[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]
FIVE YEARS OF BROKEN PROMISES: HOW THE
PRESIDENT'S HEALTH CARE LAW IS AFFECTING
AMERICA'S WORKPLACES
=======================================================================
HEARING
before the
SUBCOMMITTEE ON HEALTH,
EMPLOYMENT, LABOR, AND PENSIONS
COMMITTEE ON EDUCATION
AND THE WORKFORCE
U.S. House of Representatives
ONE HUNDRED FOURTEENTH CONGRESS
FIRST SESSION
__________
HEARING HELD IN WASHINGTON, DC, APRIL 14, 2015
__________
Serial No. 114-8
__________
Printed for the use of the Committee on Education and the Workforce
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COMMITTEE ON EDUCATION AND THE WORKFORCE
JOHN KLINE, Minnesota, Chairman
Joe Wilson, South Carolina Robert C. ``Bobby'' Scott,
Virginia Foxx, North Carolina Virginia
Duncan Hunter, California Ranking Member
David P. Roe, Tennessee Ruben Hinojosa, Texas
Glenn Thompson, Pennsylvania Susan A. Davis, California
Tim Walberg, Michigan Raul M. Grijalva, Arizona
Matt Salmon, Arizona Joe Courtney, Connecticut
Brett Guthrie, Kentucky Marcia L. Fudge, Ohio
Todd Rokita, Indiana Jared Polis, Colorado
Lou Barletta, Pennsylvania Gregorio Kilili Camacho Sablan,
Joseph J. Heck, Nevada Northern Mariana Islands
Luke Messer, Indiana Frederica S. Wilson, Florida
Bradley Byrne, Alabama Suzanne Bonamici, Oregon
David Brat, Virginia Mark Pocan, Wisconsin
Buddy Carter, Georgia Mark Takano, California
Michael D. Bishop, Michigan Hakeem S. Jeffries, New York
Glenn Grothman, Wisconsin Katherine M. Clark, Massachusetts
Steve Russell, Oklahoma Alma S. Adams, North Carolina
Carlos Curbelo, Florida Mark DeSaulnier, California
Elise Stefanik, New York
Rick Allen, Georgia
Juliane Sullivan, Staff Director
Denise Forte, Minority Staff Director
------
SUBCOMMITTEE ON HEALTH, EMPLOYMENT, LABOR, AND PENSIONS
DAVID P. ROE, Tennessee, Chairman
Joe Wilson, South Carolina Jared Polis, Colorado,
Virginia Foxx, North Carolina Ranking Member
Tim Walberg, Michigan Joe Courtney, Connecticut
Matt Salmon, Arizona Mark Pocan, Wisconsin
Brett Guthrie, Kentucky Ruben Hinojosa, Texas
Lou Barletta, Pennsylvania Gregorio Kilili Camacho Sablan,
Joseph J. Heck, Nevada Northern Mariana Islands
Luke Messer, Indiana Frederica S. Wilson, Florida
Bradley Byrne, Alabama Suzanne Bonamici, Oregon
Buddy Carter, Georgia Mark Takano, California
Glenn Grothman, Wisconsin Hakeem S. Jeffries, New York
Rick Allen, Georgia
C O N T E N T S
----------
Page
Hearing held on April 14, 2015................................... 1
Statement of Members:
Roe, Hon. David P., Chairman, Subcommittee on Health,
Employment, Labor, and Pensions............................ 1
Prepared statement of.................................... 3
Polis, Hon. Jared, Ranking Member, Subcommittee on Health,
Employment, Labor, and Pensions............................ 4
Prepared statement of.................................... 6
Statement of Witnesses:
Troy, Hon. Tevi, Ph.D., President, American Health Policy
Institute, Washington, DC.................................. 9
Prepared statement of.................................... 11
Paal Jr., Mr. Rutland, President, Rutland Beard Floral Group,
Scotch Plains, NJ.......................................... 17
Prepared statement of.................................... 19
Brey, Mr. Michael, President, Brey Corporation t/a Hobby
Works(R), WingTOTE Manufacturing, LLC, Laurel, MD.......... 26
Prepared statement of.................................... 28
Roberts, Ms. Sally, Human Resources Director, Morris
Communications Company, LLC, Augusta, GA................... 30
Prepared statement of.................................... 32
Additional Submissions:
Dr. Roe:.....................................................
Prepared Statement of the National Coalition on Benefits. 76
Courtney, Hon. Joe, a Representative in Congress from the
State of Connecticut:
Chart: 2014 Connecticut Insurance Rate Filings for On/Off
Exchange 2015 Policies................................. 58
Hinojosa, Hon. Ruben, a Representative in Congress from the
State of Texas:
Letter dated April 14, 2015, from Small Business Majority 67
Pocan, Hon. Mark, a Representative in Congress from the State
of Wisconsin:
Slide: Average Premiums for Employer-Based Family
Coverage............................................... 50
FIVE YEARS OF BROKEN PROMISES: HOW
THE PRESIDENT'S HEALTH CARE LAW IS
AFFECTING AMERICA'S WORKPLACES
----------
Tuesday, April 14, 2015
House of Representatives
Subcommittee on
Health, Employment, Labor, and Pensions
Committee on Education and the Workforce
Washington, D.C.
----------
The Subcommittee met, pursuant to call, at 10:03 a.m., in
room 2175, Rayburn House Office Building, Hon. David P. Roe
[chairman of the subcommittee] presiding.
Present: Representatives Roe, Wilson, Foxx, Walberg,
Guthrie, Messer, Carter, Grothman, Allen, Polis, Courtney,
Pocan, Hinojosa, Wilson, Bonamici, Takano.
Also present: Representative Kline and Scott.
Staff present: Andrew Banducci, Professional Staff Member;
Janelle Belland, Coalitions and Members Services Coordinator;
Ed Gilroy, Director of Workforce Policy; Christie Herman,
Professional Staff Member; Nancy Locke, Chief Clerk; Zachary
McHenry, Legislative Assistant; Michelle Neblett, Professional
Staff Member; Brian Newell, Communications Director; Krisann
Pearce, General Counsel; Lauren Reddington, Deputy Press
Secretary; Alissa Strawcutter, Deputy Clerk; Juliane Sullivan,
Staff Director; Alexa Turner, Legislative Assistant; Tylease
Alli, Minority Clerk/Intern and Fellow Coordinator; Austin
Barbera, Minority Staff Assistant; Melissa Greenberg, Minority
Labor Policy Associate; Carolyn Hughes, Minority Senior Labor
Policy Advisor; Brian Kennedy, Minority General Counsel; Amy
Peake, Minority Labor Policy Advisor; Arika Trim, Minority
Press Secretary.
Chairman Roe. Thank you, all. A quorum being present, the
Subcommittee on Health, Employment, Labor, and Pensions will
come to order.
As a practicing physician for more than 30 years, I have
experienced firsthand the marvels of the United States health
care system and how it has helped improve the lives of
countless individuals. But I also saw the challenges of our
health care system; one that was too bureaucratic, too costly,
and leaves too many Americans without the coverage they need to
care for themselves and their families.
Health care reform should have been an opportunity to
preserve and build on what works with common sense market-based
reforms that would expand access to more affordable coverage.
Instead, a costly government takeover of health care was
imposed on the American people. And five years later, the law
continues to wreak havoc on families, businesses, and even
schools.
It is hard to recall a time when supporters of a law
promised so much and delivered so little. The American people
were promised if they liked their health care plan, you could
keep it. Not true. Millions of Americans have received letters
notifying them that their health insurance coverage has been
canceled because it doesn't comply with the dictates of the
health care law. Patients have learned in horror that their
trusted doctors are no longer in their health insurance
networks. And it will only get worse as the narrowing of
networks is going to continue to help hold cost down, as we
will hear later.
The nonpartisan Congressional Budget Office projects seven
million people will lose their employer-sponsored coverage over
the next 10 years. The American people were promised that
health care costs would go down. In fact, the President
promised to lower premiums for the average family by $2,500,
not true.
According to the Kaiser Family Foundation, health care
costs for the average family increased by 26 percent during the
last five years. The average employee with an employer-
sponsored insurance plan experienced a 7 percent increase in
their share of health care costs.
Finally, the American people were told that the health care
law would boost the economy. Again, not true. More than 450
employers have publicly stated they are cutting hours or making
other staffing changes to avoid the law's punitive mandates,
including the University of Colorado in Colorado Springs,
Trig's Supermarkets, Coach's Fast Food in Wisconsin, Shari's
Restaurants in Oregon, and Henrico County School District, as
well as other school districts across the Commonwealth of
Virginia and including my home state of Tennessee.
The Congressional Budget Office estimates that the law will
result in two million fewer full-time workers. Many of these
difficult changes are taking place in the service industry,
which means lower wage workers are bearing the brunt of the
Affordable Care Act's burden. Schools are also cutting hours,
undermining the quality of education for America's students.
We have heard time and again from the Administration that
these are mere antidotes or, in the words of then-Secretary
Sebelius, ``speculation.'' Yet, even those who supported the
health care law have no choice but to recognize its harmful
consequences. Members of the AFL-CIO endorsed a resolution that
warned of an ``underclass of less than 30 hour workers,'' as
employers seek to avoid paying penalties under the health care
law.
The National Brotherhood of Teamsters and other union
leaders said the law will, ``shatter not only our hard-earned
health benefits, but destroy the foundation of the 40-hour work
week that is the backbone of the American middle-class.''
Finally, the International Brotherhood of Electrical
Workers lamented that the law, ``imposes increased benefit
costs, fees, and new taxes on our multiemployer health care
plans.''
Unfortunately, more pain is right around the corner. In
just a few short years, nearly half of all large employers will
be hit with the so-called ``Cadillac tax''. It is estimated the
federal government will collect more than $85 billion through
this tax over the next decade. That is money that could have
been used to raise wages or create new jobs. Instead, it will
go into the coffers of the federal government. And don't
forget, that right now, the Supreme Court is deciding a case
resulting in millions of Americans being stuck with government-
run health insurance they can't afford.
Remarkably, when it is all said and done, after all the
broken promises, fewer jobs, lost wages, Web site glitches, and
canceled health care plans, 35 million individuals will still
be without health insurance. The American people can no longer
afford this costly mistake. And it is time to move the country
away from this government-run health care scheme toward a more
patient-centered health care system.
A key part of that effort is oversight hearings like the
one we are holding here today. Congress must shine a light on
the President's fatally flawed law. We have a very
distinguished panel of witnesses here today to help us do just
that. I would note for my colleagues today that the panel
includes three employers to share their perspectives on how the
law is impacting their workplaces. I look forward to a robust
discussion.
And with that, I would like to congratulate the new ranking
member, Jared Polis. Congressman Polis and I came in with the
same class. He is an incredibly capable member of Congress. And
I am really pleased to be serving with him today. And I will
now yield for his opening remarks.
[The statement of Chairman Roe follows:]
Prepared Statement of Roe Hon. David P., Chairman, Subcommittee on
Health, Employment, Labor, and Pensions
As a practicing physician for more than 30 years, I experienced
first-hand the marvels of the U.S. health care system and how it has
helped improve the lives of countless individuals. But I also saw the
challenges of our health care system, one that is too bureaucratic, too
costly, and leaves too many Americans without the coverage they need to
care for themselves and their loved ones.
Health care reform should have been an opportunity to preserve and
build on what works with commonsense, market-based reforms that would
expand access to more affordable coverage. Instead, a costly government
takeover of health care was imposed on the American people, and five
years later the law continues wreaking havoc on families, businesses,
and even schools. It's hard to recall a time when supporters of a law
promised so much and delivered so little.
The American people were promised that if they liked their health
care plan they could keep it. Not true. Millions of Americans have
received letters notifying then that their health insurance is being
cancelled because it doesn't comply with the dictates of the health
care law. Patients have learned in horror that their trusted doctors
are no longer in their health insurance networks. And it will only get
worse. The nonpartisan Congressional Budget Office projects seven
million people will lose their employer-sponsored coverage over the
next 10 years.
The American people were promised health care costs would go down.
In fact, the president promised to lower premiums for the average
family by $2,500. Not true. According to the Kaiser Family Foundation,
health care costs for the average family increased by 26 percent during
the last five years. The average employee with an employer-sponsored
insurance plan experienced a seven percent increase in their share of
health care costs.
Finally, the American people were told the health care law would
boost the economy. Again, not true. More than 450 employers have
publicly stated they are cutting hours or making other staffing changes
to avoid the law's punitive mandates, including the University of
Colorado in Colorado Springs, Trig's Supermarkets and Coach's Fast Food
in Wisconsin, Shari's restaurants in Oregon, and the Henrico County
School District - as well as other school districts - across the
Commonwealth of Virginia. The Congressional Budget Office estimates the
law will result in two million fewer full-time workers.
Many of these difficult changes are taking place in the service
industry, which means lower-wage workers are bearing the brunt of the
ObamaCare burden. Schools are also cutting hours, undermining the
quality of education America's students deserve. We've heard time and
again from the administration that these are mere anecdotes or, in the
words of then-Secretary Sebelius, ``speculation.'' Yet even those who
supported the health care law have no choice but to recognize its
harmful consequences.
Members of the AFL-CIO endorsed a resolution that warned of an
``underclass of less than 30-hour-workers'' as employers seek to avoid
paying penalties under the health care law. The International
Brotherhood of Teamsters and other union leaders said the law will
``shatter not only our hard-earned health benefits, but destroy the
foundation of the 40 hour work week that is the backbone of the
American middle-class.'' Finally, the International Brotherhood of
Electrical Workers lamented that the law ``imposes increased benefit
costs, fees, and new taxes on our [multiemployer health care] plans.''
Unfortunately, more pain is right around the corner. In just a few
short years, nearly half of all large employers will be hit by the so-
called ``Cadillac tax.'' It's estimated the federal government will
collect more than $85 billion through this tax over the next decade.
That's money that could be used to raise wages or create new jobs;
instead it will go into the coffers of the federal government. And
don't forget, that right now, the Supreme Court is deciding a case that
may result in millions of Americans being stuck with government-run
health insurance they cannot afford.
Remarkably, when it's all said and done - after all the broken
promises, fewer jobs, lost wages, website glitches, and cancelled
health care plans - 35 million individuals will still be without health
insurance. The American people can no longer afford this costly
mistake. It is time to move the country away from this government-run
health care scheme and toward a more patient-centered health care
system.
A key part of that effort is oversight hearings like the one we are
holding today. Congress must shine a light on the president's fatally
flawed law. We have a very distinguished panel of witnesses to help us
do just that. I would note for my colleagues that today's panel
includes three employers to share their perspectives on how the law is
impacting their workplaces. I look forward to a robust discussion, and
with that, will yield to Ranking Member Polis for his opening remarks.
______
Mr. Polis. Thank you, Mr. Chairman.
I want to acknowledge that I think we are all glad that
Chairman Roe is back in his seat leading this subcommittee. I
am very much looking forward to working with him. And on behalf
of the Democrats on the Committee, we want to as well join our
Republican friends in offering our condolences to you and your
family. And I would like to ask unanimous consent for a moment
of silence in honor of Pam Roe and to convey our thoughts and
prayers to the Roe family at this time.
[Moment of silence.]
Thank you. We are truly glad to have you back. Thank you.
As to the business at hand. After 56 attempts to repeal the
Affordable Care Act since the law was passed, I was hoping that
we could move forward with improving the Affordable Care Act
and make it work better and reduce costs even more. We all have
a lot of ideas, like improving access to preventative health
care services, making sure workers receive fair treatment in
the workplace. Many of us are very interested in some of the
ways that the Affordable Care Act is paid for and how those can
be changed or paid for to modify cost.
But instead, we are spending our time attacking, rather
than improving, a law that is working for millions of Americans
who gained quality affordable health insurance, for tens of
thousands of businesses who have saved costs on health care,
and millions of others who have been able to enroll in Medicaid
for the first time, particularly in states that have expanded
Medicaid eligibility.
The most recent estimate by the Congressional Budget Office
found that a total of 27 million people will gain access to
health coverage through the Affordable Care Act who otherwise
would not have had it, to say nothing of millions of Americans
who have coverage for preexisting conditions for the first
time, are no longer subject to lifetime caps that could leave
them bankrupt if they get a serious illness, or finally have
access to comprehensive preventative services and affordable
prescription drugs.
According to a newly-released Gallop poll, the percentage
of Americans lacking health insurance has dropped more than 5
percent since the marketplace opened at the end of 2013. In my
home state of Colorado, 16.5 percent of people lacked health
insurance before the Affordable Care Act. And according to a
recent Kaiser Family Foundation study, the figures dropped to 9
percent this last June. And health care premiums are growing at
slower rates than they have in decades, for both businesses, as
well as individuals.
I think it is clear the Affordable Care Act is working for
consumers, working for businesses. Of course it is not perfect.
But the Affordable Care Act works because of the shared
responsibility of individuals, federal and state governments,
and employers.
I have started several businesses myself before I came to
Congress. And as an employer, I knew that before the Affordable
Care Act, health care costs were climbing at an out-of-control
rate, double digit inflation every year. Health care choices
were slim to none in many areas. And people were having to get
a job in businesses like mine sometimes because they needed
health insurance, not because they needed the income.
The five years since the ACA has been implemented of course
hasn't been perfect. But on a whole, cost increases are down,
there are more choices for employees, and more ways that
businesses can get coverage, as well as more tools to help
businesses affords to cover their employees.
The ACA has brought down cost and spread the responsibility
among everyone, employers and employees. Under the ACA, small
employers are more likely to offer insurance and they are more
likely to want to offer insurance. Many receive a tax credit to
pay for a portion of the coverage for their employees. And the
exchanges allow small employers to compete to find good rates,
which was impossible to do before because according to
insurance companies, small companies were simply too small.
Nationwide, 360,000 small businesses have used tax credits
to provide coverage to their employees. And as a result,
businesses are now able to recruit and keep quality employees
without bankrupting the company or their workers. Instead of
huge premium increases during the past five years, costs have
grown at historically low rates. Instead of workers choosing
between coming to work seriously ill and putting food on the
table, workers will be able to receive quality health care that
allows them to stay on the job and keep their paycheck. And
instead of having a stressed, unhealthy workforce, businesses
will have a happy, healthy, and productive workforce, which is
good for the families and good for the businesses.
Just one more example. We have an automotive company in
Colorado owned by Craig Lear who believes it is his
responsibility to keep his employees happy and healthy. As he
stated, ``It is hard to find good employees, so you have to
take care of them to retain them. And health insurance is part
of that.'' ACA helped him cut his health care costs in half and
his business is thriving, thanks to the Affordable Care Act and
the exchanges that have been put up. As he said, this is a huge
step in the right direction. It makes sense, and in 10 years we
will look back and see that.
I hope, Mr. Chair, we are able to look back even sooner
than 10 years. We are halfway to that mark. And I look forward
to hearing the testimony from our witnesses today. And I yield
back the balance of my time.
[The statement of Mr. Polis follows:]
Prepared Statement of Polis, Hon. Jared, Subcommittee on Health,
Employment, Labor, and Pensions
Thank you. I first want to acknowledge that I am glad Chairman Roe
is back in his seat leading this subcommittee, and I look forward to
working with him. I want to offer my sincere condolences to him and his
family. I know this must be an extremely difficult time. All of our
thoughts and prayers are with you in this trying time.
And for the business at hand. Today, once again, we are wasting our
precious time on this subcommittee rehashing tired debates about the
Affordable Care Act.
After no fewer than 56 unsuccessful attempts to repeal the ACA
since the law was passed five years ago, I would hope that we on the
HELP subcommittee could move onto more pressing matters--like improving
access to preventative health services and making sure all workers have
fair wages and receive fair treatment in the workplace.
Sadly, we're instead once again spending our time attacking--not
improving, attacking--a law that is working for millions of Americans
who have gained quality, affordable health insurance through the
marketplace for the first time, as well as millions of others who have
been able to enroll in Medicaid for the first time.
The most recent estimate by the Congressional Budget Office found
that a total of 27 million people will gain access to health coverage
through the ACA who otherwise would not have had it, to say nothing of
the millions of Americans who:
* Have coverage for pre-existing conditions for the first time;
* Are no longer subjected to lifetime caps that can leave them
bankrupt if they get a serious illness;
* Finally have access to comprehensive preventative services and
affordable prescription drugs for the first time;
* And have been able to afford health insurance in young adulthood
by staying on their parents' plans.
According to a newly released Gallup poll, the percentage of
Americans lacking health insurance has dropped more than 5 percent
since the marketplace opened at the end of 2013.
In my home state of Colorado, 16.5 percent of folks lacked health
insurance before the ACA took; according to June Kaiser Family
Foundation study, that figure had dropped to nine percent by last June
--all while health care premiums are growing at slower rates than they
have in decades.
The Affordable Care Act is working--for consumers and for
businesses. It may not be perfect, but the ACA works because of the
shared responsibility of individuals, federal and state governments,
and employers.
I have started several businesses myself. And as an employer I know
that before ACA, health care costs were climbing at an out-of-control
rate for employers and employees. Health care choices were slim to none
in many areas and states, and people were having to get a job in
businesses like mine sometimes because they needed the health
insurance, not because they needed the income.
The five years since ACA have been implemented has not always been
perfect, but costs are down and choices are up for employees and
bUsinesses.
1.n reality, most companies are not impacted by the employer
mandate. 96 percent of employers are small businesses and have fewer
than 50 workers and are thus exempt, and the overwhelming majority of
the remaining 4 percent already offer quality coverage. And the vast
majority of good business owners provide health insurance to their
employees, and this is causing little to no change for them.
In fact, ACA has brought costs down and spread the responsibility
among everyone--both employers and employees. Under ACA small employers
are more likely to offer insurance, and they are more likely to want
to. Many can receive a tax credit to pay for a portion of coverage for
their employees, and the exchanges allow small employers to compete to
find good rates, which was impossible to do before because according to
insurance companies they were too small.
Nationwide, more than 360,000 small businesses have used tax
credits to provide coverage to their employees. As a result, businesses
are now able to recruit and keep quality employees without bankrupting
the company and the workers.
Now, instead of huge premium increases, during the past five years
costs have grown at historically low rats.
Now, instead of workers choosing between coming to work seriously
ill and putting food on the table, workers will be able to receive
quality health care that allows them to stay on the job and keep their
paycheck.
Now, instead of having a stressed, unhealthy workforce, businesses
will have a happy, healthy and productive workforce, which is good for
families and good for their businesses' bottom line.
As just one example, we have an automotive company in Colorado
owned by Craig Lear who believes it's his responsibility to keep his
employees happy and healthy. As he stated, ``It's hard to find good
employees, so you have to take care of them to retain them, and health
insurance is part of that.''
As a small business owner he believes that before ACA health care
costs were a huge burden to his company, threatening to put him out of
business. ACA helped him cut his healthcare costs in half. He feels
that because of ACA and the exchanges that have been set up, small
business owners now have a voice and someone's watching out for them,
in comparison to the previously unaffordable small business health
insurance of the past. Quote: ``This is a huge step in the right
direction. It makes sense and in 10 years we'll look back and see
that.''
Even with all of improvements this law has created in the lives of
individuals and business owners, we continue to rehash the same
arguments over and over again. The Majority on this committee is
whiling away our time here talking about ``repeal''--which is bad
policy and is simply not going to happen.
I would request that instead of spending time working to repeal a
bill that is overwhelmingly doing good for Americans and the economy we
talk about changes we can make to the Affordable Care Act to ensure
that it functions as intended over the long-term. Or even better, we
should be spending time marking up bills and talking about issues that
I hope everyone agrees should be a top priority.
We should be working to fix our multi-employer pension system,
expanding opportunities for all workers, creating a fair and equitable
wage for women and men, creating good paying jobs for all, protect
worker's rights, and expanding our economy. The list goes on and on. We
have had 56 votes in the full house to repeal ACA and countless
hearings in committees. Instead of rehashing the same stubborn ``the
sky is falling'' argument let's work together to expand our economy and
create jobs for the middle-class.
I look forward to hearing from our witnesses, especially those who
are actually running a business and not lawyers or lobbyists.
As a businessman and a father I know that ACA is working to protect
our companies, our employees and our families. And this ``sky is
falling'' talk that we hear over and over is just not coming to
fruition.
I am interested to hear how everyone thinks we can move beyond this
rhetoric and begin to work together to perfect a good start that is
helping our businesses, creating good paying jobs, and saving lives.
I yield back the remainder of my time.
______
Chairman Roe. Thank you, Mr. Polis. And thank you for your
kind words, also. I appreciate it very much.
And pursuant to committee rule 7(c), all committee members
will be permitted to submit written statements to be included
in the permanent hearing record. And without objection, the
hearing record will remain open for 14 days to allow
statements, questions for the record, and other extraneous
material referenced during the hearings to be submitted in the
official hearing record.
It is now my pleasure to introduce our distinguished panel
of witnesses. First, Dr. Tevi Troy is president of the American
Health Policy Institute here in Washington, D.C. Welcome.
Previously, Dr. Troy held numerous positions in the federal
government, including serving as deputy secretary of Health and
Human Services beginning in 2007, where he oversaw all
operations, including Medicare, Medicaid, Public Health,
medical research, food and drug safety, welfare, child and
family services, disease prevention, and mental health. Woo,
that was a mouthful.
Mr. Rutland ``Skip'' Paal, Jr. is the owner of Rutland
Beard Floral Group, Inc. in Baltimore, Maryland. Mr. Paal is a
fourth generation business owner of Rutland Beard Floral Group,
Inc. Since taking over the business from his parents, Mr. Paal
expanded the business over the last 10 years from a single
retail shop to a multistate business with import, wholesale,
and retail operations. Thank you for being here today.
Mr. Michael Brey is the founder and president of Brey
Corporation in Laurel, Maryland. Mr. Brey started Brey
Corporation in 1992 and acquired retailer Hobby Works in 1993.
In addition, Mr. Brey has served on several corporate boards,
including the board finance committee of Dimensions Healthcare,
a health care provider. Welcome, Mr. Brey.
Now I will take this opportunity to yield to Representative
Rick Allen to introduce our final witness.
Mr. Allen. Thank you, Mr. Chairman. I am pleased to
introduce Ms. Sally Roberts from Augusta, Georgia, who is the
human resources director of Morris Communications Company, LLC.
Morris Communications is a privately-held media company with
diversified holdings that include newspaper and magazine
publishing, outdoor advertising, radio broadcasting, book
publishing, and distribution and online services.
She is here today to testify on behalf of the Society for
Human Resource Management. Ms. Roberts is in charge of the
company's magazine and radio division, where she manages the
benefits for Morris' 3,000 employees in more than 20 states.
Ms. Roberts works with insurance providers and consultants on
medical and dental plans to design employer rates and employer
premiums and coordinates open enrollment with brochure design,
online support, employee meetings, and enrollment processes.
She also formed a wellness committee and developed a
monthly online news letter, ``Wellness Information and News.''
And I just happen to have the front page of Monday's newspaper.
And it shows the Lone Star hero, the new champion of the
Master's Golf Tournament, Mr. Spieth, from the Great State of
Texas.
So Ms. Roberts, welcome. And thank you for being with us
today.
Chairman Roe. Thank you all. Now I ask the witnesses to
stand and raise your right hand. Thank you.
[Witnesses sworn.]
Let the record reflect witnesses answered in the
affirmative. You may be seated.
Before I recognize you all for your testimony, let me
briefly explain our lighting system. You will each have five
minutes to present your testimony. When you begin, the light in
front of you will turn green. When one minute is left it will
turn yellow. And when your time is expired the light will turn
red. If you are in the middle of a sentence, I am not going to
gavel you. You can go ahead and finish your thoughts. So we are
not going to do that. But I will adhere to the five-minute
rule.
At that point, I will ask you to wrap up your remarks as
best able. After everyone has testified, each member will have
five minutes to ask questions of the panel.
Now, Dr. Troy, begin your testimony.
STATEMENT OF HON. TEVI TROY, PH.D., PRESIDENT, AMERICAN HEALTH
POLICY INSTITUTE, WASHINGTON, DC
Dr. Troy. Mr. Chairman, Mr. Ranking Member, members of the
Subcommittee, I am Tevi Troy, president of the American Health
Policy Institute, former deputy secretary of HHS, and a former
senior White House aide.
American Health Policy Institute is a think-tank dedicated
to studying the issue of employer-sponsored health insurance,
and highlighting the challenges employers face in offering care
to their employees and their dependents. The institute
publishes studies on employer-sponsored health insurance and
examines employer responses to health care challenges.
These roles give the institute a unique perspective on
development and employer-sponsored insurance and the future
state of health care. Today I would like to talk about the
impact of the ACA's high-cost excise tax, the cost of the ACA
to employers, and the affordability of health care to
employees. These three factors signal big changes ahead in
employer-sponsored care, which is currently how 169 million
Americans get their health coverage.
Under the ACA, an excise tax on high-cost health plans, the
so-called Cadillac tax, takes effect in 2018. The potential
impact of this tax is already driving employers, including
corporations, state government, local government, and
universities, to reassess their health care plans and
reconsider their future role in providing health care benefits.
The tax is causing employers to reduce health care benefits
to limit their exposure to the tax. In the future though,
continued medical inflation and other factors will make it very
difficult for employers to avoid the tax. Big increases in
health care costs will eventually cause Chevrolet benefit plans
to be taxed as Cadillacs. That in turn will result in the
burden of the excise tax falling on a significant number of
American employees and their families.
Last November, the institute published a study on the
impacts of this excise tax, which found that from 2018 to 2024,
the excise tax could cost 12.1 million employees an average of
$1,050 in higher payroll and income taxes per year if employers
increase their taxable wages as they reduce the cost of health
care benefits.
Alternatively, these employees could see up to a $6,150
reduction in their health care benefits and little or no
increase in their wages. Large employers subject to the excise
tax in 2018 will pay an average of $1 million that year and an
average of $2.1 million per year from 2018 to 2024, or over
$2,700 per employee.
In 2018, the excise tax is anticipated to hit 17 percent of
all American businesses and 38 percent of large employers. By
2031, the cost of the average family health care plan is
expected to hit the excise tax threshold. Many state and local
government health plans will also be impacted by the high-cost
excise tax because they tend to offer more expensive health
plans than private sector employers. In addition, unionized
employers already need to address potential excise tax costs in
upcoming contract negotiations.
Overall, the threat of the excise tax is driving employers
to fundamentally reassess their plans in a way that will have a
real impact on employees and their families. Last year, an
institute study looked at direct cost to companies from the
ACA's requirements, over and above projected employer health
care cost trends within the ACA. The study found that over the
next decade, the cost of the ACA to large employers is
estimated between $4,800 and $5,900 per employee.
These large employers will see overall ACA-related cost
hikes of between $163 million and $200 million per large
employer. And the total cost of the ACA to all large U.S.
employers over the next 10 years is estimated to be from $151
million to $186 billion. These cost hikes, combined with a fear
of triggering the excise tax, are leading to employer reactions
that will have a significant impact on the recipients of
employer-based care.
Under the ACA, large employers must offer affordable plans
and coverage to full-time employees. Coverage is deemed not
affordable if the employee's share of their annual premium for
self-coverage--for self-only coverage is greater than 9.5
percent of their annual household health care. However, the
average employee premium for family coverage accounted for more
than 9.5 percent of family income for 4.7 million employees.
Further, 10.4 million employees with families, or 38.1 percent,
faced an average family premium and deductible that could
consume 9.5 percent of their family income. By 2025, that 38
percent becomes 53 percent.
So the combination of a creeping excise tax and high
marginal ACA costs is driving employers to look at significant
changes to their health care offerings. Some employers will
exit the system. But we believe that more will look to make
serious changes in approach. These employer-based changes will
likely include more cost-sharing components as employers seek
to avoid triggering the excise tax in 2018. The cost-sharing
then impacts the affordability of health care for employees,
who will then become unsatisfied with their employer-sponsored
care and look to Washington for answers.
Mr. Chairman, Mr. Ranking Member, members of the
Subcommittee, I thank you for your time here today. And I look
forward to any questions that you may have.
[The statement of Dr. Troy follows:]
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Chairman Roe. Thank you, Dr. Troy.
Mr. Paal, you are recognized for five minutes.
STATEMENT OF MR. RUTLAND PAAL, JR., PRESIDENT, RUTLAND BEARD
FLORAL GROUP, SCOTCH PLAINS, NEW JERSEY
Mr. Paal. Mr. Chairman and distinguished members, thank you
for inviting me to present testimony before the Committee
regarding my company's experience with the Affordable Care Act.
My name is Skip Paal. And I am a fourth generation florist.
My great grandfather opened a flower shop and greenhouses
outside Baltimore in 1923. Today, my company employs over 150
people and operates at 11 different locations in Maryland and
New Jersey, including my great grandfather's original location.
We are a family business. Our employees are extensions of
our family. And we have always felt an obligation to take care
of our employees accordingly. We have been providing health
care to our full-time employees for decades. When cash flow was
tight, and I and other family members skipped paychecks, we
still contributed to our employee's health care plans. Not
because we had to, but because it is the right thing to do.
We also offer a simple IRA plan so that our employees have
the opportunity to retire with something after their years of
service. We established this retirement plan not because we had
to, but because it is the right thing to do.
We try to help our employees in any way we can. Last month,
I gave a plane ticket to an employee to spend some time with
her daughter because she will be missing her daughter's
graduation from college to work for us during the Mother's Day
holiday, one of our peak times of the year. I didn't do that
because I had to. In fact, the employee didn't ask for it. I
did it because it is the right thing to do.
My companies employed a total of 152 individuals over our
most recent measurement period. Of this total, 28 would be
considered full-time under the ACA, 85 part-time, and 39
temporary.
In order to comply with the ACA, it took me over 40 hours
to collect all the data on our employees' hours of service,
create spreadsheets, perform calculations, select appropriate
plans, and make offers of coverage. In the past, this process
took me about an hour of meeting with our health insurance
broker. Since my company is not large enough to have an HR
manager, that responsibility falls to me.
As an employer, I would improve the bottom line if I did
not offer coverage to my employees. Even though I am considered
a large employer under the ACA, with 51 FTEs. If I stopped
offering health care coverage for my employees my penalty would
be zero, since I have only 28 actual full-time employees. This
would result in a savings to the company of over $60,000 a
year. We continue to offer the coverage because it is the right
thing to do.
The ACA has provided numerous challenges to me and my
company; the confusion about what is needed for compliance
today, what will be needed for compliance in the years ahead,
and how to correctly report our data is frustrating, to say the
least. I remain cautious about continuing to expand my business
because I just don't know what the future impacts of the ACA
will be.
The ACA has also placed me at a competitive disadvantage
against other florists and Main Street retailers. Since my
employees are offered employee-sponsored coverage, they are
ineligible for a subsidy from the exchange and feel forced into
accepting the coverage offered by my company's group plan.
Because of the ACA, one of my employees has almost $2,300
less in annual expendable income as a result of being employed
by me versus another flower shop down the street that does not
require health insurance coverage. This isn't rational, as it
penalizes the employee working for me and prevents my company
from attaining good employees, while continuing to be
sustainable.
It is my hope that Congress will work diligently to craft
and pass legislation to address the unnecessary burdens and
complexities the ACA has created. One example is the STARS Act,
which would provide a technical change to the ACA because the
law has conflicting definitions and applications of what a
``seasonal worker'' is. That one provision is causing confusion
and a massive burden to small business throughout the country.
Thank you again for giving me the opportunity to present
this testimony before the Committee.
[The statement of Mr. Paal follows:]
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Chairman Roe. Thank you, Mr. Paal.
Mr. Brey, you are recognized for five minutes.
STATEMENT OF MR. MICHAEL BREY, PRESIDENT, BREY CORPORATION T/A
HOBBY WORKS(R), WINGTOTE MANUFACTURING, LLC, LAUREL, MARYLAND
Mr. Brey. Good morning, Mr. Chairman, members of the
Subcommittee. Thanks for having me. I am sorry for your loss,
sir.
My name is Mike Brey. I am the owner of Hobby Works, a
hobby and toy store with four locations in the D.C. metro area,
Maryland, and Virginia, with nearly 50 (more than 30 FTE)
employees. Thanks for allowing me to share my comments with you
on the health care law's impact on my business.
I started my business in 1992. Almost from the beginning, I
offered health coverage. Not just to attract and retain good
employees, but because as a former retail employee myself, I
had found it difficult to get good, affordable insurance. My
business has been successful, and we have been able to expand
multiple locations. But over the years, it became more and more
and more difficult to continue offering health insurance to my
employees.
Prior to the passage of the health care law, our insurance
rates were going through the roof. We saw annual premium
increases, 10, 15, 20 percent. Sometimes even higher if we
crossed an age band. As a result, we were forced to ask
employees to pay more of their premiums and face higher
deductibles in order to continue offering coverage.
Other small businesses also faced these issues before there
was an Affordable Care Act. The research shows that many small
business owners struggled to offer health insurance to their
employees due to rising costs. Small Business Majority's
scientific opinion polling found that the majority of small
business owners provided insurance to at least some of their
employees. But of those who didn't, 70 percent, said it was
because they couldn't afford it. What is more, small businesses
paid 18 percent more on average for health coverage than large
companies and received fewer comprehensive benefits.
Inaction was unacceptable. The passage of the Affordable
Care Act was the first thing in years that gave me hope that
the spiral of escalating cost and depreciating quality of
coverage might finally end. Many provisions of the health care
law have been key to making health insurance more accessible
and affordable for small businesses like mine. In addition to
the marketplaces, a multitude of cost containment provisions
have gone into effect that are helping to lower costs and
provide more stability throughout the system.
A survey conducted by Towers Watson and the National
Business Group on Health found that in 2013, employers
experienced the lowest increase in health care cost in 15
years. While some argue that the health care law is requiring
many small firms to drop their health coverage, the Kaiser
Family Foundation found in 2014 that the number of employers
offering coverage remains statistically unchanged from the
previous year. Additionally, 8.2 million more people, many of
whom were previously uninsured, have gained employer-sponsored
coverage.
Thanks to the health care law's cost containment
provisions, our premiums are starting to stabilize. And I
believe I am finally starting to have the certainty and
stability I need when it comes to health insurance premiums and
choices of plans.
What's more, in Maryland, we now have many more options
when it comes to insurance carriers and health plans. Where we
once had only a few carriers to choose from, we can now choose
from a variety of insurers that offer many health plans. I went
on the shop exchange and counted. It has more than 110 options
for my business to choose from now.
Furthermore, thanks to the new options created by the
health marketplaces, more people are able to leave jobs to
become self-employed or start a business because they don't
have to worry anymore about health insurance. This means that
spouses don't have to stay in particular jobs in order to
maintain health benefits for their dependents.
Some claim that the health care law is a job killer and
that small businesses are being forced to make their full-time
employees cut their hours. This has not impacted my business.
We don't make expansion decisions based on tax laws. We do it
based on consumer confidence and how we expect sales to
increase over time. As a retailer, we are still recovering from
the effects of the recession. Nobody actually needs anything I
sell. But we have never thought of expanding or shrinking based
on the health care law's requirements.
Some say that the health care law is forcing small
businesses to order more outside help in order to comply with
the law's requirements. As a small business owner, I can tell
you that the vast majority of owners already rely on the
expertise of accountants and lawyers and insurance brokers.
Small Business Majority's research shows that 75 percent of
small business owners already work with an insurance broker to
purchase insurance policies for their business.
The Affordable Care Act is not perfect, and it won't solve
all of our health insurance problems. However, it is the first
meaningful law in decades that meets many of small businesses'
core needs in regards to rising health care costs. In this
economy, policies that allow us to spend less on premiums so we
can keep more of our profits to reinvest in our companies and
create jobs is what we need most.
Strengthening and tweaking the Affordable Care Act instead
of chipping away at it is the only path forward to lowering the
overall cost of health care and providing more options to
coverage for small business owners like myself and their
families and their employees.
Thank you for the opportunity to comment. I really
appreciate it.
[The statement of Mr. Brey follows:]
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Chairman Roe. Thank you, Mr. Brey.
Ms. Roberts, you are recognized for five minutes.
STATEMENT OF MS. SALLY ROBERTS, HUMAN RESOURCES DIRECTOR,
MORRIS COMMUNICATIONS COMPANY, LLC, AUGUSTA, GEORGIA
Ms. Roberts. Chairman Roe, Ranking Member Polis,
distinguished members of the Subcommittee, my name is Sally
Roberts, and I am the director of human resources for Morris
Communications. I am here today on behalf of the Society of HR
Management. I have been a member of SHRM for 18 years. Thank
you for the opportunity to testify today on how employers are
implementing the ACA.
Five years after the implementation of the Affordable Care
Act, it continues to be a challenge for HR professionals and
employers due to the complexity, the delay in effective dates
of certain provisions, and the coverage requirements.
Mr. Chairman, although the ACA purports to lower health
costs, costs continue to rise for both employers and employees.
And for that reason, many organizations are changing health
care benefits to minimize the costs.
By way of introduction, Morris Communications is a private,
family-owned business based in Georgia since the 1800s. Our
core business is newspaper publication, but we have expanded to
magazines, visitor publications, radio broadcasting, and
farming. We have over 2,200 employees in 29 states from Alaska,
California, Texas, Tennessee, and Georgia, just to name a few.
Morris has long offered benefits to our employees because
we believe it is vital to provide a competitive compensation
package. Throughout implementation, Morris has made changes to
our plans and benefits, but we have been able to continue our
one provider PPO plan to all of our employees.
However, this year, we introduced an ACA-compliant high
deductible plan. Let me briefly outline some of the challenges
we have encountered with the implementation. First, the
anticipated excise tax. At Morris, we project that our current
health plan will trigger an excise tax of over $650,000 in
2018. To mitigate this cost, we are considering a full
replacement of our PPO with a high-deductible plan. However, we
have considered this option for over ten years, and we have
failed to implement it because of the economic hardship we
believe it would have for our aging workforce. That is why SHRM
supports H.R. 879 to repeal the excise tax.
Some employers are implementing incentive-based wellness
programs as cost-containment strategies. However, recent
litigation proposed by the EEOC has threatened the certainty of
the law for employers that offer these programs. SHRM applauds
the introduction of H.R. 1189 under the leadership of Chairmen
Kline, Roe and Walberg to protect employer-based wellness
programs.
Another challenge facing my company as well as others is
the employer reporting requirements. At Morris, after looking
at the effort it will take to track, record, and report hours
of eligibility, we will either have to hire someone to do this
for us or outsource at an estimated cost of $50,000.
Other challenges include obtaining exchange notifications.
Exchanges are supposed to notify organizations of employees who
have applied and who are eligible for subsidies and credits. So
far, only a few state exchanges have sent notifications to
employers, and the federal exchange has yet to do so.
Lastly, SHRM has strong concerns regarding the ACA's
definition of ``full time.'' The definition is inconsistent
with the Fair Labor Standards Act and conflicts with many
federal and state laws. SHRM supports H.R. 30, a House-passed
bipartisan proposal to amend this definition.
Mr. Chairman, prior to the ACA, benefits administration
occupied about one-third of my time. Since the ACA, I have
spent closer to two-thirds of my time on benefits
administration. In addition to staff time, Morris has incurred
health care consultant and attorney fees; funds that we could
have spent on employees in such ways as giving increases or
contributing to their 401(k)s.
Mr. Chairman, thank you for allowing me to share my
experience in implementing the ACA and SHRM's views. SHRM
believes that effective health care reform should expand access
to affordable care, but organizations should not have to change
business practices and benefits to afford the required changes.
Unfortunately, the ACA's requirements are increasing costs,
and it has restricted employer flexibility to offer benefits
packages that best meets our employees' needs. Thank you.
[The statement of Ms. Roberts follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chairman Roe. Thank you. And I want to thank this entire
panel. The members here should take notice that every one of
you finished under your time. So that is amazing. Thank you. I
don't think that has ever happened since I have been here. So
we will try to be as good as you are.
Mr. Wilson, you are recognized for five minutes.
Mr. Wilson of South Carolina. Thank you very much, Dr. Roe.
Thank you, each of you, for being here. But in particular, I am
very pleased to see Ms. Roberts here. Morris Communications,
their headquarters is in Augusta, Georgia. And with Congressman
Rick Allen, I have the privilege of representing the sister
communities of North Augusta, Akin, Barnwell. And, of course,
the eyes of the world, Doctor, were on Augusta this weekend at
the Master's Golf Tournament. What a tribute to the community.
Jordan Spieth, we are looking forward to him being at the
Hilton Head Heritage Golf Classic this weekend. And so, hey,
people get to see the southeast. And everybody wants to move
into Rick Allen's district. So this is good.
But hey, thank you for being here. And indeed, Morris
Communications also owns a weekly paper in the district I
represent, the People's Sentinel. And it really is a very
promoting newspaper of the Barnwell community. So thank you
very much. Additionally, I am grateful--I have to point out
that as a graduate of Erskine College, Due West South Carolina,
we appreciate your success.
With that in mind, I want to thank you for being here. And
if you could explain how Morris Communications and other
similar companies are planning for the Cadillac tax, a 40
percent excise tax. How will these changes affect your
employees in the coming years as the tax becomes effective?
Ms. Roberts. Thank you. That is something that we have
given much thought to. We haven't come up with an exact
solution yet. One thing that we are considering is converting
to a high-deductible plan for all employees. This would be a $2
million cost shift from the employer to the employees,
unfortunately. And as I have mentioned in my written statement,
we have hesitated to do so because of the negative impact. We
know our employees are aging. We know they utilize their
benefits. And this would mean that they would have to meet the
upfront costs first, as high as $1,500 in a deductible, before
the insurance would kick in.
However, we believe that would allow us to--
Can you hear me? Okay.
Mr. Wilson of South Carolina. It was working. Yes.
Ms. Roberts. However, we believe that is the hard decision
that we have to make; transfer more costs to the employees in
order to mitigate the cost of the excise tax or continue and
stay on our course and incur the tax.
Mr. Wilson of South Carolina. And thank you for being
employee-sensitive. And indeed, I have seen personally the
gruesome consequence of Obamacare, where I have had bag boys at
the grocery store tell me they have lost hours. I have had our
wonderful young ladies behind the counter at the hardware store
tell me how they now have to have two jobs because they have
lost hours. And so it is really sad.
But actually, I want to thank Dr. Troy. You had an Op-ed
which reminded the American people that it was Professor
Jonathan Gruber, an architect of Obamacare, at the University
of Pennsylvania--said this quote should always been remembered
by the American people--``lack of transparency is a huge
political advantage. And basically, you know, call it the
stupidity of the American voter or whatever. But basically,
what is really, really critical to getting the thing to pass.''
And so through this stupidity, it has really affected real
people. And that is why I am so grateful for Dr. Roe's
leadership to repeal this.
But Dr. Troy, how is it that with the taxes not even being
calculated yet, how can businesses try to comply?
Dr. Troy. So the excise tax is going to tick in 2018, as we
said. And the issue is that employers are looking at what
happens in 2018. They don't look six months ahead. They look
two, three years ahead. Especially if you have a union plan
where you have a negotiated deal on health care. But even in
nonunion plans, they are starting to look a few years ahead.
And I have spoken to one employer who told me that--it is a
very well-known employer. And they said that they see the
amount of cost-sharing that they are going to have to do in
order to get under the excise tax threshold is so significant
that they are starting to make the cost-sharing steps now so
that it is a transition period so it is a little bit each year
between now and 2018.
And if I could make one request of the committee. To the
extent that you are going to do something about the excise tax,
I would urge you to do it in advance and not wait until the end
of 2017 because employers are making decisions in advance, as
well.
Mr. Wilson of South Carolina. Well, thank you for that
advice. And with the leadership of Dr. Phil Roe, we will be
working hard on this. And Chairman John Kline.
And in my brief end, we received word today that what small
businesses have to deal with are now 1,077 pages of
regulations, 1,377 pages of Treasury decisions, 669 pages of
notices, 100 pages of revenue projections, and 12 pages of
revenue rulings. How small businesses could probably put up
with that is just inconceivable.
Thank you. I yield.
Chairman Roe. Thank the gentleman for yielding.
Mr. Polis, you are recognized for five minutes.
Mr. Polis. Well, you know, a lot of what I am hearing from
the testimony is that you have some suggestions for improving
the Affordable Care Act. I mean, Dr. Troy and Ms. Roberts both
talked about the excise tax. Well, Mr. Courtney is leading the
way with a--with regard to a bill that would repeal the excise
tax.
And I think if the discussion is how do you modify the way
that the Affordable Care Act is paid for--and Democrats are
happy to have that discussion. They are happy to have that
discussion. Not everybody agreed with the excise tax in the
first place. There are other elements in the bill, like a
medical device tax, that many Democrats don't agree with.
But as long as these are presented in light of repealing
the Affordable Care Act and taking the necessary revenues out
of the subsidies and out of the tax support for businesses, you
are not really gonna have a real bipartisan discussion. So if--
if the problems you have identified, if we are serious about
solving them, I think we can get a real bipartisan discussion
going.
I wanted to briefly say that for Mr. Paal's testimony, I
was a little bit confused. Because it seems like the Affordable
Care Act doesn't really impact his business. It seems like--he
said he has 28 actual full-time employees, so he is not subject
to the mandate. So can't you, Mr. Paal, just keep doing
whatever it was you were doing before the Affordable Care Act
with regard to your employees?
Mr. Paal. It is a great question. Where it really affects
us is a number of our employees work three days a week or so.
So normal week for them is 25, 28 hours. That is what they want
to work, that is what we want them to work. They are in a part
time capacity. Because we have some periods of our year--of
course, the traditional retail season in the early winter. We
also have a great season at Valentine's Day for the ones that
you love. And everybody has got a mom they have to send some
flowers to on Mother's Day.
We have a lot of peak hours during those times. So our
employees that end up working 25 or 28 hours on a normal week
end up working 40 to 45 to 50 hours during those peak weeks. A
multitude of our employees are now eligible for health care
because their average number of hours is maybe 30 or 31 or 32;
46 weeks of the year they are operating lower. So that is a
concern for us.
Mr. Polis. So, you know, and again, people need to get
their health care somewhere. So either they are getting it from
their employer, they are buying it themselves, maybe they have
a spouse. If they are low enough income, it is Medicaid.
So without health care, essentially the cost of individuals
that are uninsured are foisted onto the rest of us. And others
are forced to absorb them. I think one of the biggest reasons
that the Affordable Care Act led to such a large reduction in
the rate of increase of health care cost is because it reduced
the number of uninsured and, therefore, reduced those costs
that got transferred onto the rest of us.
I too was a florist before I came to Congress. My company,
when we sold it, had about 250 employees. And we did offer
benefits to all of our full-time employees, which was the vast
majority of them had full benefits, as well. But it seems to me
that effects on a company that had 28 actual full-time
employees would leave you with more alternatives in terms of
how you cover them without having any detrimental effect on the
bottom line.
I would like to go to Mr. Brey. You mentioned that you
think competition is a good thing and that the Affordable Care
Act has given small businesses like yours the ability the shop
among many convenient insurance carriers. In fact, you said
your company used to only have a couple choices, and now you
and your employees have 110 options. Doesn't that sound like
this competition can benefit both you and your employees, and
that is one of the factors in reducing costs?
Mr. Brey. Oh, absolutely. I mean, there were years when we
had only two traditional insurers plus Kaiser. So the idea that
the marketplace is--you know, that the marketplace is--it has
allowed us to--and my employees to have access to so many
different plans and so many different new insurance companies
is, frankly, a little bit astonishing to me. It was more than I
hoped for when people first started talking about this.
Mr. Polis. As a former businessman, I agree with your
assertion that a boss should do whatever they can to ensure
that employees have health care. Can you talk briefly about the
advantages of offering employees health care? Besides the moral
obligation, why is it good for your bottom line to offer health
care?
Mr. Brey. Well, I am in retail. If people are healthy, they
are coming into contact with a lot of people. If people are
healthier, then they are not calling in sick. Put quite simply.
Mr. Polis. In addition, I know it helps retain your quality
employees and--
Mr. Brey.--sure. And so many retailers don't offer good
plans. I have been very proud for a long, long time to be able
to tell my employees listen, the insurance we are offering is
not some, you know, cut-rate plan. It is the very same
insurance that the president of the company and his family are
on.
Mr. Polis. And the lower the turnover rate of employees,
the lower your training costs are, the more that you can invest
in educating and professionally developing employees, as well.
Happy to yield back the balance of my time.
Chairman Roe. Thank the gentleman for yielding.
Dr. Foxx, you are recognized for five minutes.
Ms. Foxx. Thank you, Mr. Chairman. I thank our witnesses
for being here today.
Ms. Roberts, we have talked about how the law imposes
reporting requirements on employers regarding the coverage they
offer and to whom. It is my understanding that many of the
requirements relate to information that employers may not have
recorded and maintained previously, at least not in
administering health care benefits.
I would like to ask you to describe for the committee what
your experiences have been in complying with the health care
law's reporting requirements. If you could, talk about the
types of investments in human resources and information
technology that you have had to make to comply with the
requirements. Can you tell us about the considerable time and
money spent on complying with the ACA reporting rules? And will
they have produced any beneficial effect on any of your
employees?
Ms. Roberts. Yes. Knowing that the reporting requirements
were going to begin for the 2015 plan year, we started
researching the requirements of reporting last year at least.
The IRS did come out with their draft forms in July. And we
have anxiously been waiting for the guidelines ever since. They
were released in February. So since that time, we have been
looking into the exact reporting requirements.
Much of the information we have in our systems, our current
systems. However, it is a matter of integrating those systems--
time systems, payroll systems--and generating information in
the format that the IRS is requiring. Some of the information
that is required we don't have on our premises, believe it or
not. It is with our third-party administrator, such as the
former employees who are on COBRA. We must supply information,
employee names, and Social Security numbers, et cetera.
But also, codes that we have not factored in before. For
example, why they are not on our benefits. So this is going to
take some time in reprogramming our systems, setting up codes.
And it does take time for evaluating; pulling the information
and evaluating the hours worked and making sure we are
recognizing those benefits-eligible employees properly.
Ms. Foxx. Thank you. As someone who in my life in education
had to spend a lot of time on evaluation, I am really very
familiar about what a problem it is after you have begun a
program to try to go back and gather information when you have
not put into your program the kind of codes, as you say, that
now the government is requiring. And that can be a real, real
headache. So thank you for describing it, in just bare terms.
We appreciate it.
Mr. Paal, would you like to add anything to what Ms.
Roberts is saying about tracking the necessary data that you
are going to need to comply with the IRS requirements? You have
got, I think, outside groups helping you with what you do. But
have you had any useful guidance from the Administration? What
are you hearing from others in your industry about the
compliance effort needed for these reporting requirements?
Mr. Paal. What we are hearing on the requirements has been
changing consistently over the past several years. It is what
are we to do this time? Well, what is it going to be next year?
The most recent thing that we were able to do is to track
everything. We got the raw data. And we figure with that raw
data we can put it into any kind of a report that someone
wants.
You know, of course, when we are trying the reach out to
our tax professionals in tax season, they don't want a call
about what kind of health care reporting they want at the end
of the year. But, you know, it is--we rely heavily on our
professional advisers. You know, our attorneys and our
accountants. But again, you know, these folks charge by the
hour. So the more we use them for that, the more it costs us on
the bottom line in order to comply. So it is a combination of
time and cost.
Ms. Foxx. Thank you very much.
I yield back, Mr. Chairman.
Chairman Roe. Thank the lady for yielding.
I will now yield five minutes to the ranking member of the
full committee, Mr. Scott.
Mr. Scott. Thank you, Mr. Chairman.
Mr. Chairman, when we talk about the Affordable Care Act, I
like to remind people what the situation was when we were
actually voting on the Affordable Care Act. People with
preexisting conditions could not get insurance. Or if they got
insurance, they would be paying exorbitant rates; 14,000 at
some point during that time--14,000 people a day were losing
their insurance, millions every year. Fewer and fewer employers
were providing insurance. We were actually paying for the
uninsured - $1,000 on the average policy went to uncompensated
care; when people go to the hospital and don't pay. When
someone with insurance goes and pays, they got to pay a little
extra, about $1,000 extra on each policy. Costs were going
through the roof. Women were paying more than men. Insurance
abuses were commonplace.
And when those people talk about repealing and replacing,
it is interesting that there is no plan in sight that actually
improves on the Affordable Care Act. We are talking today about
broken promises. I guess there have been some broken promises.
We were promised by the opponents of the bill that this
would be a job-killer. In fact, since the passage of the bill,
we have had record job growth in the private sector.
Consecutive months that have been unprecedented. The promise
that there would be a shift to part-time work was also broken.
There is no evidence that there is any broad shift to part-time
work. The promise of skyrocketing premiums was broken. Since
2010, there has been a marked slow down of premium growth, as
Mr. Brey has indicated.
The cost of the Affordable Care Act was also broken. It is
actually cheaper than we thought. In fact, we have a little
chart up here. The blue bar is the projected 10-year cost of
Medicare and Medicaid payment by the Federal government, 10-
year cost. After the Affordable Care Act, the red bar is the
10-year projected cost of Medicare, Medicaid, Children's Health
Insurance Program increases, and tax credits under the
Affordable Care Act. And you will notice it is actually a
little shorter than the bar for the 10-year cost for Medicare
and Medicaid.
Now, I guess this is what we call a gruesome consequence or
broken promises or out-of-control costs. We actually during
this time insured 11 million people and are spending less than
before. Let's go over that again. Blue, Medicare and Medicaid
10-year cost. Red, Medicare and Medicaid, Affordable Care Act
tax credits, and children's health insurance. It's actually
less after 11 million people have been insured.
We forget that the Affordable Care Act is really the
Patient Protection and Affordable Care Act. Insurance abuses,
they can't cancel your policy when you get sick, they can't put
lifetime limits on your coverage, women can't pay more than
men. That is the patient protection part of the Patient
Protection and Affordable Care Act. And so I think we have to
put that--all of that into perspective. And we have heard about
people cutting back in hours.
Mr. Brey, could you tell me what you think would happen to
your workforce if you arbitrarily started cutting people back
to 29 hours?
Mr. Brey. They would get other jobs.
Mr. Scott. And so long as there is a good recession and
they are stuck, you could probably get away with it for a
little while. But as soon as they had options--
Mr. Brey. Oh, absolutely. They are gonna go. And, in fact,
the interesting thing is the very SHRM study that Ms. Roberts
cites, on page four of that it says, ``very few organizations
plan to reduce the total number of employees because of ACA.''
Only 5 percent of their respondents said that was gonna happen.
And that is kind of where I am. We just don't make those kind
of decisions based on this type of act.
Mr. Scott. Thank you, Mr. Chairman.
I yield back.
Chairman Roe. Thank the gentleman for yielding.
Mr. Guthrie, you are recognized for five minutes.
Mr. Guthrie. Thank you, Mr. Chairman. And I will echo
others and say it is great to have you back. And I think most
people around here say you are one of their favorite members in
Congress. And those of us who got elected when you did got to
know Pam. And we know why you are great, because you had a
great wife. And we really, really appreciate her. And you are
in our prayers. Thanks.
First, I want to thank everybody for coming here. My
background is manufacturing. So I had--in the business
environment--offered health insurance and still offer health
insurance. And I was a human resources manager in a lot of
respects. As a family business, as Mr. Paal said, you do a lot
of everything, don't you? But I was also in charge of benefits.
So I understand the frustration. And I sympathize for how
difficult this law can be.
As we talk about a lot of the pieces of the law, like we
talk today about the employer mandate, the Cadillac tax, the
health insurance tax, the benefits mandates, et cetera. But
there is one piece of the law that I want to bring up that
really concerns me. And that is the definition of a ``small
group employer.'' In the health care law until January 2016, a
small employer is defined as one with 1 to 50 employees.
However, on January 1, 2016, that definition will change to 1
to 100 employees. Those employers who have 51 to 100 employees
will overnight be subject to many of Obamacare's benefit
mandates, community rating rules, the essential health
benefits, health insurance tax, composite rating rules, and a
prohibition on group discounts. And that is just the name a
few.
And we have looked at an Oliver Wyman study that estimated
that this change will increase premiums for these employers by
18 percent. I think Mr. Brey said that the difference--small
businesses typically pay 18 percent more than larger groups.
And so it is kind of in line with this study that these
employers from 51 to 100 will necessarily increase it by 18
percent just because of the rating rules alone. I have serious
concerns about what this will mean for the ability to provide
quality affordable health care for their employees.
And I have introduced a bill, it is H.R. 1624, the
Protecting Affordable Coverage for Employees Act, that would
stop this provision from going into effect and maintain the
current definition of a small group employer as 1 to 50
employees. And I am proud to say, as Mr. Polis talked earlier
about opportunities to do things together, I am proud to say
this is bipartisan--I have a Democrat cosponsor. It has
bicameral support. And we have gotten through the bill--that we
have gotten for the bill. And I hope this is something that we
can take action on in this Congress.
And in the time left, I know that you guys have full-time
equivalent, less than 50 employees. I think you were saying--so
you were in the 1 to 50. This wouldn't affect you, 51 to 100.
But I don't know Dr. Troy, if you have looked at this at this
provision before. Do you have any comments on that? In not,
we--
Dr. Troy. We look mainly at the impact on large employers.
So these are a thousand or more. So this change wouldn't really
affect what is happening on large employers. And we have not
studied this provision specifically for that reason.
Mr. Guthrie. Okay. I didn't know if any of you had any
experience with that. Well, I appreciate that. I think it is
important. And there are things that we need do to fix issues
for these people. And look forward to continuing to work for a
bipartisan, bicameral basis to move this forward.
And Mr. Chairman, I yield back.
Chairman Roe. Gentleman yields back.
Mr. Pocan, you are recognized for five minutes.
Mr. Pocan. Great. Thank you, Mr. Chairman.
So let me just raise one point, and then I want to get into
what I really want the talk about. I think one of the myths--I
know there are two hearings today going on roughly around the
same subject. I think one of the myths is about the number of
businesses affected. And I just want to put, you know, just out
there, 96 percent of employers are small businesses that have
fewer than 50 employees, thus are not affected by the employer-
shared responsibility provisions. I am one of those. I have had
a business for 28 years.
And then the overwhelming majority of the remaining 4
percent, 95 percent of the businesses with 50 or more employees
and 98 percent of the businesses with 200 or more employees,
already offer coverage. So we are talking about a relatively
small number. Not that any small number is insignificant. But
the vast majority of employers--let's face it. We have an
employer-based health care system in this country. And the vast
majority are providing that or, in the case of the small
employers, are not necessarily required to. But this is the
system that we have in the country. And that is what we really
have.
There is a slide I would like to put up I think that we
have regarding the average premium for employer-based family
coverage. You are not going to see the bottom colors real well,
so I will try to explain them. And I think from the testimony,
I know Mr. Brey specifically brought up the cost of health
insurance. I know with premiums increases I used to have too,
double digits for many, many years for my employees.
[The information follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
And if you look at that line, that is--the top line shows
you where the trend was going. But the bottom line, you can't
quite tell, but there is a blue line showing where the actual
costs have been since the passage of the ACA and where they are
expected to go. And this not only corresponds with your
testimony, Mr. Brey, but with my experience. I actually had
employees' health insurance go down this year. I haven't seen
that since maybe I had hair. And it has been a long, long time.
So I was really excited to have that actually happen.
But also, I was talking to the administrator of a hospital,
Meriter Hospital in Madison, Wisconsin, who told me as soon as
the Affordable Care Act passed, their costs have really
flattened. Now, being a business person, lowering the cost of
health care means you are going to ultimately lower the cost of
the premium, which means there will be a lower cost to the
business. And since many businesses like yourself, Mr. Paal,
you are talking about capping how much you offer to the
employees. That means the employers will ultimate will have--
the employees will ultimately have more money in their pockets
because that cost is going to go down. So I am looking for the
downside on that aspect. I don't know if I see it as an
employer.
Mr. Brey, specifically, can you share your experience, you
know, talking about those increases prior to 2012 and the
increases now?
Mr. Brey. Well, they were almost always double digits; 9
percent, 11 percent, 13 percent, 15 percent. And in--you know,
Maryland already mandated certain small group coverages. So
what the insurers did is they used the average age of the
group. So the intrinsic increases that you are talking about,
that doesn't include what happens when you cross an age band.
So, for example, you are already going to have a 10 or 13
percent increase, and then the average age of your group goes
over 40, you know what happens. And at one point, I actually
removed myself from our own plan because I was the oldest
employee and went on my wife's plan, which was substantively
identical, only to lower the average age of the group for one
more year because the last thing I wanted to do again was tell
my employees about another change in our health coverage.
Mr. Pocan. I remember one time getting a 12 percent
increase, and I was really excited about getting that for a
year. And that is why, like, this year was really different.
Mr. Paal, in your experience prior to 2012 to now, the
increases, clearly, you must have also experienced what Mr.
Brey and I have experienced, much higher increases and now we
have got a little bit of a flattening event; is that correct?
Mr. Paal. Absolutely. We have experienced the same type of
increases consistently year over year.
Unfortunately, what we have seen is a lot of specific
examples. When they did away in Maryland with the average age-
based pricing, they price out each employee individually. Which
means, you know, prior to ACA, everybody in our company paid
the rate of a 43-year-old. Well, now the 62-year-old pays the
rate of a 62-year-old. And that cost is substantially more.
I took a look at some of the figures in regards to that
employee. His premium three years ago when we had a shared
group, his premium was $242. His premium on our most recent
renewal, he declined it because it was too much money, would
have been $630.
Mr. Pocan. Okay. So now looking, you say that the actual
employer's cost to insure a full-time employee range from $107
to $322 a month? Is that your current?
Mr. Paal. That is--right. That is--what we do, we pay 50
percent. So--
Mr. Pocan. I gotcha.
Mr. Paal. So double that number and that is what the total
price is for his insurance.
Mr. Polis. Gotcha. And if--you said it would increase $2 an
hour potentially under the ACA-defined small business employer
plan. I am averaging it out. That is about $346.66 a month.
Which would be slightly more than the $300 cap you have, but
actually would be within that realm.
Because I know we--we provide 100 percent for our
employees. Because part of it is you are being competitive;
right? I mean, I know you mention in here you can't charge more
for roses. I looked at your Web site. I noticed you don't
compete on price. Because you shouldn't compete on price. That
is what we are all told. I foolishly named my business Budget
Signs, so I have to deal with that a little bit, when I was 23.
But I learned.
But, you know, you have service, you have all the other
things you compete on. So technically, it is not true it is
just based on the price of roses. People go to you for a lot of
other reasons. But it seems like there is some wiggle room in
here on the numbers on that.
Mr. Paal. What I was trying to illustrate there is that,
you know, and being in business, you understand you have a pot
of money that you can pay to an employee in compensation.
Mr. Pocan. Sure.
Mr. Paal. You can pay it in salary, you can pay it in
salary and benefits. But it is still the same amount of money.
If I take that money and I give it to an employee, I am
required to offer them the benefits. So a portion of that gets
shaved off and I can only pay them a little bit less in salary.
Whereas, if they go to one of my competitors to do the exact
same job, that competitor can take the same bucket of money,
pay them a higher salary, they can go to the exchange. They are
eligible for a subsidy.
At the end of the year, they have got $2,300 less working
for me working the exact same job, exact same hours, exact same
employer's costs in compensation doing the same thing in the
same town. That just seems silly.
Mr. Pocan. Yes. My time is up, otherwise I would ask you
another question--
Chairman Roe. Thank the gentleman for yielding.
Mr. Messer, you are recognized for five minutes.
Mr. Messer. Thank you, Mr. Chairman. Again, I would want to
echo the comments of so many others that have talked about how
beloved both you and your wife Pam are. And just want you to
know you continue to be in our prayers. Thank you for being
here.
You know, last Congress with Chairman Roe's leadership, we
had a field hearing in my district focusing on the Affordable
Health Care Act's impact on schools, on workplaces. Congress
needed to hear directly from employers about the true impact of
this law.
I have to tell you, much of the testimony that I have heard
today reminds me of the economist who saw something working in
practice and wondered if it worked in theory. And, you know,
the reality is that you can talk about all the theory you want
here--millions of employees are being impacted by this law. For
many, they have lost their health care policy. For many, they
have lost their doctor. For many, they have seen their prices
go away.
That hearing highlighted that the employer mandate creates
a catch-22 for both employers and employees. There is a high
price to pay, whether or not businesses and schools comply with
the law. For example, witnesses were faced with paying the high
cost for health care that is spiking, paying a high tax, or
cutting employees or employee hours.
That is why I introduced the School Act last year, which
would exempt schools from this onerous provision, eliminate
this odd circumstance where we are taxing schools and local
municipalities to pay for the President's health care law. I am
going to be reintroducing legislation that would deal with the
employer mandate and redefine a large employer as an employee
with 100 or more employees for the purposes of the individual
mandate, instead of the current threshold of 50.
As Brett Guthrie talked about earlier, there is a
difference between the benefit regulatory compliance and where
the threshold is for the employer health care mandate.
Mr. Paal, in your testimony you mentioned the unknown cost
of insuring future employees, and it has made you apprehensive
at potentially expanding your business. As a business owner who
would have to comply with this tax, would that change from a 50
to 100 employee threshold help you in your business in
considering the next employee you hire?
Mr. Paal. Absolutely. You know, a great portion of my
expansion that I have performed over the past decade has been
in acquiring existing flower shops. Because they then become
part of our company, very few of these other flower shops--in
fact, not a single flower shop that I have purchased offered
health care coverage to their existing employees. So when they
come onboard with us, the full-timers always got health care,
because that is what we do.
I would have to double the size of my company--which I
would love to do. But it is going take me a little while to do
something like that before I get up to 100. I have just crossed
the 50 threshold on the FTE. So having a cap at one hundred, I
think that is--that is very appropriate. I mean, I run a bunch
of Main Street flower shops. You know, it is not a large
manufacturing corporation. It is a bunch of Main Street
businesses.
Mr. Messer. Yes. And thank you.
And Dr. Troy, I will ask you for maybe a little bit of
insight on the Cadillac tax, the health care cost there. I
represent a largely rural district with manufacturers, other
entities. One of the challenges that district has with the
Cadillac tax is that because it is based on the gross cost of
employee--and in the rural areas, there is not the kind of
competition that drives down cost that there can be in more
highly-populated urban areas--this tax could disproportionately
impact small towns and rural America.
Can you comment a little bit on that reality?
Dr. Troy. Yes. One thing we are finding with the excise tax
is it is--as conceived, it was a Cadillac tax. It seemed like
it would hit big corporations with generous health care plans.
But it is hitting a lot of places that are unanticipated,
including rural districts, as you were saying. But the states,
localities, a number of union members. Unions are against it
because it affects their health plans. So it is having wider
impact than originally anticipated.
Mr. Messer. Thank you.
No further questions, Mr. Chairman.
Chairman Roe. Thank the gentleman for yielding.
Ms. Bonamici, you are recognized for five minutes.
Ms. Bonamici. Thank you very much, Mr. Chairman. And
welcome back, Dr. Roe.
I want to thank everyone, all the witnesses for testifying
before the Subcommittee today. It is clear that people have
pretty strong opinions about the actual health care law. But
there does appear to be a commitment among everyone that people
in this country should have access to affordable health care.
And I appreciate that very much.
In my home state of Oregon, where implementation was, let's
just say, far from perfect, we have been reminding ourselves
many times that the law was about more than Web sites. It
really is about access to health care. We have seen a lot of
positive effects, including the fact that the uninsured rate
last year was less than 12 percent. The year before, it had
been closer to 20 percent.
It is important that we have this conversation about the
benefits of the Affordable Care Act. And I really hope that my
colleagues can work together, as Ranking Member Polis was
saying, so that we can address the concerns; these concerns
that have been raised about lack of clarity or inconsistencies
and even cost without rolling back the benefits for Americans
that they have seen from this health care law.
Now, Ranking Member Scott did a great reminder of what
things were like before the Affordable Care Act. I wasn't here
in Congress when it passed. But I used to work as legal aid
helping low-income families. And there were a lot of families
that would come in absolutely desperate with high debt. They
wanted to file bankruptcy. And typically, that was because they
had unexpected medical bills from either inadequate or no
insurance.
Now, post-Affordable Care Act, recently I had a
conversation with a doctor in Oregon. He said he used to
volunteer at a free clinic. They don't need him anymore.
Because so many people have coverage, they don't need to go to
the free clinic. So I am looking at the benefits and hoping
that we can, again, work together to address the
inconsistencies and get some more clarity.
And I would also wanted to talk about this, because we are
really focusing on small businesses. I had a great conversation
in the district I represent with a manufacturer. At the end of
2013 I went out to visit the business. And I said tell me how
things are going with the implementation of the Affordable Care
Act. And he said well, we are close to having 50 employees. We
were really concerned because we want to grow so we went and
talked to our broker, and we found out that even if we grow our
employees will be getting better coverage and not paying any
more. Let's go see the factory. So we have to talk about how
this is actually working and helping a lot of employees and
employers.
And Mr. Brey, I wanted to ask you. You talked about all of
the choices you have now as a small business owner. I think you
said more than 100 choices, which doesn't sound like a
government takeover of health care. It sounds like the free
market working.
So can you talk a little bit about the process, compare
before and after the Affordable Care Act. Just navigating the
system, talk about whether there is enough support out there,
enough information. I actually have someone in my Oregon office
who is there to help constituents and small businesses if they
have questions about the ACA. But are you getting enough
information out there to get through this and, as you said, go
through those choices and make decisions about your coverage
for your employees?
Mr. Brey. Sure. You can always have more information, I
think, when it comes to things like this. But even you know
when we were a much smaller company, you know, we went to an
insurance broker. So we have always all along, I guess, had
kind of advice to help us through all of the changes and things
that have happened.
So, you know, I haven't found it as a small employer
particularly difficult. That is not to say that there aren't--
you know, it couldn't be better. But we had--you know, there
was one point in Maryland as I mentioned before, we literally
had two insurers offering coverage. and plus Kaiser, which we
couldn't do because we were expanding into an area that wasn't
convenient for my employees.
So, you know, the idea now that we have insurers offering
coverage that I have never even heard of in Maryland I think is
exciting. I think it is an example of the law at least starting
to work the way it is supposed to.
Ms. Bonamici. And it is interesting. Because I know both
Mr. Paal and Ms. Roberts talked about spending more time now to
try to get coverage for their employees. But are you spending
more time, less time, about the same time?
Mr. Brey. You know, I always hated being the HR guy, the
benefits person, in my company. So I think there was a period
of time at the beginning of the Affordable Care Act's passage,
and then there was a year there I think as things starting to
come in where I did probably spend some more time. But it is
time I have spent now. And I know where we are. And we are on
an ACA plan and we know what we are doing.
Ms. Bonamici. Thank you. And before I yield back, I just
want to again say, Mr. Chairman, that I hope we can work
together to make this law work, to make sure that people do
have access to affordable health care, and that we work out
some of the inconsistencies that are making it challenging for
some of the businesses that testified today and across the
country.
Thank you. And I yield back.
Chairman Roe. I thank the gentlelady for yielding.
Mr. Allen, you are recognized for five minutes.
Mr. Allen. Thank you, Mr. Chairman.
And being that I have been a member of Congress for just a
short period of time, but prior to that I actually worked for a
living in the business community for over 30 years in the state
of Georgia. And unlike, I guess, Maryland, which has had a
mandated program for some number of years, Georgia has not
mandated-employer health plans.
In fact, it was the business community that started in the
health care business. Just a little history that I thought
might be interesting is that when the government actually
capped wages during World War II is when the business community
began to offer health insurance and other benefits to
supplement their workforce. So that tradition has continued.
And it has become a very important benefit for our employees. I
know our employees, we had a shared program that we thought
worked pretty well. And we encouraged our folks to participate
in it.
As early as the Great Depression, the government has wanted
to get in the health care business. In fact, it was
contemplated in the Social Security law that the government get
involved in health care. And, of course, now the government
owns health care and has mandated that businesses offer health
care or either send their people to the exchanges. Which,
again, creates tremendous uncertainty in the marketplace at a
time in our economy--we don't have the Great Recession, but I
don't think growing the economy at 2.5 percent is going to get
this country where it needs to be.
And I think that this plan is the greatest impediment to
economic growth in this country. Everyone knows, and I think
everyone will admit, that the thing is flawed. And there are
two big question marks here. Do you fix a flawed program, or do
you start all over? And I think that is the debate that we have
before us.
One of the things that is of great concern in my direct is
our rural hospitals are going out of business and our rural
medical practices are moving to urban areas because it has
wrecked rural health care. You know, deductibles--and I think
probably one of the biggest reasons for that is that if you
talked to any hospital today, the thing that is driving down
cost is the fact that deductibles on the standard plan are
$1,300 to $2,600 per family. And then on the bronze level, they
have gone from $5,100 to almost $10,500.
Now, I can tell you because of this economy and the last
few years, folks are living week to week. And when they have to
have some type of medical procedure, they simply don't have the
cash or the money to pay for it, which is a dangerous health
care issue in this country.
And with that, Ms. Roberts, I would like to ask you,
obviously, you are debating this high-deductible plan versus
your current plan. Obviously, these deductibles are a big
challenge for you. What are you all looking at as far as a
deductible? And how do you think that will affect the health
care of your employees?
Ms. Roberts. If we decide to go to a full replacement to a
high-deductible plan that is very similar to our ACA high-
deductible plan, we are looking into helping our employees
through wellness incentives. We would reward certain behavior
with contributions, perhaps, to an HSA that would offset these
higher deductibles.
However, as I mentioned in my written statement, the EEOC
is looking at wellness plans very carefully and wanting to put
a cap on that. That would also be a challenge for us because,
as you mentioned, with a high deductible, the insurer must meet
the first $1,500 or higher before any insurance coverage would
kick-in.
Mr. Allen. Okay. As far as the overall effect that it has
had on growing your company, do you think without this law that
Morris Communications could have expanded its business?
Ms. Roberts. We have had to look very carefully at how we
spend our money. Revenue is very hard to come by in a mature
industry like the newspapers. So every time we look at what we
can do for our employees, for example, with the excise tax, we
see that as an impediment to funds that could be better used on
our employees.
Mr. Allen. To grow jobs.
Thank you. And I yield back.
Chairman Roe. Thank the gentleman for yielding.
Mr. Courtney, you are recognized for five minutes.
Mr. Courtney. Thank you, Mr. Chairman. And welcome back.
So, first of all, I just want to make a few observations
and join my colleague, Mr. Polis. You know, coming from a state
that embraced the Affordable Care Act--Governor Malloy, you
know, moved quickly to set up an exchange. We are now into year
two of the exchange operations. And again, we have seen
dramatic increases in terms of uninsured. We have basically cut
it in half; in the state of Connecticut, about 500,000 people.
We are only a state of 3.3 million people.
The insurance department just did a second round of rate
filings for 2015. Again, both exchange plans and non-exchange
plans. And I would like to just sort of offer for the record--
because rates went down. They didn't go up in 2015. The savings
were in the millions to both small employers, individual health
care plans, and across the board. I mean, Blue Cross, you know,
Cigna, United Healthcare, and some of the smaller plans.
We have more insurers in the marketplace; Harvard
HealthCare from Boston just announced they are again opening up
for business in the state of Connecticut and another insurer
out of Springfield, Massachusetts, is also moving in.
So we have more competition, more choices. And that is why
an employer in the heart of my district from eastern
Connecticut, Willimantic Waste, basically saw their rates go
down for 2015. Because they actually had more competition out
there amongst different insurance providers competing for the
business. They have about 275 employees. You know, they--it is
a trash removal service there. And, you know, it is--and they
were very nervous about this law. I mean, we had a lot of
dialogue back in 2010 when this measure was introduced.
So, Mr. Chairman, I would like to enter the Connecticut
State Insurance Department's chart for rate reductions for 2015
and ask that be made part of the record.
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Chairman Roe. Without objection, so ordered.
Mr. Courtney. And again, I would say listening to the
testimony and reading it, as Jared said, if we are gonna get
off of the political theater and really focus on legislating,
we can actually I think do some good things. Both in this
committee and the Congress as a whole looking at this law.
If you go back to 2010, when the excise tax, I would argue
was cobbled on to the bill at the end of the process, the House
passed the Affordable Care Act with no excise tax. And I think
that is an important point for people to remember. It is not
some intrinsic, you know, pillar of the law. The fact is it was
the Senate Finance Committee that, frankly, adopted a lot of
economic thought, that taxing health benefits has been a
mistake in America going back to World War II. And this was, in
my opinion, a pretty mangled version of trying to promote that
sort of--that philosophy.
And 192 House members actually signed a letter protesting
the Senate's inclusion on this. The bill that they initially
proposed would have gone into effect in 2013 with much lower
tax thresholds for the 40 percent excise tax. Because of that
push-back, the law was delayed five years to 2018. The
thresholds were raised, we excluded vision and dental. You
know, this was something that was a very hotly-contested item.
And as we now know, looking at the reports that are coming in
from actuaries, whether it is Towers Watson that is working for
Fortune 500 companies, Milliman and Associates, who just did a
study for the teachers union. We have got Mercer.
I mean, again, all the sort of, you know, blue chip
analysts that are out there is that, again, this is still a
flawed mechanism; that the incidence of tax is gonna hit
basically regions of the country geographically. Because that
drives premium costs much more than benefits. And so-called
Cadillac benefits, as well as gender and age.
And so that achieves nothing in terms of trying to have a
more efficient health care system and promote quality and
affordability. So again, I would just say to the chairman,
there are many of us who, again, were very concerned about this
proposal, you know, back in 2010. It was a truce that was
agreed to. It was not an agreement when that was incorporated,
the five-year delay. And it was well understood that it would
be revisited, again, as we get closer to the time.
And as I think the point was made, now is the time to do
it. The fiscal note from the Congressional Budget Office is $87
billion over 10 years. That has actually come down fairly
significantly from the last couple of years or so. And I am an
optimist. And I know we have got a great chairman here. I have
been on some bills with him -on IPAB-and a couple of others.
But again, the question is are we gonna do this surgically?
And--which I think is the appropriate way to do this. And if
you do that, then, frankly, I think some good things can
happen.
So I want to thank all of the witnesses for being here. As
a former small employer, I lived the life of double-digit
increases. And we are very excited in Connecticut that the
changes that are taking place are particularly helping. We had
the largest job growth in 2014 since the 1990s. So, you know,
that ain't bad, despite all of the, you know, sort of, you
know, predictions of doom and gloom.
So with that, I yield back.
Chairman Roe. Thank the gentleman for yielding.
Mr. Walberg, you are recognized for five minutes.
Mr. Walberg. Thank you, Mr. Chairman. And welcome back, as
well. And may I add the fact that I honor you for doing what I
as a minister for many years standing in front of a couple
taking the oath to love and cherish until death do them part,
you exemplified that. I honor you for that.
Ms. Roberts, thank you for mentioning the wellness issue,
as well. I think it is a misguided thought, let alone approach,
from the EEOC that goes directly opposite to what we really
ought to be doing; to encourage people and to make sure people
have equal opportunity in health, as well.
But you have mentioned the statistics of companies having
to change their health care benefits packages to comply with
the ACA mandates, fees, and taxes. One change has been to offer
fewer benefits, but increase taxable wages. That has been
mentioned several times this morning; for employees to pay for
their own health care costs.
How has this and other changes been received by employees,
that you are aware of?
Ms. Roberts. This year, as I mentioned, at Morris was the
first year that we introduced a high-deductible plan. And that
was to align and comply with the ACA. It needed much more
communication on how this type of insurance plan works. People
are accustomed to their copays and then a small deductible and
then a co-insurance. However, we have had to explain that while
these premiums are much lower than you are used to, beyond your
wellness benefits, everything else will be out of pocket until
you hit that high deductible. So that takes a lot of education
for these employees.
Morris was already paying 100 percent of wellness visits
prior to the ACA. So that part is easy to communicate. But just
the difference between a preferred provider organization-type
insurance plan versus a high deductible, we have had to do a
lot of education with our employees.
Mr. Walberg. Well, I think along with that, the evidence
is--I have heard my colleagues' conversation about the benefits
of the ACA. And there indeed may be--and I would debate it. But
there may be more people who have health insurance coverage
now, but they don't necessarily have health care. And I think
that is a challenge. When you get down to the issue of the
cost, the deductibles, the prescription cost increases. And
ultimately, people who have a health insurance policy, but
can't afford the health care from that point.
Dr. Troy, beginning last year, individuals and small
businesses began paying a tax on the health care insurance
products they purchased. The tax increased 40 percent this
year. And according to the United Health Care health insurance
filings in Michigan--and I could give other stats from other
health care providers, as well, that would coincide. But United
Health care says a family of four in Michigan will pay $537 in
increased premiums due to this ACA tax.
Will this increase in small business health insurance tax
push more businesses past the excise and, slash--and coming
from the motor capital of the world, I hate the use Cadillac in
a pejorative way. But we understand what it says. It is a
luxury, a fine car. This isn't a fine law. But it will push
businesses past the excise Cadillac threshold. What is your
response to that?
Dr. Troy. Well, we are finding that the--and I don't see it
as a pejorative to say, Cadillac tax. Because it means a
praiseworthy product, something that is of high value--
Mr. Walberg. Okay--
Dr. Troy. But what we are seeing is that the Cadillac tax,
because of the version you mentioned, but others as well, is
hitting more and more and more employees over time. And that by
2031, for example, it is going to hit the value of the average
family plan, which means that in many ways, the excise tax or
Cadillac tax acts a little bit like the Alternative Minimum
Tax, which was designed to hit only a very small number of very
wealthy employees in the late 1960s, and then eventually grew
until it hit many middle class employees and taxpayers.
So similarly, we think that this is going to be hitting
more and more people over time. Not just people in so-called
Cadillac plans, but in--
Mr. Walberg. Is it a bug or a feature of the law?
Dr. Troy. You are asking me sir to speak to intent. I can't
say. But it seems like it is a feature; that the idea if you
accept the Gruber comments, is that the idea was to try and get
the--to tax the higher-valued plans and to make individuals pay
more without it seeming like the tax would be directed at
individuals.
Mr. Walberg. Thank you.
My time is expired.
Chairman Roe. Thank you, Mr. Walberg.
Mr. Takano, you are now recognized for five minutes.
Mr. Takano. Thank you, Mr. Chairman. And personally, it is
great to see you back. And appreciate your being here. And you
are a great, great colleague on the other side, and we would
like to work with you on fixing some of the features of the
law.
It has been five years since the Affordable Care Act was
passed. The last five years have met real progress for my
constituents and the residents of California. When I took
office in 2013, a quarter of my constituents were uninsured.
Now more than 4 million Californians, who could not get
coverage, have health insurance through the state marketplace
or Medicaid. Nearly a half a million Californians got rebates
when insurance companies failed to use premium dollars to pay
for health care, and another 400,000 seniors in the state saved
close to $400 million on prescription drug costs. That is
nearly $1,000 per beneficiary.
Now, while there are many areas in the law that need
improvement, we can't go back to the days when people could get
kicked off of their plans as soon as they got sick or find out
too late that they exceeded their plan's annual limit when they
need it the most. I am sympathetic to fixes that help make the
law more effective and address things like the excise tax on
high-cost plans. But I do not believe that repealing the entire
ACA is the right path forward.
And, you know, I thought--I really appreciated the
legislative history lesson that we got from my colleague from
Connecticut. It reminds me, I was looking up on my iPhone what
the--who originated the quip, ``the Republicans are the
opposition, but the Senate is the enemy.'' And that might have
been the case here. But in this particular case, it sounds like
that was what happened; that something got attached in the
Senate Finance Committee and the House bill never intended to
have the excise tax.
But let me just go on to say that, you know, the ACA has
improved coverage for millions of Americans and provided over
11 million more through the marketplaces. And I want to
emphasize that when we often talk about the law in the
abstract, that there are some very real people that have been
protected by this law.
For instance, Bob Kamack, from Alpharetta, Georgia has an
incurable brain tumor. After he was diagnosed in April of 2013,
he feared that he would be kicked off of his wife's employer-
based insurance policy or offered prohibitively expensive
premiums. Bob is grateful for the ACA's consumer protections
that allow him to have quality coverage that won't jeopardize
his family's finances.
Bob has said that his type of tumor is, ``one of the best
you can get,'' because it is slow growing and responds to
treatment and he expects to live anywhere from 5 to 20 more
years. Bob has said that, ``I have seen so many people lose
everything because they have gotten cancer early in life.''
``My biggest fear''--oh, this is a continuation of the
quotation--``my biggest fear is that the ACA will be overturned
and I will leave my family in debt.''
Bob's wife's premium is fully covered by her employer-
provided insurance. Specialist visits are $60 and his
deductible is within a few thousand dollars. Bob feared that
without the ACA's consumer protections for people with
preexisting conditions, his coverage would have been denied.
Ms. Roberts, now, you are just a few--I don't know how many
miles. But you are fairly close to where Mr. Kamack lives. Can
you discuss what might have happened to him and his ability to
obtain affordable coverage in the absence of these consumer
protections like the preexisting conditions? And I realize that
there is some--there is some issues that you are dealing with
trying to--with this excise tax coming up. But would you at
least say that--concede that the ACA would have protected
people like Mr. Kamack from being kicked off their policies?
Ms. Roberts. Even prior to the ACA, Morris Communications
did not kick people off their plan because of certain
conditions or discriminate on any type of conditions. Employers
like Morris had good plans before the mandate, and we continue
to have good plans. Some of which we absolutely agree with the
mandate, very parallel coverage.
So if he were an employee on our plan or his wife was an
employee, he would have the same coverage regardless of his
illness.
Mr. Takano. So just to clarify. It could have been the case
that the premiums could have risen to a certain level that
might have made it prohibitive. Maybe you were a company that
would have tried to work against that and would have tried to
keep people on the plans. But the truth is that many people
could be priced out of those plans or they could have been, you
know, just simply not accepted by the insurer. And the ACA
protects those folks.
Now, I understand there is some difficulties with the
excise tax, which has caused you to take a look at
restructuring your health plans, which not be so likable by
your employees. But nevertheless, I think that this case with
Mr. Kamack shows us that in Georgia, the law has protected
people like him from being discriminated against by the--or
summarily just kicked off of insurer plans.
Mr. Chairman, I will yield back at this point. And I asked
my questions. And thank you so much.
Chairman Roe. I thank the gentleman for yielding.
Mr. Hinojosa, you are recognized for five minutes.
Mr. Hinojosa. Thank you, Chairman Roe. Can you hear me? I
also want to welcome you back to the committee. And know that
working with you on this committee and other caucuses that you
and I serve on, I have learned to appreciate and respect the
great work that you do here in Congress.
I ask unanimous consent that a letter from the Small
Business Majority outlining their support for the Affordable
Care Act, which explains the law's benefits to small businesses
and workers while reducing the job loss and lowering health
care costs, be entered into the record.
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Chairman Roe. Without objection, so ordered.
Mr. Hinojosa. Thank you. Despite the rhetoric from my
friends on the Republican side of the aisle, the facts speak
for themselves. The Affordable Care Act is working. Today, the
percentage of uninsured Americans is the lowest in 50 years.
And the facts show that in 2014, health care spending grew at
the slowest rate on record and that 129 million Americans with
preexisting conditions can no longer be denied coverage. Since
2011, as a result of the Affordable Care Act, Americans have
saved a total of $9 billion on their premiums.
Last month, the Congressional Budget Office announced that
the Affordable Care Act will cost $142 billion less over the
next 10 years than they originally thought. Just yesterday,
April 13, a Gallop survey that was released showed that nine
out of ten adults now say they have health insurance. This
morning, another Gallop poll was released showing that the
uninsured rate has dropped to 11.9 percent, which is 5.2
percentage points lower than it was at the end of 2013.
So millions more Americans now have affordable, quality
health insurance. In addition, the uninsured rate among
Hispanics has dropped by 9.3 percent since the end of 2013. And
these numbers cannot be denied.
Now, we hear a lot of rhetoric on how burdensome some
believe the employer-shared responsibility provisions are.
Again, let's look at the facts. Over 96 percent of all small
business employers are exempt from the shared-responsibility
provision. And of the remaining 4 percent of small businesses
it applies to, the overwhelming majority of them already
provide health insurance for their employees.
So the ACA also makes it easier than ever for employers to
provide health insurance for their employees through the newly-
created small business exchanges. The ACA is here to stay. It
reminds me of Social Security, reminds me of Medicare and how
when they were signed into law there were 30 percent who said
it would never work, it would never work. And look at how well
it works today. Instead of continuing their endless
obstructionism, I would hope that my friends in Congress on the
other side of the aisle would instead work with us to
strengthen the law for future generations.
My first question goes to Mr. Brey. Would it be fair to say
that before the ACA, your choice of insurance options for your
employees were limited?
Mr. Brey. Beforehand? They were limited, yes.
Mr. Hinojosa. How has that changed since the passage of the
Affordable Care Act?
Mr. Brey. We have more companies offering in Maryland for
small group. And we have many more choices and variety of plans
to choose from.
Mr. Hinojosa. Mr. Brey, we have heard stories of how
businesses must now deal with more paperwork, and they are very
unhappy about that. So, when obtaining insurance for their
employees, what has your experience been as far as a lot of
paperwork?
Mr. Brey. Don't let me be too Pollyanna about this.
Anything I can do or anybody can do to reduce paperwork faced
by small businesses and large businesses, for that matter, I am
in favor of. But my personal experience was that there was a
little bit of a learning curve in the beginning. But once we
were through that, we are moving forward.
Mr. Hinojosa. Mr. Brey, can you talk a little bit on the
coverage for employees that you and your family now have?
Mr. Brey. It is--again, Maryland mandated some small group
provisions before the Affordable Care Act came in. Meaning that
for an insurer to offer insurance in Maryland, they had to meet
certain criteria. So from my perspective, there has not been a
huge change.
Mr. Hinojosa. My time has expired.
And I yield back.
Chairman Roe. I thank the gentleman for yielding. Ms.
Wilson, you are recognized for five minutes.
Ms. Wilson of Florida. I would like to offer my condolences
to Chairman Roe and welcome you back. Looking forward to
working with you. And I want to thank you for convening this
meeting and Ranking Member Polis for this hearing. Thank you so
much.
As a lifelong educator, I cannot stress enough how
important health is in ensuring children have the opportunity
to develop, learn, and grow. Not only does this include the
health of the child, but the health of the parents. And this is
where the ACA is working. The ACA is working to ensure that
parents have access to affordable health insurance.
And I am proud to say that this year my home state of
Florida led the nation in the number of enrollees on the
federal marketplace, with nearly 1.6 million Floridians finding
quality affordable health care. And now I am fighting for them
to expand Medicaid so millions more can be covered.
Because so many Americans can access health insurance on
the marketplace, parents are no longer stuck in their jobs for
fear of losing their health insurance. This means more parents
can go back to school or train for a career that will allow
them to better provide for their children. This means more
parents can choose to work part time and care for their young
children. This means parents have the flexibility to make
decisions that make their families stronger.
The ACA is also working to ensure that more children have
access to health insurance. Although many of the ACA provisions
and directives are increasing adult care coverage, research
shows that when parents are covered, children are covered, as
well. And more parents are getting covered. The ACA is also
working to ensure that children have access to better health
insurance.
The ACA ensures marketplace insurance plans, as well as
employer-sponsored plans, covers preventive dental and vision
services for children. This means more parents can take their
children to get their flu shots this year. This also means that
more parents can afford to take their children to the eye
doctor to get the glasses they need to do better in school. And
I noticed that many of you are using reading glasses. And you
can imagine what happens to children in schools who cannot see
and don't even realize they cannot see. This means more parents
can access the services that allow them to raise healthy, happy
children.
And I am sure all of us want that for our country. So while
we can talk about ways to improve the ACA, we cannot for the
sake of our children afford to go back. I continually call the
Affordable Care Act, Obamacare. In fact, I always say Obama
cares about the men, women, and children of our nation.
So this--I have a question for Mr. Brey. As a small
business owner, you likely have several employees with children
who depend on their employer-sponsored insurance that you
provide. Can you speak about your ability to offer your
employees better plans now that the ACA requires many plans to
have additional benefits for children, such as preventive,
dental, and vision care?
Mr. Brey. I think it is very important. I come from a
pretty big family. And, you know, like most of people here, if
you operate a small business your employees work for you for
long periods of time and they become like members of your
family and so do their children and their pets. So you love
to--you love the idea, if you are me, that you know that you
are offering coverage that is doing real good in their lives.
My bookkeeper's husband is self--an individually employed
landscaper. So for many years she worked for me only to get the
health coverage. I mean, I am a heck of a boss. But the primary
reason I think was her health coverage. So she has been able to
use it. She has benefited from it. And I am very happy to
provide that.
Ms. Wilson of Florida. Okay. Can you see us going back? How
would that impact your employees?
Mr. Brey. As I said in my testimony, the situation before
the Affordable Care Act, inaction was not acceptable. We just
could never have endured it. As it was, we were--like everybody
here, we were tweaking plans and making changes to plans and
doing everything we could to continue to insure people but be
able to afford it as a business. I can't imagine going back.
Ms. Wilson of Florida. Thank you.
Chairman Roe. Thank you for yielding.
Mr. Grothman you are recognized for five minutes.
Mr. Grothman. Thank you much. We will talk to Dr. Troy.
Thanks for being here today. You are very educational.
You studied the impact of the health care law. And there
are a lot of reasons why the cost of health care is up; the
aging population, new technologies and whatnot. But I would
like to get just a general how are employers dealing with the
costs and what alternatives are employers experimenting with to
deal with the costs?
Dr. Troy. Thank you, Congressman, for the question. We work
primarily and study primarily large employers. And large
employers are looking at significant alterations to their
health care offerings. In response to the excise tax, they are
reducing the value of their health care offerings so as to
maintain--or remain under the thresholds so that they don't
trigger the excise tax when it comes online in 2018.
In terms of the overall cost to large employers, we found
that the ACA has an impact of--marginal costs of about $5,000
per employee over a 10-year period. And that is leading them to
rethink what they are doing with health care, as well.
So some of the--they are looking at a variety of
alternatives. One, there has been some movement towards private
exchanges. Although I think that has slowed down a little bit
at this point. And I get the sense from employers that, first
of all, they feel that there is a uncertainty out there in
large part because of ACA delays and questions in the Supreme
Court. So they are not sure what is going to happen.
So I get the sense that employers are looking for something
new. They are looking for some kind of future state but they
have not yet decided on what that is going to be.
Mr. Grothman. Okay. Now, correct me if I am wrong. When we
look at the cost to the employer, we look only at his premiums,
not at the cost to the employer; right? So we don't--in
encouraging one type of plan or another, the way this
Affordable Care Act was designed, it was only looking at it
from the perspective of the employer, not the employee, right,
as far as cost?
Dr. Troy. Yes. And so we looked--that is why we did this
study about the marginal costs of the ACA to large employers.
These are costs over and above the traditional costs of health
care that are imposed by the new law.
Mr. Grothman. Right. So correct me if I am wrong. Under
this plan, we are encouraging employers to put in things like
big deductibles, which just may hammer their employees,
particularly lower-paid employees. You know, a lot of the times
these people who set up these plans are very, you know, wealthy
in their own right. But, you know, you encourage, like, $5,000
deductible, that sort of thing.
Dr. Troy. Yes. We are definitely seeing employers move
towards these high-deductible plans or towards more cost-
sharing, which does impose additional costs on the employees.
And it raises questions of affordability of employer-sponsored
care, as well.
Mr. Grothman. Great. I am not familiar with all around the
country. I know in my area what is going to happen is you have
bigger deductibles, you are going to wind up having employees
dig into their 401(k)s and that sort of thing. Is that
something you are going to see around the country, do you
think?
Dr. Troy. Well, what we are finding is that there are
already about 13-14 million people in employer-sponsored care
who, if you look at the combination of deductibles and
premiums, they are over the ACA's threshold of what is deemed
to be affordability, which is 9.5 percent of income.
Mr. Grothman. Okay. I give you one more question, a chance
to respond. Earlier today we saw a couple of charts that were
presented. You know, you have seen these things. And you
haven't had a chance to respond them. And I thought while I had
my five minutes, if I have any of my five minutes left, I would
give you a chance to respond.
Dr. Troy. Well, I appreciate that opportunity. There is a
chart from Kaiser that shows that the increase in premiums has
decreased over time. And it compares the 2001 to 2010 period
and the 2011 to 2015 period. There are a couple of things.
First of all, the costs are still rising for employers
faster than the cost of goods and services, faster than
productivity, and faster than GDP growth. So the costs are
still rising faster.
Second of all, CBO did an analysis that suggested that some
of the abatement in cost increases in the past few years--and
remember, the costs are still growing faster than inflation.
But some of the abatement is due--a large part of it is due to
the recession, and it could not all be attributed, or even
mostly attributed, to the ACA.
Chairman Roe. I now yield myself five minutes.
Let me just clear a few things up about what is going on in
the real world. And I could not agree more that we should have
done this bill on a bipartisan basis. I was willing to do that.
And the two major bills that I have worked on here that have
been done on a bipartisan basis that got huge votes were one,
the Veteran's Affairs bill, and two the SGR replacement we just
passed.
And that is one of the reasons you are seeing pushback, is
that good ideas were left out of this. There are things in
here, there is no question. You have all brought up things that
needed to be addressed in health care in this country. It is
one of the reasons I ran for Congress.
And let me just bring you down to reality, what is
happening out in the hospitals and the providers. I looked at
it as an employer, which provided health insurance, just like
all of you all have, and also as a provider. And what Mr.
Grothman said is absolutely what is going on.
In our local hospital system, which is over a billion
dollar-a-year system, 70 percent of the payers they have are
Medicaid or Medicare. That is only 30 percent from the private
sector. And now, 60 percent of the uncollectible debt in our
hospital system are people with insurance. And the reason is
because if you put a $3,000 or $4,000 or $5,000 deductible for
someone who makes $26,000 or $32,000 a year, it might as well
be $100,000. They don't have the money. And that is happening
today.
And it is just because you have a health insurance plan
doesn't mean you can get health care coverage. Now, because
people are coming to doctors and saying to the doctors ask
saying to the hospitals you just absorb this loss. And who is
the winner here? I think the winner is the insurance companies.
I think they turn out great.
And I was the mayor of a local city before I came here;
65,000 people. This reinsurance fee that nobody has even talked
about, if you are a self-insured plan, cost our city, our
taxpayers $180,000 of what we got absolutely zero for. Nothing,
except maybe a higher tax bill for senior citizens on a fixed
income with property taxes. We don't have an income tax in
Tennessee. And this has cost hundreds of millions, if not
billions of dollars, to self-insured plans.
Let me tell you what we to do need to do in this, I think.
I think we need to get rid of the mandates. We need to get rid
of the ten essential health benefits. You all are business
people can decide what plan you can afford and pay for.
And I think, Mr. Brey, you would love the plan I wrote. I
really think you would like it a lot for the Republican study
committee. And you are going see it again in about two weeks if
there is a replacement bill. And we are going to have a huge
Supreme Court decision made in about the next 60 days, King v.
Burwell, that will have a huge affect on this and a lot of
citizens.
Let me also say that I did a poor job as a Congressman of
explaining preexisting conditions to people. If you have an
ERISA plan right now, it doesn't affect you, you cannot be
denied. If you have Medicaid, you cannot be denied. If you have
Medicare, you cannot be denied.
Truthfully--and this is where we needed to work on it--in
the small group and individual market, you could be. And those
folk were--and Mr. Brey pointed out--paid 18 percent more for
no reason whatsoever than they couldn't group up and get
bigger. I have been through the very same thing you have in
paying my bills.
What I want to know, Mr. Paal, or Ms. Roberts, you can
answer this, or any of you. I still haven't been able to figure
out in a smaller business that uses a lot of temporary
employees how you figure out who you are going to have to
provide coverage for, and then who gets the coverage. An FTE is
not a person. That is not a human being with a policy. So how--
what do you do with that? How do you calculate? Maybe Mr. Paal,
you should answer that.
Mr. Paal. Well, in the past it was very simple. If you
worked for us year round, then you were a full-timer, then you
got the benefits. And this is part of where the--the 40 hours'
worth of time that I spent calculating these things. I have
people that work for me that will work 3 days a week for 2
months, then they will work full time for a month and a half,
and then they won't work for 3 months because they want to take
time off in the summer when they are kids are off of school.
What do I calculate that person as? Well, technically they
are full time for a good portion they are there. I should offer
them the coverage. In the past we always had offered them the
coverage.
I actually have two employees under our most recent renewal
that did not qualify for health care coverage because of the--
one of them was only 8 hours shy of hitting to be a full-time
employee out of an entire years' worth of service. So three
more minutes a day or one more day of work over the entire
year, they would have health care. Instead, their health care
is terminating May 31st. That is where we really get into a
pickle.
Chairman Roe. So trying to figure out who those folks are
is virtually impossible? To figure out who gets the policy.
Mr. Paal. If I could forecast exactly what my sales were
going to be, whether it was going to rain or shine or how many
weddings we were going to have next fall, I could forecast it
pretty well. But unfortunately, we can't.
Chairman Roe. Trust me, I understand that.
Well, I thank the--I want to thank the Subcommittee. You
all have done a tremendous job. And I thank you for staying
within the time. We have been fairly good at that on our end. I
would like to thank you all for doing it. It has been great
hearing. And once again, it is an important issue.
And I would now to yield to Mr. Polis if he has any closing
remarks.
Mr. Polis. Thank you so much, Mr. Chairman. And I will be
brief.
With the lowest rate of increase in decades, with more
health care choices for small businesses, with millions more
Americans being covered by the Affordable Care Act, I think we
know that it is working. And of course, we can do better, as
well. Nobody is saying the Affordable Care Act is perfect.
There are a number of suggestions that were submitted today,
which I think both sides can work on, as well. And like any
major piece of legislation, of course, I and many of my fellow
Democrats are happy to work with my colleagues on both sides of
the aisle to improve the Affordable Care Act, building on the
progress that is already made to help American small businesses
succeed.
What we can't do is dismantle the reforms that have helped
millions of Americans afford health care, helped tens of
thousands of small businesses afford to cover their employees.
From my meetings with small businesses from constituents
regarding the Affordable Care Act, I have heard so many stories
about how the coverage they have gotten has helped avoid
illness, stay out of the hospital, how businesses have grown
and prospered in my district.
Quality preventive care helps ensure that people get
healthier and happier, keeps them out of the hospital, allows
them to continue to get a paycheck, be productive for their
employers. Without a good doubt, it is a good thing for the
economy.
I implore members on both sides of the aisle to work
together to improve the delivery of health care in this
country. Work with us to improve the Affordable Care Act and
strengthen the start we have made to shrink growing costs for
employers, taxpayers, and families.
We need to stop this sky-is-falling narrative. Since the
Affordable Care Act was enacted, 12 million private sector jobs
have been created. Let me repeat. Since the Affordable Care Act
was implemented, 12 million private sector jobs have been
created. That is indisputable. We need to stop the sky is
falling narrative. We need to start narrative of how we can
continue the road to help make our economy and the lives of
Americans stronger and healthier.
I yield back the balance of my time.
Chairman Roe. I thank the gentleman for yielding. I again
want to thank the Subcommittee for being here.
And just in summary, I ran for Congress in 2008 to work
on--one of the reasons was to work on health care. Having spent
over three decades in the private sector, both in practice and
medicine teaching in medical school, I realized we needed
health care reform. Came to Washington, D.C. We got health care
reform really by one party.
And as was pointed out, this was not the House version of
the bill. And in my opinion, the House version was the
Affordable Care Act was a much better bill than what the Senate
passed and was finally--through reconciliation, was passed on a
one-party rule. And that is why you still have a majority of
the people in this country who are opposed to this.
And let me sort of--the thing that we did do with this, we
took a small percent of the population, less than 20 percent.
And that is what we were needing to deal with. And literally,
we could have done three-fourths of what we did with the
Affordable Care Act in two paragraphs. One was expand coverage
to 26-year-olds and expand Medicaid. That is where the biggest
expansion has been.
Many of the people, including myself and every member of
Congress who gets their health insurance through the D.C.
exchange had health insurance before, perfectly good health
insurance, but we lost it and we had to buy through the
exchange. Which for me is up 75 percent. And many people had--
and I can pay that. It is not a problem for me. For other
people, they can't pay that.
So I think we are in a situation where we do need to reform
it. The Supreme Court is going to make a huge decision in the
next 60 days that will affect the law tremendously. I think we
have seen increased costs in businesses. I know I have seen
school systems in my own district that have reduced hours
because they have fixed--municipalities have fixed budgets, and
they only have so many dollars that are allocated each year by
the local commissions to spend on health care and salaries and
so forth. And they have had to make those decisions. So it is
happening out there in the real world. People are making
decisions now two and three and four years downstream.
I have heard today from my colleagues on the other side of
the aisle about the Cadillac tax. It needs to go. And I think
you will get bipartisan support for that. I heard that, I
think, almost universally here; that there was no support for
that; that businesses were having a difficult time dealing with
it. And it has been pointed out that unions, those contracts
are being negotiated now for--for two, three, four years
downstream. So we need to do something. Not wait until 2017,
but do it now.
I think the other thing is to not redefine the workweek in
this country. That was a great distortion for American
business, to define the workweek at 30 hours. It was
unnecessary. And as all of you pointed out, if it is
affordable, people do--business owners want to do the right
thing. I certainly want to provide good health insurance
coverage so people could get the care that I got for my family
for their families. I didn't hear a single person, Republican
or Democrat, out there dispute that. So I think that is a
narrative we all agree on.
Again, I want to thank you all. There is a lot of work to
be done. And it may be a lot of work to be done in the next 60
days. But thank you for your time, your indulgence. And this
meeting is adjourned.
[Additional submission by Dr. Roe follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
[Whereupon, at 12:06 p.m., the Subcommittee was adjourned.]