their applications both for premium
reductions and full premiums, we were at about 1350 for full-
price applications and close to 2000 for reduced price. Each
application could be a family of 10. We only count
applications.
In terms of account holders who selected a plan, over 1100
account holders selected a health plan and 565 account holders
said they wanted to be invoiced to pay.
Now, they are not required to pay until December 15. So, I
just want to make sure that people who are residents of the
District are reminded of that. We are not asking for people to
pay early. If they want coverage to be effective January 1,
they do have to make their payment by December 15.
Senator Risch. So, by my calculation then, a little under
one percent of the population in the District signed up. Would
that be fair?
Ms. Kofman. I can provide you better numbers. Right now
folks who are shopping and making decisions, there is a lot of
activity through DCHealthLink.com.
I am encouraging both small businesses and individual
shoppers to take their time. Selecting health insurance is not
an easy decision and if you are not working with a broker who
can help you through it, you really do have to take your time.
I can tell you as a former insurance regulator myself,
insurance is very complicated. Consumers who get a 150-page
document which is their insurance contract which has the
exclusions and what is included is very complicated. So,
although we have made it much easier through our webpage to
shop and compare apples to apples, we provide four-page
coverage summaries that make it much easier than before to
shop. It is still not a quick decision and we encourage
everyone to take their time.
Chair Landrieu. Thank you, Ms. Kofman.
Senator Booker, and let me welcome you to this Committee
and welcome you to the United States Senate. I look forward to
your leadership. You have already been a champion of small
business and you are just a perfect person to join us in our
effort to help them.
Senator Booker. Thank you very much, Chairwoman. I want to
thank you and I want to thank the Ranking Member.
These are the things you need to teach the new guy, how to
turn on your microphone.
But I want to thank the Chair and I want to thank the
Ranking Member both who took times out of your busy schedule to
sit and meet with me and help me get along my way.
This is such an important issue for the State of New Jersey
that I am very grateful to have the opportunity. I want to
thank all the panelists. They have been informative. I wish we
had more time and I look forward to reading more of your
testimony that was submitted into the record.
Mr. Greenblatt, first of all, I appreciate your Jersey
connection, a guy who vacations in Jersey, and you have some
Jersey boy aura sp to you.
[Laughter.]
I want to say to you, first and foremost, as the geologists
say, you rock. And you rock not because of your Jersey
connection because I feel one of a kinship with you, both you
and I in the last month have come down to Washington. You get
to go home I think; I am going to stick it out here and battle
it out.
But you deal with pragmatism and I have had to deal with
it. I cut 25 percent of my employees as a mayor. One of the
reasons I had to cut so much is because health costs were going
up so much, my taxpayers could not afford it.
I had to balance the budget for every year. So do you. And
the challenge that you have which I have seen working with
local manufacturers in my city that I wanted to expand is that
you said you export products to China. Right?
Mr. Greenblatt. Yes.
Senator Booker. You are competing globally, right?
Mr. Greenblatt. Absolutely.
Senator Booker. I would like you a lot and when you compete
globally, you are competing against countries in Europe and
Asia and across the globe, right?
Mr. Greenblatt. Absolutely. Right.
Senator Booker. And many of those countries have different
health care systems and most of those countries, most of our
competitor Nation's have much lower health care costs, right?
Mr. Greenblatt. Absolutely. This is a challenge for us.
Take Canada, their health insurance is included, is part of the
system but their taxes are 15 percent. Our taxes are 40
something percent.
Senator Booker. God bless you.
Mr. Greenblatt. This makes it challenging to compete with
Canada.
Senator Booker. I want to compete with Canada in every way
except for Toronto, their Mayor, they have challenges there.
[Laughter.]
So, my point to you is that your pragmatism I love because
this is not about politics, it is not about the pugilism that
is profoundly prodigious sp in Washington. It is about solving
problems, lowering costs, giving access; and small business
people like you want to compete with the big boys. Right?
Mr. Greenblatt. Absolutely.
Senator Booker. And what I see in my city is many folks
have a hard time keeping employees who could easily go to other
companies who have better health insurance plans.
In fact, you probably know people that will go to a company
and get less salary for better health insurance. Is that not
correct?
Mr. Greenblatt. I think that is one of our positive
attributes that we have such a good plan.
Senator Booker. Right. And so the key here, and the goal
here, is to make sure that we take this variable which has made
small businesses get so crushed in the past that it helps them
be more competitive, not only in keeping employees locally but
also competing against other countries that have lower health
care costs, call it socialism or whatever you want, they have
lower health care costs and you are competing against them
because you internalize those costs and many of those companies
do not. Right?
Mr. Greenblatt. You are right.
Senator Booker. So, that is the pragmatism. We are not here
to score political points. I do not care about in the next
election. I care about solving the problems. And when you look
at polls, they might not like politicians but most people are
saying right now, fix the dagnab thing which you are saying.
Right?
Mr. Greenblatt. Absolutely.
Senator Booker. And so, Mr. Hickey, who has no New Jersey
connection.
Dr. Hickey. Actually I do.
[Laughter.]
Senator Booker. You do. In my last 90 seconds, sir, would
you please, you are well down the field. You have a functioning
exchange. You heard the good Jersey boy, Mr. Greenblatt, and
Mr. Allen's problems.
Could you please tell us what the future could look like
for them and how to solve the very real problems they brought
up?
Dr. Hickey. Number one, put together an exchange board that
is from both sides of the aisle but, as you say, they care
about the people of New Jersey. Our board has people----
Senator Booker. I am sorry to interrupt you, sir. I do not
know if you know about my governor. He is a very quiet, soft-
spoken not to many people know who he is.
[Laughter.]
But he did not participate in the exchanges. We have one of
the best local insurance-based knowledge there is and we did
not engage in that in New Jersey. We left it up to the Federal
Government. So we are way behind you in Kentucky, not a place
that we like to be in New Jersey. But continue. Or New Mexico.
Dr. Hickey. Yes. And that board being made up of people
even though they were vitriolic against the ACA. Once they got
on that board, they said we have an obligation, a fiduciary
duty to the people of New Mexico, and we are going to make this
work.
Senator Booker. Right and left coming together.
Dr. Hickey. Right. And we all came together. We have a
great Chairman. He is also a doctor. We all came together and
we met and we met and we met and resolved the issues. We hired
an excellent CEO and we hired a company, a previous private
exchange vendor, a SHOP in a box is what we call it, and it
already worked and we knew it would work.
Senator Booker. My time has expired but we do not have
time. People are hurting right now. We have got to fix this
before the next election and I appreciate you showing us the
way forward.
Chair Landrieu. Thank you very much, Dr. Hickey.
Senator Enzi.
Senator Enzi. Thank you, Madam Chairman.
I had not anticipated getting into my Congressional Review
Act. But since it has been brought up several times, I will.
One of the reason that it included some things that you
would prefer not to have in it is that when the Federal
Register is published and says that there is going to be this
huge cost of people losing their insurance even though the
President has promised that if they like their insurance they
can keep it, your choice is not to pick from the things that
are in there.
You have to reverse the whole regulation. The whole
regulation would have made it possible for people to keep their
insurance if they liked it.
So, you also have a very limited time to be able to bring
up a Congressional Review Act and have that kind of a forced
eight-hour debate and then up or down vote on a regulation. And
I took advantage of that window.
After that window closes, the only people that can make a
difference would be through the majority leader which means
that the majority side could have brought up things that would
have left out the one or two things that were in that
regulation that they did not like and they could have made it
so that people could keep their insurance if they liked it
provided it did not have those two things.
That is not how it works and there has not been any effort
in the meantime to do that. Now that it has been exposed, there
is a tremendous effort and interest, and Senator Johnson has a
bill that would comply with what I think the Chairman said
would be acceptable to go ahead and fix it so that people who
like their insurance can keep it, although it should have been
done three years ago so that the insurance companies would have
had the opportunity to adjust to the time, to have their
actuarial stuff together for this particular time and I think
it would have helped out businesses.
There are actually three changes that I would like to make
in Obamacare; and if we made those three changes, it would make
more of a difference in jobs and the economy than the stimulus
package did.
One of those would be to change those hours for part-time
from 30 to 40, and that is kind of the standard by the Small
Business Administration, and this is the Small Business
Committee. So, I would hope that we would do that.
I had a 10-step plan for fixing health insurance before the
President ever became a Senator, and one of the things in that
was small business health plans, and we had an opportunity to
do that that would allow small businesses to group together
through their association, any association, across state lines,
nationwide, so they would have a big enough group that they
could effectively negotiate with any insurance company.
There is another proposal that would have allowed them to
self-insure on those big groups. Those would have provided a
lot of advantages for small business. Those are not available.
Small business owners in Wyoming are asking me what can be
done. Wyoming did not do an exchange. It is the least populated
state in the Nation. It is less populated than the District of
Columbia, and we have a lot of miles between places, and we
have extremely small towns, and we only have two insurance
companies that are interested in serving there.
Under prescription part D, we only had two companies
providing prescriptions until we did prescription part D. And
one of the things that surprised us, suddenly 48 companies
wanted the business in Wyoming even though it was a small
populated state.
What was the effect? Before the law even went into effect,
it dropped prices by 25 percent and gave people choices. We
could have had that same thing here but we do not.
So, I want to thank you all for the testimony that you had.
I had some pretty specific questions that I would ask just
quickly.
Mr. Allen, you mentioned that drugs cost 52 percent more
because of the name brand requirement. Could you expand on that
just a little more?
Mr. Allen. Yes. So, the plan that we have presently covers
only generic drugs, and the difference in premiums to go to the
new policy that includes the brand-name drugs, the difference
in the premium is 52.3 percent.
Senator Enzi. I think you said that none of your employees
were using brand-name drugs?
Mr. Allen. That is correct. In preparation for my testimony
today, I did a poll among my employees and not one single
person is presently taking or has any plans to take any
pharmaceuticals that are only available as a brand-name
product.
Senator Enzi. Thank you.
I think there are a number of great examples there, and I
appreciated Mr. Greenblatt's comments about his sales to China
and how he bids those three or five years in advance, and
sometimes he could not use a little bit of stability in what
his prices are going to be, and he is not getting that under
the exchange.
I thank the Chair.
Chair Landrieu. And I thank the Senator from Wyoming.
Senator Shaheen, who also comes from a small State, just to
put for the record as the Senator knows, there are 576,000
people in Wyoming less than in the District of Columbia. One
chose the exchange, one chose not.
Senator.
Senator Shaheen. Thank you very much, Chair Landrieu and
Ranking Member Risch for holding the hearing. Thank you all for
being here. I am sorry I missed your spoken testimony this
morning but I do think it is very important for all of us to
hear from small businesses.
In New Hampshire, 96 percent of our employers are small
businesses. It is a brilliant foundation of our economy, and
the frustrations that you have shared are ones that I think
everybody on this panel appreciates and shares in terms of how
to make this law work and what we can do better.
You know, one of the biggest concerns that I have heard
from New Hampshire small businesses is about the cost of health
care, and Mr. Greenblatt, you and Senator Booker engaged in a
back and forth on that this morning.
But small businesses currently in New Hampshire are paying
18 percent more than large businesses because of administrative
costs. So, finding a way to address the challenges that you
face is going to be critical.
And you know, looking at what we can do to fix this
legislation I think is very important. In that vein, I have all
offered a bill that would delay open enrollment in the
individual market because that is the immediate problem that we
are facing in New Hampshire, and I did that because we want to
make sure that people have time to enroll.
Now, fortunately with the SHOP exchanges, that is an
ongoing opportunity. But New Hampshire like Wyoming, like a
number of other states, also has not chosen to do a state to
exchange; and so we are very much struggling with what is
happening at the federal level.
I wonder for Mr. Nold and Ms. Kofman as you have
participated in state exchanges that are working, if you could
talk about the reaction of those businesses that are enrolled
in the SHOP exchanges in the District of Columbia and in
Kentucky and how they are feeling at this point about the
product that they are getting.
Mr. Nold, maybe you would go first.
Mr. Nold. Sure. As you are aware, the enrollment process
will in the small-group exchange, the SHOP exchange, is really
a two-step process.
The first step is the employer themselves will come to the
exchange and shop and try to determine which plans they want to
offer to their employees. Once they go through that process and
pick the plans that they want to offer, then the employees are
given a 30-day open enrollment opportunity to go on line and
pick the one they want.
So, it takes a little longer in the SHOP to really get to
the point where you actually are enrolling. So, that process
has to be completed. That is, the open enrollment period for
the employees has to be completed.
We have a participation requirements in Kentucky that says
that 75 percent of the employees have to participate. If they
do not, then the employer, so that takes time.
We have gotten to the point where now employers have
selected plans and the open enrollment period is ongoing where
employees can come in and choose.
So, what I am trying to say is that it is difficult to say
how that is all going to happen. It is again predicting the
future. So, but we are very, very encouraged about the numbers.
I mean, we have had over 93 employers that have gotten to the
point where their employees are now picking plans.
Senator Shaheen. Great. Thank you. Ms. Kofman.
Ms. Kofman. Thank you. I will just share with you a theme
small businesses have shared with me of their experience. So,
one small business is growing and they never offered coverage
in the past. So, this is the first time they can offer coverage
to their workers and themselves because if the workers are not
covered it is likely the owner is not covered either. So, one
small business was very excited about that.
Another small business I spoke to on October 1 said, the
owners said, based on his quick review of all the products he
will save 12 percent, at least 12 percent. At that point in
time he has not made a decision of the products he wanted to
offer.
And another small business I spoke to said they were very
happy not to be paternalistic any longer. They can just decide
how much to contribute and let their employees decide which HMO
or PPO or insurance company to select.
So, anecdotally, small businesses that I have talked to
have been very, very pleased with the product offerings, the
range of offerings, and the price is.
Senator Shaheen. Thank you.
Thank you, Madam Chair.
Chair Landrieu. Thank you very much.
Senator Johnson, thank you for joining us.
Senator Johnson. Thank you, Madam Chair.
In solving any problem, in negotiation, the first thing you
want to do is figure out what you can agree on. There are a
couple of things I can agree right off the bat with you, Madam
Chair.
You know, we need to fix this bill, and there is a lot to
fix. Secondly, it sounds certainly in your opening statement
that you are giving states a lot of credit and we are having
real problems on the federal level.
I agree. The federal level I do not think has any
capability of doing this. The states are far better, a far
better place to start solving these problems.
So, I want to start my first question with Mr. Nold. Did
Kentucky need a 1600-page bill with 20,000 plus pages of
regulations to do this small business exchange?
Mr. Nold. Uh----
Senator Johnson. Quickly.
[Laughter.]
You could have done it on your own. Could you not?
Mr. Nold. We tried to do it back in 1990, the early 1990s
and it----
Senator Johnson. You did not need a federal bill. Did you?
Doctor Hickey, did you really need a 1600-page bill and
30,000 pages, 20 or 30,000 pages of regulations, to do this in
New Mexico?
Dr. Hickey. That set up some of the rules and regulations,
Senator, but we had a 60-page bill creating the exchange.
Senator Johnson. So, you could have done it far easier. We
did not need a federal solution. We did not need to take over
one sixth of our economy to start doing these things.
So, again I will stipulate. Another thing we agree on. I
think a small business exchange is a good idea. It is a sharing
of the risk pool.
Dr. Hickey. Right.
Senator Johnson. It is a good idea.
Dr. Hickey. Right, right. And we had a very supportive
Republican governor doing it and a Democratic legislature and
they compromised on this bill and we moved right out of the
gate. I think states are a great place to start.
Senator Johnson. To paraphrase Senator Booker, this is not
about politics. It should not be. It is really about solutions.
I would say it is really about recognizing reality. It is about
telling the truth.
In fact, the matter is the American people have not been
told the truth. Let us talk about cost. You know, we were
guaranteed that if you pass this law, the cost for an average
family plan would be reduced by $2500 per year.
Ms. Salter, by the way, did a great job here. I want to ask
you, because you have the exact experience, if you have a
health care plan and that add, we will say, ambulatory patient
services, is that going to increase the cost or decrease it?
Ms. Salter. If I have one now?
Senator Johnson. Yeah.
Ms. Salter. It will increase.
Senator Johnson. Doctor Hickey, if you add emergency
hospital services to that, is that going to increase the cost
or decrease it?
Dr. Hickey. They are automatically covered.
Senator Johnson. But again, in other words, if you add
coverages to a health insurance plan, is that going to increase
the cost or decrease the cost?
Dr. Hickey. That generally will increase the cost but the
state, again coming back to the state, the state had the
authority under the federal bill to decide what essential
benefits were going to be covered.
Senator Johnson. But again, I am just talking about the
truth of what promises were made here and we were promised that
the health care law would actually decrease costs but all of
the added costs, all the added coverages, all the added
mandates have increased costs. Correct?
Dr. Hickey. Sir, if I could point out to you that 25
percent of the premiums that you pay today goes to cover the
uninsured and the services they get from wherever they get them
from.
So, in fact, I think, is where the opportunity, once those
people get covered, the insurance companies will have a major
opportunity----
Senator Johnson. Right, that is ----
Dr. Hickey [continuing]. To lower the cost.
Chair Landrieu. Please let him answer.
Senator Johnson. But that is really not----
Chair Landrieu. Please let him answer.
Senator Johnson [continuing]. What the business people are
experiencing.
Chair Landrieu. Senator Johnson, please let him answer.
Go ahead.
Senator Johnson. Well, I have such limited time here so I
have got to move quickly.
I do want to talk about the other totally broken promise.
Fraud, and it is massive fraud. It was a political deception
that if you like your health care plan you could keep it. While
I do appreciate that Senator Enzi pointed that out if you like
your health plan you can keep it which again I appreciate Madam
Chair's, her attempt, but her bill only covers those
individuals who participate in the individual market where we
are going to see, I believe, because of those increase in cost,
49 percent, 52 percent increase in insurance premiums, we are
going to see a massive loss of employer-sponsored coverage
coming next year.
So, I guess I would certainly encourage Madam Chair to take
a look at my bill which actually is all inclusive, and it is
not quite so onerous on forcing insurance companies to do what
they may not be able to do because of state regulators.
So, I would really like you to take a look at your law
versus my law and I would like to start working with you folks
to actually start giving Americans in the freedom, allow them
to keep their ability to choose the types of health care plans
that they can afford, that they actually want.
So, thank you, Madam Chairman.
Chair Landrieu. Thank you. I will look forward to doing
that. Your bill, of course, guts be Affordable Care Act. Mine
fixes it. We will talk about that later.
Senator Vitter.
Senator Vitter. Thank you, Madam Chairman.
First of all, I wanted to give a quick update. At one of
our last hearings about Obamacare and small business, we had a
very compelling witness from Louisiana, Larry Katz, the owner
of Dot's Diner. And unfortunately--I have followed up with him
in response to his testimony, and unfortunately, it has gone
from bad to worse due to he was forced to cancel policies he
provided before in particular so that many of his employees
could still be eligible for a subsidy on the exchange.
Now, he followed the law by giving 90-day notice and he
also asked and hired a consultant to come in to help his
employees with the Obamacare exchange application.
However, all the website problems have pretty much shut
down their ability to purchase insurance on the federal
exchange for now. The consultant next coming in December 1st
which gives them two weeks to enroll.
If his employees go to the individual market, they will see
an average premium increase of 54 percent; and if they cannot
get plans there on the exchange, there will be 30 individuals
who were previously happy with their employer-based coverage
who will not have any coverage. So, that is a very real-world
but unfortunate update.
In terms of questions, Ms. Kofman, I wanted to ask you a
few particularly based on Congress and congressional staff
going to the D.C. SHOP exchange under the special carveout rule
for Congress.
Are there more than 50 members of Congress or employees
that will procure insurance on this D.C. SHOP exchange?
Ms. Kofman. I am sorry. All of the enrollment for employers
is protected information, and I am not able to share with you
any specific details about the Congressional enrollment.
Senator Vitter. Based on the size of Congress, 535 members
and the size of their employee base, would you expect that
number to be more than 50?
Ms. Kofman. More than 50 people enrolling?
Senator Vitter. Yes.
Ms. Kofman. Oh, yes, I am sorry. I did not understand your
question. That is correct. The provision under the Affordable
Care Act that speaks about Congressional enrollment essentially
overrides the small business size and that is how you are able
to avail yourself of the same choices that small businesses
have in the District.
Senator Vitter. Correct. Is there any other large employer,
meaning over 50, who gets the same treatment and gets to go to
that exchange?
Ms. Kofman. So, At this time, the Congressional provision--
the Congressional prevision only applies to Congress. In 2016--
--
Senator Vitter. Forget about the Congressional provision.
Right now, for 2013, 2014, going into 2014 is there any
other large employer who has the opportunity to go to the D.C.
SHOP exchange or whose employees can?
Ms. Kofman. In the city, we made a decision to limit the
size of the small business market to up to 50 workers.
Senator Vitter. So, Congress is the only large employer who
gets that special treatment?
Ms. Kofman. It is a function of one of the provisions in
the Affordable Care Act.
Senator Vitter. Okay. And is there any large employer who
gets this huge subsidy well above the normal income-based
subsidies of Obamacare in that exchange?
Ms. Kofman. So, small businesses in the District, they
also, many contribute 100 percent to the premium just as you
have heard from other witnesses. Small businesses, especially
nonprofits, in the District provide platinum plus level of
coverage to their workers and contribute 100 percent. Many
contribute 100 percent toward the premiums so they do better
than Congress.
Senator Vitter. But again, Obamacare has a clear
distinction between under 50 and over 50. So, my question was.
Are there any other large employers, which means over 50, who
go to an exchange, go to the D.C. SHOP exchange at all or go
there and contribute this big subsidy?
Ms. Kofman. So, in the District, we do not allow larger
employers to come in. In 2016, larger employers up to 100 can
come in starting in 2016, and then it will be a policy decision
for the District whether or not to expand the DC Health Link to
larger-sized employers.
Senator Vitter. What, in your opinion, justifies this
completely different and better treatment for Congress?
Ms. Kofman. Congress gets the same treatment as all small
businesses in the District. You have the same----
Senator Vitter. Congress is not a small business. It is not
under 50 employees.
Ms. Kofman. So, by going through DC Health Link, you get
access to everything that small businesses in the District get.
By choice----
Senator Vitter. I understand.
Chair Landrieu. Your time is up.
Senator Vitter. But my question is. What in your opinion
justifies this completely different----
Chair Landrieu. Senator Vitter, I am very sorry. Your time
is up so let me answer that question.
The Federal Government is not a small business. The Federal
Government is a large business and the Federal Government,
Congress, employees, postal workers as you know very well
because you have studied this issue very well is under the same
as large businesses in America; and that insurance premium is
shared between the worker and the government, their employer.
Now, that is not the subject of this hearing. We can talk
about it. We have debated it. You have had ample time to debate
that on the floor. So, if you do not mind that, let us take
that debate to the floor.
Senator Vitter. Madam Chair, can I briefly the respond?
Chair Landrieu. No, you may not and your time----
Senator Vitter. Can I briefly respond?
Chair Landrieu. I will give you 20 seconds to respond
because you have a lot of time on the floor on this issue and
Ms. Kofman does not.
Senator Vitter. Well, I certainly did not have a 25-minute
opening statement here so I would just like to briefly respond.
Chair Landrieu. You have plenty time on the floor. You can
respond. Ms. Kofman does not have the time.
Senator Vitter. You are right that Congress is not a small
business. It is a large employer and it is treated completely
differently than any other large employer and far better by
being able to go to this exchange, the only large employer that
is allowed to do that. And by being able to get a huge subsidy,
only large employer that is able to do that for this period or
any time soon.
Chair Landrieu. And if your bill passes, the only large
employer that will not be able to get insurance would be you
and your staff.
Thank you all very, very much. I really appreciate it. It
has been an excellent hearing. We are going to go to the second
panel.
[Pause.]
Excuse me. Welcome back. Thank you all so much and let us
begin with our second panel. If you will just briefly introduce
yourself.
In light of the time, we would like to extend this for
another 30 minutes. It is very, very important.
Most of the members have left accept Senator Vitter and
myself. So, we will stay here and debate this or get testimony
on the record.
If you would proceed please--I am sorry. Senator Booker is
also here.
If you would introduce yourself briefly and begin. Ms.
Borzi.
STATEMENT OF HON. PHYLLIS C. BORZI, ASSISTANT SECRETARY,
EMPLOYEE BENEFITS SECURITY ADMINISTRATION, U.S. DEPARTMENT OF
LABOR, WASHINGTON, DC
Ms. Borzi. Thank you, Madam Chair. Good morning, or I guess
it is afternoon by now, to you, Chair Landrieu.
Chair Landrieu. Can you speak into your mic please? You
have got to lean and I am very sorry. It is uncomfortable but
you have to lean forward.
Ms. Borzi. Thank you very much for inviting me here this
morning. I am Phyllis Borzi. I am the Assistant Secretary of
Labor for the Employee Benefits Security Administration and I
am here today to discuss the Department of Labor's activities
related to communicating with small business about the
opportunities and requirements that exist under the Affordable
Care Act.
The department's Employee Benefits Security Administration
or EBSA is committed to helping small businesses and employees
understand and benefit from the law.
The health insurance market place premium tax credits and
notices to employees of coverage options available through the
marketplace are all designed to expand access to affordable
health coverage.
For small businesses, the small business health options
program, the SHOP exchange, offers one-stop shopping to enable
small businesses to find and compare private health insurance
options. The SHOP is administered by HHS and the states.
The marketplaces will help individuals and small businesses
evaluate their private health insurance options for coverage
effective January 1, 2014. The new Fair Labor Standards Act
Section 18B notice gives employees information about coverage
options available through the marketplace and, if applicable,
information about their employer-offered coverage.
Employers covered by the FLSA are required to provide this
key notice of coverage options to each employee no later than
October 1, 2013. For all new employees hired after that date,
employers have to provide the notice within 14 days of the
employee's start date.
Now, although there is a statutory duty on employers to
provide this notice, there is no fine or penalty under the
statute for failing to do so.
On May 2, the department issued Technical Release 2013-2
providing guidance on the coverage options notice, as well as
model notices. We are increasingly using model notices in an
effort to be helpful to small businesses because a model notice
makes the notice requirement far less burdensome.
Without a model notice, employers need to figure out for
themselves how to comply with statutory requirements or hire
somebody to help them.
EBSA worked with HHS and our other sister agencies to
develop the model notices. We also received feedback from
employers. The model notice serves as a compliance assistance
tool for employers but employers are not compelled to use these
notices.
There is one model notice for employers who offer health
plans to their employees and a second one for employers who do
not offer health plans. These notices are posted on our website
in multiple formats for easier use by employers and are also
available in Spanish.
The two model notices make the process for shopping for
health care coverage easier for both employers and employees.
For example, the model notice for employers who offer health
care coverage deliberately contains more information than the
minimum statutory requirements for this notice. Why? Because
then employees will have more information about their coverage
options inside and outside of the marketplace.
This also creates efficiencies for employers because the
extra information in the model notices matches exactly the
marketplace employer coverage tool designed by HHS which is
part of the single streamlined application for the coverage in
the marketplace.
This means that an employer who uses our model notice will
not face additional requests for information from the
marketplace about coverage with respect to the employee because
the model notices satisfy both the FLSA and the HHS
requirements.
Outreach and compliance assistance are very high priorities
for EBSA. We partner with HHS, Treasury, IRS, and the Small
Business Administration using a multifaceted approach that----
Chair Landrieu. Please try to wrap up.
Ms. Borzi. Certainly--coordinated online information linked
to other agencies, webinar trainings and compliance and
participant assistance.
In addition, we have benefit advisors that are available to
assist small employers with compliance both through our website
and through our toll-free hotline.
I think I will stop there and be happy to take any
questions.
[The prepared statement of Ms. Borzi follows:]
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Chair Landrieu. Thank you very much.
Mr. Cohen, please introduce yourself briefly and get into
your testimony. Thank you.
STATEMENT OF GARY COHEN, DEPUTY ADMINISTRATOR AND DIRECTOR,
CENTER FOR CONSUMER INFORMATION AND INSURANCE OVERSIGHT,
CENTERS FOR MEDICARE AND MEDICAID SERVICE, U.S. DEPARTMENT OF
HEALTH AND HUMAN SERVICES, BALTIMORE, MD
Mr. Cohen. Thank you, Chair Landrieu and members of the
Committee. I am Gary Cohen. I am privileged to serve as
Director of the Center for Consumer Information and Insurance
Oversight within the Centers for Medicare and Medicaid
Services, and thank you for the opportunity to discuss the many
benefits the Affordable Care Act provides for small businesses.
I was very pleased, as I know you were Madam Chair, to hear
from our state partners from Kentucky and New Mexico and the
District of Columbia about their successes in building small
business marketplaces at the state level.
From the very beginning we encouraged every state to set up
their own marketplaces because we believe that states were in
the best position to create those marketplaces in hallway that
would best serve the residents of their states.
We have worked very closely and, indeed, every day with our
state partners to help them stand up those exchanges, and we
take great pride in the success that they have had.
But I think it is also important to remember that the
reforms of the Affordable Care Act are not just about the
exchanges. They go beyond the exchanges to the entire small
business market.
As you know did in your opening statement, Madam Chair,
many small businesses that would like to offer health benefits
to their employees have faced significant challenges in the
market as it exists today.
Premiums have been going up, double digit, 20 plus percent
every year. Small businesses have been charged 18 percent more
for the same type of coverage that the larger employers pay;
and most importantly, they were subject to wide variations and
high volatility in premiums based on the type of work that the
business did, based on the health status and demographic
characteristics of their employees. So, a small construction
company would pay more than an accounting firm of the same size
for the same coverage.
Small employers often face significantly higher rates if
they had older workers or more women in their workforce than
others. Because of the small risk pool, if even one employee
became sick, rates for the entire company would skyrocket.
The Affordable Care Act is changing all of that and
transforming this market. Most importantly, we are expanding
the risk pool to all of the small business enrollees in an
entire state. We are spreading the risk among all of those
employers.
We are saying that you cannot charge more just because some
people get sick or are women, and there are limits to how much
more you can charge people because of their age.
So, the whole point of this is for the small business
market to function more like the large group market has
functioned and, as you noted, Madam Chair, where premiums have
been significantly lower.
In addition, what we have said is that insurance should be
real insurance. It should not run out just as soon as you have
an illness that requires a hospital visit. It should provide
the essential benefits that were determined by states and were
pegged in most cases to what was prevalent in the small group
market today.
So, these are not a bunch of new benefits that nobody ever
thought about or wanted to have. This is what small businesses
had today and what we said is that it is the type of coverage
that is real coverage so that people do not find that if they
become sick and they all of sudden have to go to the doctor or
go to the hospital, oh, you do not have that coverage. You do
not have hospital coverage. You do not have prescription drug
coverage. It is real coverage.
Now in addition, the Affordable Care Act created the small
business health care tax credit to help small employers of 25
or fewer employees who earn an average of less than $50,000 a
year, and if the employer pays at least 50 percent of the
premium cost of their employees, they qualify for a tax credit.
That tax credit has been in effect and hundreds of
thousands of small businesses have already benefitted from it.
Beginning in 2014, the tax credit increases to up to 50 percent
of the employers contribution to their employees health care
costs.
I just want to touch very briefly on some of the things
that we have done to make sure that small businesses are aware
of these benefits and options, and in particular I want to say
that we have worked very closely with the agent-broker
community.
We understand that most small businesses do obtain coverage
from an agent, using an agent or a broker. We have done a
series of many webinars and trainings for literally tens of
thousands of agents and brokers who participated in those so
they can understand how to participate in the SHOP exchange.
In addition, our regional offices have conducted many, many
workshops and programs across the country to inform small
business about the benefits of the Affordable Care Act.
Thank you very much.
[The prepared statement of Mr. Cohen follows:]
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Chair Landrieu. Thank you very much.
Ms. Markowitz.
STATEMENT OF MARIANNE O'BRIEN MARKOWITZ, REGIONAL
ADMINISTRATOR, REGION V, U.S. SMALL BUSINESS ADMINISTRATION,
CHICAGO, IL
Ms. Markowitz. Chair Landrieu and members of the Committee,
thank you for having me here today to discuss SBA's efforts to
educate small businesses about the Affordable Care Act.
As SBA's Regional Administrator for Region V, I serve as
the agency's principal representative for Illinois, Indiana,
Michigan, Minnesota, Ohio, and Wisconsin. In this role, I
oversee SBA's Affordable Care Act outreach through our seven
district offices in the Midwest.
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 work force.
At SBA, we are committed to providing entrepreneurs with
the tools and the resources they need to start and grow
businesses. This includes an aggressive outreach effort around
the Affordable Care Act to ensure that small business owners
have the facts that they need to make sound business decisions
for their businesses and their employees.
With a nationwide network of 68 district offices, SBA is
uniquely positioned to provide outreach and education on the
Affordable Care Act. Since February 2013, we have participated
in more than 1200 Affordable Care Act outreach events reaching
over 68,000 small business owners and stakeholders across the
country.
I have personally presented at over 20 health care forums,
and my team in Region V has participated in an additional 100
plus events throughout the Midwest.
These events are often hosted in partnership with local
chambers and other community organizations and enable SBA to
connect with a wide range of entrepreneurs.
In conjunction with our federal partners at the Department
of Health and Human Services, the Department of Labor, and
other agencies, SBA provides small business owners with the
most updated information on the Affordable Care Act.
We continue to educate entrepreneurs on issues such as the
impact of the law based on a businesses size, the tax credits
available for small companies, and the eligibility and
enrollment details relevant to the individual marketplace.
I cannot emphasize enough that there is a great deal of
misinformation about the health care law and the small business
community. In my travels, I frequently meet with small business
owners who are anxious and apprehensive about how the
Affordable Care Act may impact their business.
When I speak at outreach events, many entrepreneurs,
regardless of the size of their business, often mistakenly
believe that they will be affected by the employer shared
responsibility rules. I am able to reassure them that this is
not the case.
In fact, 96 percent of all businesses and most of the
businesses that I encounter in these sessions are too small to
be impacted. Of the remaining four percent, the vast majority
already provide health care that meets these standards required
by the law.
When entrepreneurs have access to accurate information,
they are able to have their questions answered. They can leave
better equipped to make educated decisions about what is best
for their unique business.
SBA also promotes the benefits available to small
businesses through the SHOP marketplace. Whether it is a state-
run exchange or a federal program, these new marketplaces are
designed to give small businesses with generally up to 50 full-
time employees the same purchasing power and options enjoyed by
larger companies.
While there is no requirement for employers to participate,
the marketplaces provide a tremendous opportunity for many
small business owners who want to purchase quality, affordable
health insurance for their employees.
In addition to these efforts, SBA has developed a robust
online and digital toolkit that complements our in-person
counseling activities and provides business owners with on-
demand access to the latest information about the Affordable
Care Act.
We have created extensive online content at both SBA.gov
and businessUSA.gov. These sites together receive more than 2
million visitors per month. We also launched a direct
enewsletter which reaches more than 1 million subscribers.
In participation with the Small Business Majority since
July, we have held more than 35 Affordable Care Act one-on-one
webinars for small businesses across the country. These popular
online sessions which take place every Thursday have reached
more than 16,000 entrepreneurs and have been very well
received.
SBA leverages our extensive resource partner network to
help educate small businesses on the Affordable Care Act.
Earlier this year, we held a series of apprehensive webinar
trainings for our Small Business Development Centers, our
Women's Business Centers and our SCORE counselors.
Working with over 1 million entrepreneurs annually, these
partners are able to expand our Affordable Care Act outreach
efforts and serve as a resource on the law in their
communities.
As the Affordable Care Act continues to be implemented, SBA
is committed to collaborating with our federal partners in
ensuring that small business owners have the facts and
resources they need to understand and benefit from the law.
Thank you again for the opportunity to testify today. I
look forward to your questions.
[The prepared statement of Ms. Markowitz follows:]
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Chair Landrieu. Thank you. Our hearing has gone 15 minutes
over time but this is so important I want to continue the
questioning. I think we have gotten a lot of valuable testimony
on the record as we continue to try to fix and improve the
Affordable Care Act.
But let me ask all three of you briefly my first question.
We have the Department of Labor represented here, Ms. Borzi. We
had the Center for Medicaid and Medicare, CMMS. We have Small
Business Administration.
The three of you all are primarily responsible to helping
implement the Affordable Care Act at the federal level, and
there has been undoubtedly justified criticism of what has
happened so far at the federal level and in those states where
governors, mostly Republican but some Democrats, have refused
to set up their own exchange and ask you to come in and do it.
There has been some difficulty.
So, my question is. What are you going to promise to do
better, what are you working on specifically? And I want 30
seconds each of you starting with you, Ms. Markowitz. And what
did you learn this morning that could help you do a better job?
Starting with you.
Ms. Markowitz. Sure. Thank you, Chairman Landrieu.
Chair Landrieu. Speak into the mic. You have to press your
back button.
Ms. Markowitz. Sorry. What the SBA is focused on is
outreach and we continue more than ever to get the word out to
small businesses. One of the biggest problems that we run into
is the misinformation in the small business community.
Chair Landrieu. Which is purposefully I think in large
measure but go ahead.
Ms. Markowitz. It is very prevalent. Most of the rooms that
I walk into are filled with small businesses. They are nowhere
near the size that would be impacted by the employer shared
responsibility provision and yet they are positive that they
will be impacted by this. So, we cleared that up.
Chair Landrieu. Just for the record, could you clear that
up now that when you walk into a room it is mostly filled with
businesses that are of what size?
Ms. Markowitz. Well under 50 employees.
Chair Landrieu. And are they affected by it at all?
Ms. Markowitz. Not at all.
Chair Landrieu. So, no business in America that is under 50
employees are affected at all by the employer shared
responsibility.
Ms. Markowitz. No. In fact, that represents 96 percent of
all overall businesses. In addition to not being impacted by
the employer shared responsibility, those 96 percent of
businesses have, you know, access to new benefits and
protections that they never had before.
So, often I walk into a room and there can be a very
negative perceptions of this Act and they have not begun to
explore the benefits that are available to them because they
are so confused by the misinformation.
Chair Landrieu. Okay. Mr. Cohen.
Mr. Cohen. Thank you. What we are doing and I will not
surprise you, we are working very hard to improve the online
experience. I am pleased to say that we actually have made
significant improvements, and I keep hearing every day that
more and more people are able to get through the application in
a reasonable period of time and get enrolled in coverage.
There is actually a story on NBC news today is the story
about the healthcare.gov roll out outdated, and I think it is.
I think we have moved on significantly from where we were
before.
In terms of what I learned today, I was really impressed by
all the three states talking about the involvement of their
stakeholder communities, and I think we have done that.
But it is different at the federal level frankly than it is
at the state level but I think we need to work really hard to
make sure that we are working with the agent-broker community,
the issuer community, the consumer community, the small
business community, and so forth to make sure that everybody
gets to the benefits of this law.
Chair Landrieu. Ms. Borzi.
Ms. Borzi. I have had the same experience that my
colleagues had. I do a lot of small business roundtables. There
is a lot of misinformation. People, not only do they not
understand that the employer responsibility penalty does not
apply to them, what I found remarkable is that they do not
understand that the small business tax credit is already
available, has been available since the law was signed, and
these are small businesses who are trying to do the right thing
by their employees which is providing coverage.
I know, Madam Chair, that you are very interested in the
notice requirement that we administer. We are trying very hard
to make sure that people understand that this can be an
opportunity for small businesses to understand a little bit
better about their responsibilities and I certainly will
promise you that we will work closely with your staff and the
others, the staff of the other members of the Committee, to try
to make the experience of having to fill out these forms
clearer and easier.
Chair Landrieu. I appreciate that. In my last few minutes,
I want to submit the forms that the Department of Labor put out
that I found very, very confusing, new health care insurance
marketplace coverage.
First of all, it should have said that if you receive this
as an employer and you are under 50 people, disregard it. It is
not appropriate for you. Over 50, this is what, and so I am
going to submit something that we have come up with that might
be a more clear form, and I hope that you all will work on
that.
Once the website gets up, people can have a better walk-
through experience because the consumer experience with this is
extremely important.
So, thank you all very much and I will come back a few. I
think it is Senator Johnson and then Senator Booker.
Senator Johnson. Thank you, Madam Chair.
Mr. Cohen, in general what is happening to the insurance
premiums, the gross premiums now, not after taxpayer subsidy,
what is happening to the insurance premiums of young, healthy
individuals under the Affordable Care Act?
Mr. Cohen. I think they vary a lot from state to state and
even within a state, region to region. I do not think it is
possible to make a, you know, broad, general statement about
that.
Senator Johnson. I would like to enter into the record, I
guess it is the Republican staff Committee has put together a
summary sheet of what is happening, and I can say, for example,
in the State of Illinois somebody 27 years old, a male is going
to an experienced a 104 percent increase, a female about a 42
percent----
Chair Landrieu. Could you clarify, though, is that with
subsidies or without?
Senator Johnson. That would be the gross premium.
Chair Landrieu. That is without subsidy.
Senator Johnson. Yes.
Chair Landrieu. But the bill has subsidies in it so let the
record----
Senator Johnson. I understand that.
Chair Landrieu [continuing]. Reflect that so we will not be
confused.
Senator Johnson. The point being is the only way that
anybody is going to, not the only way, but one of the prevalent
ways that people actually see their share of health premiums
reduced is because taxpayers are going to subsidize their care.
In Wisconsin--let me finish, Madam Chair--in Wisconsin, the
cost of a male 27 years old will increase about 125 percent, a
female about 77 percent.
While that has to do really with the fact that we are a
community rating, we are limiting the insurance premium rate on
older, sicker individuals and we are increasing the premiums,
making the younger, healthier people pick up that burden,
right? Is that not correct? Is that not redistribution?
Mr. Cohen. Well, what I think we are hoping to do is
increase the number of younger people who are actually covered
because the rate of coverage is----
Senator Johnson. Right. So, they can get in the pool and
pay a lot more than they were currently paying in the
individual marketplace. Correct?
Mr. Cohen. Well, what----
Senator Johnson. I mean----
Mr. Cohen. We are expanding the risk pool so we can spread
the risk across the whole population. That is the idea behind
the law.
Senator Johnson. Mr. Cohen, let me ask you as the expert in
the CMMS. When did you realize that what the President was
saying that if you like your health care plan you can keep your
health care plan, if you like your doctor you can keep your
doctor period, when did you--did you believe that ever?
Mr. Cohen. The law provides that issuers could continue
plans as grandfathered plans as long as they wanted to into the
future. So that the law----
Senator Johnson. Well----
Mr. Cohen [continuing]. The law was designed to enable that
what the President said.
Senator Johnson. Yes, but my----
Mr. Cohen [continuing]. To be true and it was really up to
the insurance industry to make decisions as they have in the
past.
Senator Johnson. Let me explore that. My bill, If You Like
Your Health Plan You Can Keep It Act uses the President's exact
same language in the bill. The problem with the President's,
the grandfather clause in the Affordable Care Act, yeah, you
can keep your plan as long as you totally change it.
What we did is we took out these as long as you totally
change it, we did not force some of those initial essential
health benefits on to those plans.
So, the fact of the matter is you could not keep your plan
unless you changed it.
Mr. Cohen. Grandfathered plans are not subject to the
essential health benefit requirements.
Senator Johnson. But there are other things they are
subject to, guaranteed issue, maximum, over the lifetime
maximum.
Mr. Cohen. No. They are not subject to guaranteed issue. In
fact, it is quite the opposite you cannot add more people onto
a grandfathered plan under the law.
Senator Johnson. I am not asking to add more people.
Mr. Cohen. Well, guaranteed issue, that is what you are
talking about.
Senator Johnson. Well, okay. Lifetime maximums. We will get
you the list of the changes required in that grandfather clause
because we extract that in my bill.
But anyway getting back to my question. Did you believe
that if people like their health care plan they would be able
to keep it, across-the-board that nobody would lose their
health care plan if they wanted it?
Mr. Cohen. I believe that the law provided an opportunity
for insurance companies to have grandfathered plans which would
make President's----
Senator Johnson. What about----
Mr. Cohen [continuing]. Promise to be true and it was also
true that the large majority of Americans who have employer-
sponsored coverage through large employers were also able to
keep their plans.
Senator Johnson. But every American? I mean, for example,
did you realize that state high risk pools like in Wisconsin
which covers 22,000 Wisconsinites, did you believe those things
would still be available after implementation of Obamacare?
Mr. Cohen. Well, before the Affordable Care Act, every
American was not able to keep his or her health plan. You could
lose it----
Senator Johnson. That is not what we are talking about.
Mr. Cohen [continuing]. Because you could lose it if you
got sick----
Senator Johnson. Listen. We are talking about the promise
made that if you like your health care plan you can keep it. I
have got a couple in Wisconsin, both cancer victims, that have
been dropped, will be dropped from the high risk pool because
it becomes obsolete January 1.
You knew that as a health care expert, correct?
Mr. Cohen. The law did not require states to drop their
high risk pools. The law allows states to continue the high
risk pools. So, I do not think that is a requirement of the
law. That was a decision made by the State of Wisconsin.
Senator Johnson. But you knew those things would be gone?
Mr. Cohen. No.
Senator Johnson. You really believed, did you really
believe that every American would be able to keep their health
care plan and their doctor? You believe that to be a true
statement?
Mr. Cohen. Well, there is nothing in the law that requires
anybody to lose their doctor.
Senator Johnson. I am just asking you whether you believe
that.
Mr. Cohen. I believe that the law contained provisions that
would enable that to be true but it also is a private market
solution. So, it is not government mandated health care. It is
up to insurance companies what products they offer in the
marketplace. Insurance companies were given the option, the
ability to maintain the existing plans as grandfathered plans,
and if they do that, people are able to keep those plans.
Senator Johnson. Are you surprised----
Mr. Cohen. That is the choice----
Chair Landrieu. I am sorry. Time.
Senator Johnson. Are you surprised millions of Americans
are losing their health care plan? Are you surprised by that?
Mr. Cohen. Well----
Senator Johnson. Are you surprised? Just yes or no. Are you
surprised that millions of Americans are losing health care
plans?
Mr. Cohen. I am not surprised or unsurprised. I did not
have an opinion as to what the market would do. I knew what the
law provided.
Chair Landrieu. Senator Johnson, thank you for sharing such
clarifying comments.
Senator Booker.
Senator Booker. First of all, I want to thank the Chair.
You held this hearing at a difficult time with a lot of
political noise and nonsense and rancor.
You know, it reminds me of a great President who once said,
it is not the critic counts, it is not the man who points out
that the strong man stumbles or the doer of deeds could have
done better, it is the person actually in the arena whose face
is marred with blood and sweat. It is not the man in the arena
this time; it is the woman. Thank you for holding this hearing
and bringing right and left together to discuss practically
what is going to help Americans.
And so, I have a very simple question which is fueled by my
frustration. I want to form a new caucus already and I have
only been here 20 days, and it is the what is going to grow
American businesses, what is going to help small businesses
which, as you rightfully pointed out, are the job creators
right now that are driving our economy right now.
And what was before, I do not want to go back. I am not
putting this country in reverse to go back to a time where
small businesses were getting crushed because they were losing
good employees because they did not have health insurance.
Small businesses were getting crushed because those who
tried to step up to the plate and provided insurance in a
globally competitive market who were competing as countries who
fixed this problem with lower health care costs, forcing small
businesses to either internalized this or put their workers in
the corner.
We have got to figure out a way to fix this in a way that
is going to grow and strengthen small businesses. The idea in
itself is very good, that we can find a way to create a
competitive business environment for small businesses so they
do not have to worry about this fear.
I agree with the Ranking Member. This is about freedom from
fear. I know tons of businesses that lived in that fear. So,
the one thing that has already been discussed that you forget
rhetoric, practically you are seeing what I am seeing, is that
when you go around the State of New Jersey there is so much
confusion fueled by politicians and media of folks about the
facts.
96 percent of businesses are not affected here, and yet I
have small businesses in New Jersey who think somehow it is
going to shake them and are not even aware that there are
federal subsidies to help them.
And so, in this state of mass confusion, fueled by media
and politicians, please tell me from your experience what is
the best way to cut through all this mishegoss--that is a
Jersey term--all this mishegoss and get to what the facts are?
How can we get the truth to small businesses who need to be
freed, liberated from fear and know how this actually could
help them? Anybody?
Ms. Markowitz. Well, thank you, Senator.
Senator Booker. With a name like O'Brien Markowitz, you are
about bringing things together, building bridges.
[Laughter.]
Ms. Markowitz. This is true.
You know, it is really about outreach and education and
bringing the focus onto the benefits that are available for the
96 percent of small businesses that are not only not affected
by the employer shared responsibility provision but that have
all of these benefits that they cannot focus on because of the
misinformation, and that is what we as an agency are entirely
focused on.
We work with our federal partners. HHS has been a great
partner in this outreach as have some of our state partners.
Once a business gets rid of that fear that you allude to
which is very real, they can focus on the fact that there are
these tax credits, be very excited about focusing on and
exploiting those for their business.
They understand more about the broader reform and that they
cannot be discriminated for having a diverse workforce, for
employing women, for employing sicker or older employees. I
mean, these are things that once a business find out about the
80-20 rule and they understand that all of these benefits are
available to them because of this important reform, they are
very excited about it and that is what we are out there doing,
creating more outreach and creating more educational
opportunities.
Senator Booker. So if you witness the relief, even the
excitement from real companies, who you do not ask them if they
are Republican or Democrat, you just ask how can we help the
company and you see it which I have seen with my eyes, the
relief many businesses feel.
Can I ask you very pragmatically, when you are explaining
things, is there anyone change or anything practically that we
could do here in Washington, besides listen to ourselves speak,
to actually help this bill get a little better than it is now?
Practically is there anything that you might want to suggest
that could help this Committee?
Ms. Markowitz. I mean, honestly, what you are doing today
is very helpful, bringing the focus on to the truth, you know,
and the benefits that are available for small businesses.
I think as the exchanges move forward and I know HHS is
working around the clock. For instance, in my outreach before
the launch, the focus on these businesses is really on the
broader reform once they get through the misinformation.
After the launch, it really is surprisingly it remained on
that. They were not so focused on the website issues. They are
really focused on this broader reform and how it impacts their
business.
The elephant in the room was the pricing, and now that the
launch has happened for the SHOP exchanges, even though they
may not be fully functional, and HHS is working on that, there
is pricing information.
So, with this information, it is just more information. The
businesses can go away, do the analysis and figure how SHOP can
eventually be a resource for their business.
It is really all about information, education, outreach,
and getting the truth out and cutting through all of the
misinformation.
Mr. Cohen. Very quickly I would just add, you know, one of
the reasons why the states' exchanges have been so successful
is frankly they had had resources available to them to do a lot
of this outreach because under 1311 we were able to give them
grants and we have been limited in terms of what we were able
to do.
Chair Landrieu. And why were you limited?
Mr. Cohen. Just because of the appropriation. We do not
have funding under the appropriation process to do as much. We
do outreach but to do as much as we would like to do so that is
one area if we could work together in a bipartisan way just to
get in the facts out, that would be wonderful.
Chair Landrieu. Ms. Borzi, your last word.
Ms. Borzi. Just one quick thing. The thing that troubles
all businesses regardless of size, but it is particularly
important for small businesses, is uncertainty.
So, there is lots of misinformation but there is also lots
of uncertainty because they keep hearing that it is going to be
repealed, it is going to be changed, this is going to happen,
that is going to be happening.
It is very important as all of us go out to be able to say
to small businesses, this is what is going to happen when,
because it is not just 96 percent of them are not affected. It
is that this Act can actually give you positive benefits like
more choice, the ability to get coverage which you were not
able to get for your employees before.
Chair Landrieu. Thank you very much. This has been an
excellent hearing and let me particularly thank Senator Booker.
This has been an extraordinary first full hearing for you
attend.
Senator Booker. You always remember your first.
Chair Landrieu. Yes, and you will remember this one, and it
has been an extraordinary privilege to be here with you. And
Senator Johnson thank you for participating all the way to the
end.
I started this morning by saying, and I knew this hearing
would be full of a lot of strong opinions, but I started this
morning by saying, as Mark Twain said, that a lie can go half
way around the world before truth gets out of bed and puts its
boots on in the morning.
This hearing was held to get the truth out about the
benefits of the Affordable Care Act to small business and the
challenges that are presented to us.
As Americans, I think if we work together, we could meet
those challenges.
The meeting is adjourned.
[Whereupon, at 12:34 p.m., the Committee was adjourned.]
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