[Senate Hearing 114-782]
[From the U.S. Government Publishing Office]
S. Hrg. 114-782
SMALL BUSINESS HEALTH CARE:
COSTS AND OPTIONS
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HEARING
BEFORE
THE SUBCOMMITTEE ON PRIMARY HEALTH AND RETIREMENT SECURITY
OF THE
COMMITTEE ON HEALTH, EDUCATION,
LABOR, AND PENSIONS
UNITED STATES SENATE
ONE HUNDRED FOURTEENTH CONGRESS
SECOND SESSION
ON
EXAMINING SMALL BUSINESS HEALTH CARE, FOCUSING ON COSTS AND OPTIONS
__________
JUNE 28, 2016
__________
Printed for the use of the Committee on Health, Education, Labor, and
Pensions
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Available via the World Wide Web: http://www.gpo.gov/fdsys/
______
U.S. GOVERNMENT PUBLISHING OFFICE
20-670 PDF WASHINGTON : 2018
COMMITTEE ON HEALTH, EDUCATION, LABOR, AND PENSIONS
LAMAR ALEXANDER, Tennessee, Chairman
MICHAEL B. ENZI, Wyoming PATTY MURRAY, Washington
RICHARD BURR, North Carolina BARBARA A. MIKULSKI, Maryland
JOHNNY ISAKSON, Georgia BERNARD SANDERS (I), Vermont
RAND PAUL, Kentucky ROBERT P. CASEY, JR., Pennsylvania
SUSAN COLLINS, Maine AL FRANKEN, Minnesota
LISA MURKOWSKI, Alaska MICHAEL F. BENNET, Colorado
MARK KIRK, Illinois SHELDON WHITEHOUSE, Rhode Island
TIM SCOTT, South Carolina TAMMY BALDWIN, Wisconsin
ORRIN G. HATCH, Utah CHRISTOPHER S. MURPHY, Connecticut
PAT ROBERTS, Kansas ELIZABETH WARREN, Massachusetts
BILL CASSIDY, M.D., Louisiana
David P. Cleary, Republican Staff Director
Lindsey Ward Seidman, Republican Deputy Staff Director
Evan Schatz, Minority Staff Director
John Righter, Minority Deputy Staff Director
______
Subcommittee on Primary Health and Retirement Security
MICHAEL B. ENZI, Wyoming
RICHARD BURR, North Carolina BERNARD SANDERS, Vermont, Ranking
SUSAN M. COLLINS, Maine Member
MARK KIRK, Illinois BARBARA A. MIKULSKI, Maryland
TIM SCOTT, South Carolina MICHAEL F. BENNET, Colorado
ORRIN G. HATCH, Utah SHELDON WHITEHOUSE, Rhode Island
PAT ROBERTS, Kansas TAMMY BALDWIN, Wisconsin
BILL CASSIDY, Louisiana CHRISTOPHER S. MURPHY, Connecticut
LISA MURKOWSKI. Alaska ELIZABETH WARREN, Massachusetts
LAMAR ALEXANDER, Tennessee (ex PATTY MURRAY, Washington, (ex
officio) officio)
Sophie Kasimow, Minority Staff Director
(ii)
C O N T E N T S
__________
STATEMENTS
TUESDAY, JUNE 28, 2016
Page
Committee Members
Enzi, Hon. Michael B., a U.S. Senator from the State of Wyoming,
opening statement.............................................. 1
Scott, Hon. Tim, a U.S. Senator from the State of South Carolina. 21
Cassidy, Hon. Bill, a U.S. Senator from the State of Louisiana... 24
Witnesses
Glause, Tom, Commissioner, Wyoming Department of Insurance,
Cheyenne, WY................................................... 3
Prepared statement........................................... 5
Hudak, Warren S., Jr., President, Hudak and Company, New
Cumberland, PA................................................. 6
Prepared statement........................................... 6
Harte, Thomas M., President, Landmark Benefits, Inc., Hampstead,
NH............................................................. 8
Prepared statement........................................... 10
Sarah Lueck, Senior Policy Analyst, Center on Budget and Policy
Priorities, Washington, DC..................................... 14
Prepared statement........................................... 16
ADDITIONAL MATERIAL
Statements, articles, publications, letters, etc.
Senator Hatch, prepared statement............................ 36
(iii)
SMALL BUSINESS HEALTH CARE:
COSTS AND OPTIONS
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TUESDAY, JUNE 28, 2016
U.S. Senate,
Subcommittee on Primary Health and Retirement Security,
Committee on Health, Education, Labor, and Pensions,
Washington, DC.
The subcommittee met, pursuant to notice, at 2:05 p.m., in
room SD-430, Dirksen Senate Office Building, Hon. Michael Enzi,
chairman of the subcommittee, presiding.
Present: Senators Enzi, Scott, Cassidy, Murphy, and Bennet.
Opening Statement of Senator Enzi
Senator Enzi. I'll go ahead and call to order this HELP
Subcommittee on Primary Health and Retirement Security
roundtable, at a square table, but this is as close as we come
to round around here. I got word from Senator Sanders to go
ahead.
I'll do my opening statement, and when he gets here, he can
do his opening statement, and if he isn't here by the time I
finish, then we'll go ahead and start having you give a summary
of your testimony, and then following that, we'll have the
discussion and questions.
I'd like to thank all of you for coming today, and I'd like
to thank the staffs on both sides of the aisle for working on
putting together a bipartisan conversation about what's
important to small business in the area of healthcare. I'd also
like to thank all my colleagues for being interested in this
and ready to engage in important discussion. There will be more
here throughout the afternoon.
I think we have here at the table representation from many
experts who have a valuable perspective about what the reality
is for small businesses helping their employees purchase health
insurance. I'm anxious to get to the real discussion, but I'd
like to touch on the heart of what I hope we can get to today.
Small businesses are the backbone of our economy. In
Wyoming today, we're watching our communities being decimated
by the collapse of the energy sector. Thousands of jobs have
been lost, but, as you know, those losses never happen in
isolation. Main street businesses feel the hit with their
customers. They feel the crunch of a down economy, and we have
to consider what additional pressures they have to face.
Small businesses as a whole are different than big
businesses. Despite the fact that they're not legally required
to offer health insurance, so many small employers do. Offering
health insurance helps give their business a competitive
advantage and incentivizes employee retention, but many
employers also offer health insurance plans out of a sense of
responsibility to their employees.
We want employers to stay involved in the health of their
employees. But Washington has done nearly everything possible
to make it a bad business decision to continue to offer health
insurance options. Policymakers often want to be supportive of
small businesses but may not truly understand the challenges
they actually have on the ground.
I know that when I was running my small shoe store, I found
out that any business that I looked at looked easy to operate,
so long as I didn't have to get behind the counter and run it.
People don't realize the decisions that have to be made, how
long in advance they have to be made, how you train people, how
you acquire people, and how difficult all that is. You may be
the owner of a small business, but you're also usually the same
person who opens the store, who waits on the customers, who
cleans the bathroom, who stocks the merchandise, all while
trying to meet payroll every week and keep up on any new
government regulations.
I also know the amazing satisfaction you get when you see
your business take off, the point where you think that you're
really going to make it work. The business owners I know see
that as a shared success with their employees. It's a
community. You know their families. You want to make sure those
people are taken care of.
The Federal Government has tried a variety of approaches to
fix the small group market. There's general agreement that we
still aren't there yet, and some would say that we've made
things worse.
Today, I'd like to focus the discussion on the biggest
challenge for small businesses wishing to help their employees
with health care, and that cost. It's the No. 1 reason that
small businesses say they do not provide health insurance
assistance for their employees. This is not a discussion about
one particular bill or priority. I'd ask our panel today to
think beyond what the market was before the Affordable Care Act
and what it is under the Affordable Care Act. We need to look
at what small businesses actually want in the next 10 to 15
years. That translates into affordable options with more
flexibility and fewer restrictions.
The landscape in healthcare has rapidly changed. We must be
willing to consider a variety of options. Perhaps it should not
resemble today's market at all. If we try to fit health
insurance into an outdated mold with priorities and sacred cows
of a decade ago, we won't be able to make much progress.
I think we agree here that cost is a problem. If the
Federal Government has created an affordability problem or
exacerbated it, we should identify it and figure out how to fix
it. Our government is even more deeply embedded in healthcare
now than ever, and we're seeing the impact of that in rising
premiums and tighter family budgets.
Just to clarify the process, after Senator Sanders speaks
or prior to him being here, I'll ask each of the participants
to speak briefly. You've submitted statements. Your entire
statement will be a matter of record for this roundtable. After
your introductory comments, if you'd like to respond to
something that's been said or one of the questions that we ask,
if you'd just stand your name tag up on end, we'll know to call
on you and we'll try to keep track of the order of that.
First, I'd like to welcome a fellow Wyomingite, Tom Glause,
who is the Insurance Commissioner in Wyoming. He has firsthand
knowledge of the insurance markets and how policies impact
costs.
I also understand that you have an accounting degree. I'm
always glad to see that. There are two of us in the Senate.
Next is Warren Hudak. Mr. Hudak is the president of Hudak
and Company, an accounting firm in Cumberland, PA. He has seven
employees and has personal experience in purchasing health
insurance as a small employer.
I appreciate you taking time away from your business to
participate.
I want to welcome Mr. Thomas Harte. He's the president of
Landmark Benefits in New Hampshire. Mr. Harte's company
provides employee benefit services to over 300 corporations and
thousands of employees.
You have participated in our roundtable before, and I
appreciate you coming back again.
Ms. Sarah Lueck is Senior Policy Analyst at the Center on
Budget Policy and Priorities here in Washington, DC. Ms. Lueck
works on issues related to health reform implementation,
specifically, health insurance exchanges and private market
reforms included.
I want to thank you all for your time. Also, another thing
that we do is at the conclusion, we allow a short period of
time for people to submit written questions that we would hope
that you'd be willing to answer as well, and those become a
part of the record, too.
At this point in time, we'll go ahead and begin the
discussion, and if each of you would summarize your comments,
which will be in the record completely, we'd appreciate it.
That leaves more time for more questions and comments.
We'll begin with you, Mr. Glause.
STATEMENT OF TOM GLAUSE, COMMISSIONER, WYOMING DEPARTMENT OF
INSURANCE, CHEYENNE, WY
Mr. Glause. Good afternoon, Chairman Enzi and members of
the Subcommittee on Primary Health and Retirement Security.
Thank you for asking me to participate in this Roundtable
Discussion on Small Business Health Care: Costs and Options. My
name is Tom Glause. I am the Insurance Commissioner for the
State of Wyoming.
As the least populated State in our Nation, Wyoming faces
challenges in providing health insurance coverage for its
citizens. Since the passage of the ACA, a large number of
health insurance companies have left the Wyoming market.
Currently, Wyoming has only one insurer participating in the
Federal marketplace for both individuals and small group plans.
The exodus from the health insurance market has been for a
variety of reasons, including financial insolvency, changing
focus of product lines, and effects of the ACA. As the State is
currently experiencing an economic downturn, employers are
reporting that they must reduce or cut employer-provided health
insurance in order to maintain employment positions.
We have seen a slow but steady increase in the number of
participants in the individual marketplace, but very little
participation in the SHOP plans. As of May 31st, Wyoming's only
SHOP carrier reports just 103 contracts covering less than 300
lives. Wyoming has traditionally had the highest rate of
employer-provided healthcare coverage in the Nation. According
to the Kaiser Family Foundation, in 2014, the national average
for employer-sponsored health plans was 49 percent, whereas
Wyoming was 61 percent.
The mandated coverage for essential health benefits has
been costly and burdensome on small employers. Wyoming
employers report that they want to provide coverage for their
employees but feel constrained by the cost and the requirements
that the small group plans must contain the ACA's 10 essential
health benefits.
In 2015, the Wyoming State legislature passed statutory
language to clarify that if a small employer offers coverage to
its employees, the employer has the option of offering coverage
to the employees' dependents. In some cases, this legislative
change has allowed the employees' dependents to obtain
individual coverage on the marketplace.
Network adequacy continues to be an issue. It was before
the ACA, and it remains an issue today. Wyoming only has 196.7
physicians per 100,000 residents, compared to an average of
265.5 nationally. In addition, Wyoming covers almost 98,000
square miles. Needless to say, our providers are widely
scattered.
Uncompensated care remains a concern in nearly all care
facilities in our State. A May 2016 report from the Wyoming
Hospital Association indicates a 3 percent annual increase in
uncompensated care. The Association anticipates larger
increases because of increasing unemployment, an increasing
number of high deductible health insurance plans, and an
increasing number of uninsureds.
Wyoming has the second highest premium rates in the Nation,
second only to Alaska. On the individual market, in 2016, the
average monthly premium before the advanced premium tax credit
was $571, compared to the national average of $396. Wyoming
employers have reported that the tax benefits of providing
coverage are often difficult and convoluted. Others report that
it's less expensive to pay the tax than to provide health
insurance coverage.
The Wyoming Small Employer Reinsurance Plan has begun a
run-out of the program and the claims. The number of ceded
lives into the plan has continued to decline, indicating a
decreasing number of small employer-sponsored plans.
In conclusion, there are two primary considerations for
small businesses when considering whether to provide health
insurance to its employees. The first is cost: the cost of the
premiums to the employer and the employee and the cost of time
in administering the program. The second is choice. Can the
small employers provide coverage that their employees need with
networks that are sufficient and out-of-pocket costs that are
reasonable?
Thank you for inviting me to this roundtable discussion,
and I look forward to your questions.
[The prepared statement of Mr. Glause follows:]
Prepared Statement of Tom Glause
Good afternoon, Chairman Enzi and members of the subcommittee on
Primary Health and Retirement Security. Thank you for asking me to
participate in this Roundtable Discussion on Small Business Health
Care: Costs and Options. My name is Tom Glause. I am the Insurance
Commissioner for the State of Wyoming, appointed to this position by
Governor Matt Mead in January 2015.
As the least populated State in our Nation, Wyoming faces
challenges in providing health insurance coverage for its citizens.
Perhaps some observations and information about my State may be helpful
in discussions regarding small employer plans in general but
specifically regarding the small employer market in rural settings.
Since the passage of the ACA, a large number of health insurance
companies left the Wyoming market. Currently, Wyoming has only one
insurer participating in the Federal Marketplace for both individuals
and the small group or SHOP plans. The exodus from the health insurance
market has been for a variety of reasons, including insurer financial
insolvency, changing focus of product lines, and effects of the ACA.
As the State is currently experiencing an economic downturn,
employers are self-reporting they must reduce or cut employer-provided
health insurance in order to maintain employment positions. We have
seen a slow but steady increase in the number of participants on the
Individual Marketplace but very little participation in the SHOP plans.
As of May 31, Wyoming's only SHOP carrier reports just 103 contracts,
covering less than 300 lives. The individual Marketplace reports 23,770
enrollees for 2016.
Wyoming has traditionally had the highest rate of employer provided
health coverage in the Nation. According to the Kaiser Family
Foundation, in 2014, the national average for employer sponsored health
plans was 49 percent, whereas Wyoming was 61 percent, followed closely
by Maryland at 60 percent.
The mandated coverage of the Essential Health Benefits (EHB) has
been costly and burdensome on small employers. Wyoming employers report
they want to provide coverage for their employees but feel constrained
by cost and the requirement that these small group plans must contain
the ACA's 10 Essential Health Benefits. Employers have expressed
concern over their desire to provide benefits to their employees and
the coverage mandate that is not required of large group employers. In
2015, the Wyoming State Legislature passed statutory language to
clarify that if a small employer offers coverage to its employees, the
employer has the option of offering coverage to the employee's
dependents. Wyo. Stat. 26-19-306(c)(vi). In some cases, this
legislative change allowed the employee's dependents to opt for
individual coverage on the Marketplace.
Network Adequacy was an issue before the ACA and remains an issue
today. Wyoming reports 196.7 physicians per 100,000 people whereas the
national average is 265.5 per 100,000. In addition, Wyoming covers
97,818 square miles--needless to say, our providers are widely
scattered.
Uncompensated Care remains a concern in nearly all care facilities
in our State. A May 2016 report from the Wyoming Hospital Association
indicates at least a 3 percent annual increase in uncompensated care
but the association anticipates larger increases because of increasing
unemployment, increasing numbers of individuals with high deductible
plans, and increasing numbers of uninsured.
Wyoming is a non-rate setting State; therefore, we rely upon the
qualified health plan (QHP) determinations and rate approvals conducted
by the Center for Medicare and Medicaid Services (CMS). Wyoming has the
second highest premium rates in the Nation, second only to Alaska. On
the individual market in 2016, the average monthly premium before the
Advanced Premium Tax Credit (APTC) was $571 compared to the national
average of $396. Some Wyoming employers have reported that the tax
benefits for providing coverage are difficult and convoluted. Others
report it is less expensive to pay the tax penalties than to provide
health insurance coverage.
The Wyoming Small Employer Health Reinsurance Plan (WySEHRP) plan
has begun a run-out of the program and claims, after it was determined
that the number of ceded lives has continued to decline as transitional
plans will be exiting the market. The declining number indicate a
decreasing number of small employer sponsored plans.
In conclusion, in my opinion, there are two primary considerations
for small businesses when considering whether to provide health
insurance benefits. The first is Cost. The cost of the premiums to the
employer and the employee, and the cost of time in administering the
program.
The second is Choice. Can the small employer provide coverage that
the employees need, with networks that are sufficient, and out-of-
pocket costs that are reasonable?
Again, thank you for holding this roundtable and for inviting me to
testify. I look forward to your questions.
Senator Enzi. Thank you.
Mr. Hudak.
STATEMENT OF WARREN S. HUDAK, Jr., PRESIDENT, HUDAK AND
COMPANY, NEW CUMBERLAND, PA
Mr. Hudak. Chairman Enzi and members of the Senate HELP
Subcommittee on Primary Health and Aging, thank you for the
opportunity to be before you today. My name is Warren Hudak. I
own a central Pennsylvania based accounting firm. We specialize
in bookkeeping, sales tax services, payroll, and tax
representation.
Our business is a typical small business. Hudak and Company
is a growing firm. But rising healthcare costs continue to
consume an increasingly significant share of our revenue. It's
difficult to keep up with the constant implementation changes
which can disrupt our business operations and consume
increasingly more and more of our time. These changes are
sometimes meant to help, but occur too late to provide
substantial relief. I feel like most small businesses have been
placed in an impossible situation. Healthcare costs are once
again our No. 1 issue.
Our business has always provided assistance to our
employees for health insurance. Group health insurance was
expensive and volatile for our business, but we had to offer it
in order to compete. We live in the Harrisburg area, which is
the State's capital, and we're competing for the same labor
market that the State of Pennsylvania is competing for.
We were early adopters of high-deductible group health
plans paired with a health savings accounts. Our plan was
canceled. We began offering health reimbursement agreements for
employees to purchase health insurance on their own. The
arrangement worked well for our employees, as they could choose
the appropriate plans that fit their needs, even pre-existing
conditions existed.
I have long been a supporter of those consumer-based
options and believe they are key to curbing unsustainable
healthcare costs. I, too, believe that the answer here is
flexibility and choice.
[The prepared statement of Mr. Hudak follows:]
Prepared Statement of Warren S. Hudak, Jr.
Chairman Enzi, Ranking Member Sanders, and members of the Senate
HELP Subcommittee on Primary Health and Retirement Security, thank you
for the opportunity to testify before you today concerning rising small
business health care costs and potential options for employers and
employees to mitigate these cost increases. My name is Warren Hudak,
president of Hudak and Company, a central Pennsylvania-based small
business accounting firm specializing in payroll services, bookkeeping,
sales tax services, and advanced tax transaction analysis.
Our business is a typical small business in many ways. Hudak and
Company is a growing firm, but rising health care expenses consume an
increasingly significant share of our revenue. It is difficult to keep
up with the constant implementation changes, which can be disruptive to
our business. These changes are sometimes meant to help, but occur too
late to provide substantial relief. I feel like small businesses have
been placed in an impossible situation as costs increase and
competition and flexibility decrease.
costs and limitations
Our business has always provided financial assistance to our
employees for health insurance. Group health insurance was expensive
and volatile for our business, but we had to offer it in order to
compete with larger companies and the Pennsylvania State Government.
We were early adopters to a high-deductible group health plan
paired with a health savings account (HSA). Our plan was canceled three
different times, so we began offering a health reimbursement
arrangement (HRA) for employees to purchase health insurance on their
own. The arrangement worked well for our employees as they could choose
the appropriate plans that fit their needs, even those with pre-
existing conditions. I have long been a supporter of consumer-driven
health insurance arrangements, and believe they are key to curbing
unsustainable health care cost increases.
In 2013, the Internal Revenue Service (IRS) issued guidance \1\
that prohibited the use of employer payment plans, including stand-
alone HRAs. Enforcement of the prohibition began July 1, 2015. Facing a
threat of $100 per employee per day penalties, we had to again change
how we help employees. Any financial assistance must be treated as
taxable income, decreasing the value of the contribution, and the
contribution cannot be contingent on the purchase of health insurance.
It felt like another punch in the nose.
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\1\ Notice 2013-54, Application of Market Reform and other
Provisions of the Affordable Care Act to HRAs, Health FSAs, and Certain
other Employer Healthcare Arrangements, https://www.irs.gov/pub/irs-
drop/n-13-54.pdf, (subsequent guidance included in Notice 2015-17).
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Our family's most recent individual policy premiums increased
substantially this year. We shopped around but there was only one other
carrier available in our county, and it excluded some of our current
doctors, so we stuck with our current plan. Insurance company
competition has not improved, it feels worse. It amazes me that there
are not more choices in the area. Prescriptions costs have skyrocketed,
as well. Costs went up, but coverage worsened.
options for relief
I do feel there are policy solutions that can provide relief from
high costs for small businesses, provide increased options for small
business employees, and provide increased competition amongst insurance
companies.
Last week, the House of Representatives passed the Small Business
Health Care Relief Act of 2016 by voice vote.\2\ The Senate should
quickly consider the bipartisan companion bill.\3\ This bill would help
employees afford health insurance, and allow employers to continue to
play a role in supporting their employees through the utilization of
HRAs. Certainly, lawmakers who drafted the ACA did not intend to punish
small businesses for helping their employees with health care costs.
Our business is proof that this arrangement worked.
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\2\ H.R. 5447, the Small Business Health Care Relief Act of 2016,
introduced by Congressmen Boustany (R-LA) and Thompson (D-CA), https://
www.Congress.gov/114/bills/hr5447/BILLS-114hr5447pcs.pdf, passed on 06/
21/2016 (previous version was H.R. 2911).
\3\ S. 3060, the Small Business Health Care Relief Act of 2016,
introduced by Senators Grassley (R-IA) and Heitkamp (D-ND), https://
www.Congress.gov/114/bills/s3060/BILLS-114s3060
is.pdf, (previous version was S. 1697).
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In order to increase competition in my area and other places with
limited options, interstate purchasing of insurance plans should be
permitted. Interstate purchasing would allow new entrants into markets
and force insurance companies to compete for small business and
individual customers.
Initial 2017 premium filings in Pennsylvania are discouraging, as
insurance companies are requesting significant increases for individual
market plans and moderate increases for small business plans. According
to NFIB Research Foundation, small business owner optimism remains near
historic lows.\4\ The political climate continued to be the second most
frequently cited reason for why owners think the current period is a
bad time to expand. The Senate can begin to restore much needed
confidence by quickly sending the Small Business Health Care Relief Act
to President Obama's desk, and working toward other solutions to lower
the cost of health insurance.
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\4\ Small Business Economic Trends, NFIB Research Foundation, May
2016, http://www.nfib.com/surveys/small-business-economic-trends/.
---------------------------------------------------------------------------
Thank you again for allowing me to share small business concerns
before the committee today. I look forward to answering any questions.
Senator Enzi. Thank you.
Mr. Harte.
STATEMENT OF THOMAS M. HARTE, PRESIDENT, LANDMARK BENEFITS,
INC., HAMPSTEAD, NH
Mr. Harte. Chairman Enzi, good morning.
Ranking Member Sanders, thank you.
Members of the subcommittee, thank you for having me back
again to discuss some of the challenges that are being faced by
all of my clients as it relates to health insurance premiums,
access to care, access to plans, bifurcated networks, and the
many challenges that small businesses are facing in the wake of
healthcare reform.
As you mentioned in your opening remarks, Senator Enzi, I
own an agency back in New Hampshire called Landmark Benefits. I
have a bit of a unique position in conversation with you today,
because not only am I an employee benefit broker representing
thousands of brokers across the country who work tirelessly
every single day in advocating for lower premiums for our
clients, but also I'm a small business owner.
I have 17 employees, a lot of employees, just like you had
back in Wyoming, and I struggle with trying to make sure that
they can afford their health insurance premiums for their
families, that I can afford to be generous to them. But I sit
in that seat of that employer every single day that's faced
with these significant rate increases.
I'm also here representing the National Association of
Health Underwriters. We represent approximately 100,000
employee benefit professionals across the country. I had the
honor of being their national president 2 years ago and served
on their board of trustees for a time period of approximately
10 years.
Before I go into some of my comments about some of the
challenges that we're faced with, last year, when I was here, I
shared with you some of the issues that we needed to face as it
relates to affordability, and I wanted to share some positive
comments first.
First, we have talked about the PACE Act, and, Senator
Scott, thank you so much for your sponsorship of that bill and
your leadership with Senator Shaheen. It has certainly made a
difference in my home State, but has also made a difference in
many States across the country.
What my concern was when we were discussing the PACE Act
was this concept of what's called rate grid overload, where
small employers have these rate grids that are three columns
wide, and you can have one family paying $3,000 to $4,000 a
month in premium and another family paying $1,500 a month in
premium. The invoices are four to five pages long, and it's
impossible for small business to manage that process. So I'm
grateful, Senator Scott and Senator Shaheen, and thank you for
that.
I also am very pleased to share with you that the
moratorium on the medical device tax, the delay of the excise
tax to 2020, and the health insurance tax suspension for 2017
has been received with open arms in the marketplace, because
it's all about affordability. As I may say later, my guiding
light is always ``Are decisions that we make leading to the
accessibility and affordability of health insurance?'' I say
that to you as Members of Congress, but I also ask that
question back home when I'm talking to the health insurance
plans.
Now back to the real world of what my clients are facing.
Even though we've made some improvements over the past year, I
am still delivering rate increases to my clients that are
difficult for me to communicate to them, but even more for them
to absorb those cost increases. In the past couple of weeks, I
have delivered to two clients, who are small businesses, rate
increases of 29.96 percent. In my prepared testimony, you will
see other clients who are faced with significant double-digit
rate increases.
That contradicts recent trend reports that you've seen in
national publications where we're seeing healthcare trends has
come down, which is a positive step and a step in the right
direction. However, when you have wage growth far below the
cost of healthcare, when you have the cost of goods and
services across the country rising at a slower rate than
healthcare inflation, then we have to ask ourselves the
question of how can we really start addressing the underlying
issue in our health insurance premiums, which is the cost of
healthcare.
I also want to share with you--and I'm sure my friend to my
right has faced--when he looks at his own health insurance
plan, he has seen that the health insurance companies are
making mandatory changes to their plans without the discretion
of the employer. Primary care office co-pays are doubling.
Specialist office co-pays are doubling. Many people across this
country are paying upwards of $500 a month for a 30-day supply
for a prescription. That's unaffordable, and what's happening
is that individuals are foregoing necessary medical treatment
and prescriptions to make sure that they can live a healthy
life, and that's not what we want.
The bottom line for me is in order for us to address the
affordability of health insurance, health plans are eliminating
plan benefits for individuals. That was never the intent of the
Affordable Care Act.
Two more quick issues for you is the recent success that
we've seen about the adult uninsured rate dropping--again, good
news for the United States of America. However, we have more
and more people falling into the category that we commonly
refer to as the underinsured. Deductibles have gone through the
roof. They've actually increased by 47 percent in recent years,
and many employers are purchasing plans that have $5,000 or
$6,000 deductibles. Individuals couldn't afford $1,000
deductible, let alone a $5,000 deductible.
The State of Wyoming is not alone. Your home State is not
alone. Losing carriers, lack of access to healthcare plans is a
growing concern. As a matter of fact, this week, in the State
of Minnesota, the largest individual health insurance company,
Blue Cross and Blue Shield of Minnesota, announced that they
will be exiting the individual marketplace in 2017. So you're
not alone.
With that being said, I thank you again for having me back,
and I look forward to sharing some other insights with you.
[The prepared statement of Mr. Harte follows:]
Prepared Statement of Thomas M. Harte
Good afternoon. My name is Tom Harte and I am the president of
Landmark Benefits Inc. in Hampstead, NH. I started my small business in
1997 and it has become one of the largest independent employee benefit
companies in New Hampshire. Today, my company provides services to over
300 corporate clients and the majority are small to mid-sized
businesses. Our primary goal for clients is to provide innovative
solutions that address the continued increases in premiums by
emphasizing both healthcare quality and healthcare cost containment.
I am proud to be here today on behalf of my professional
association, the National Association of Health Underwriters (NAHU),
which represents approximately 100,000 health insurance agents,
brokers, general agents, consultants and other employee benefit
specialists nationally. Last year, I completed 6 years of service as a
member of our national Board of Trustees, including serving as the
NAHU's national president for 2013-14. As an association member engaged
on the national level since 1996, I know thousands of brokers from all
over the United States who serve small businesses with health insurance
challenges. Not only did I consult with my own clients about their most
critical challenges and opportunities with small group coverage that
they have asked me to communicate at today's roundtable, but I also
reached out to my colleagues nationwide so that I could share their
message today.
Prior to my responding to the primary topics for the consideration
of the subcommittee, I want to share with you some of the successes
within the market since my last visit in July 2015.
The passing of PACE allowed States to determine if
increasing the definition of small group to 100 was in the best
interest of their small businesses.
Delay of Excise Tax to 2020 (Thresholds: $10,200 /
$27,500).
To address the affordability issues in the market, both
the Moratorium on Medical Device Tax of 2.3 percent and health
insurance tax were suspended for 2017.
Gallop has reported that the adult uninsured is at 11.0
percent, which is the lowest it has been in 8 years. (http://
www.gallup.com/poll/190484/uninsured-rate-lowest-eight-year-
trend.aspx).
At the same time, it is important to share with you that small
businesses continue to face significant premium increases.
----------------------------------------------------------------------------------------------------------------
Rate Adj. (In
Client Location Enrolled Deductible percent)
----------------------------------------------------------------------------------------------------------------
Manchester, NH..................................................... 65 $5,000 29.96
Nashua, NH......................................................... 46 $5,000 29.96
Kittery, ME--SHOP.................................................. 12 $2,600 HDHP 12.61
Lowell, MA......................................................... 2 $2,000 29.22
Derry, NH.......................................................... 86 $5,000 18.45
Salem, NH.......................................................... 10 $500 11.47
Cambridge, MA...................................................... 19 $2,000 17.73
Methuen, MA........................................................ 8 $2,000 15.47
Chelmsford, MA..................................................... 3 $2,000 19.01
----------------------------------------------------------------------------------------------------------------
It is also important to understand that most small employers are
faced with mandatory health plan changes from the health plans. For
example:
Primary care office copays are increasing from $25 to $30
or $40;
Specialist office copays are increasing from $50 to $60 or
$80; and
Prescription drug copays are increasing dramatically and
cost shares are increasing up to a monthly maximum of $400.
Finally, the recent success of the adult uninsured rate at 11.0
percent does not take into consideration the ``under insured.'' For
example, most employers are increasing plan deductibles and many have
increased to as high as $5,000 or $6,000; however, most employees can't
afford a deductible event of $1,000 let alone $5,000 or $6,000--this
would result in a financial catastrophe.
With regard to the topics of interest to the subcommittee, I have
focused my remaining remarks on these issues:
(1) Factors driving healthcare costs for small businesses;
(2) Health insurance market policies that have affected premiums
for small businesses; and
(3) Factors that small businesses must consider when assisting
their employees in purchasing health insurance.
It is my and NAHU's hope that now, 6 years into the implementation
of the Patient Protection and Affordable Care Act (ACA), that Congress
and President Obama will come together with bipartisan solutions to
improve the outcomes of the ACA and resolve many of the unintended
consequences that are making coverage more expensive and creating
burdens for health insurance consumers.
factors driving healthcare costs and health insurance
market policies that have affected premiums for small
businesses
The leading causes of increased health plan premiums are increased
utilization and government regulation.
Increased Utilization
In 2014, utilization increased in virtually every metric, with more
physician visits, hospitalizations, and prescriptions filled than in
2013. Prior to the recession, higher utilization of services accounted
for 43 percent of the increase, fueled by factors such as increased
consumer demand, new and more intensive medical treatments, defensive
medicine, our aging population, and unhealthy lifestyles. As American
consumers return to increasing use of healthcare services, including
many newly insured individuals under the ACA, utilization has increased
significantly.
Changes in the rate of utilization could also be attributed to plan
design and the use of technologies in place of traditional medicine. To
help offset the impact of increasing premiums, insurers and plan
administrators have increasingly turned to higher deductibles. From
2009 to 2014, premiums increased by 26 percent in employer-sponsored
plans while deductibles increased by 47 percent. In 2006, only 10
percent of employers offered plans with deductibles over $1,000 and 3
percent had deductibles over $2,000, compared to 40 percent and 18
percent in 2014, respectively.
------------------------------------------------------------------------
Deductible Expenses X > $1,000 X > $2,000
------------------------------------------------------------------------
2006............................ 10 percent of 3 percent of
employers. employers
2014............................ 40 percent........ 18 percent
------------------------------------------------------------------------
This increased out-of-pocket expense before coverage is deterring
many individuals from seeking necessary healthcare services. This delay
of care will exacerbate medical conditions, requiring more expensive
care at a later date. Telemedicine is a way that some patients are
seeking care without receiving more expensive care in person, as these
services can be available at a significantly reduced first-dollar cost
to the patient. Other plan design changes include value-based insurance
design, which encourage chronic disease management while reducing the
need for more expensive care.
Government Regulation
The ACA has imposed significant compliance burdens on employers,
employees, individuals, and local and State government. Many of these
compliance burdens discourage employer-sponsored coverage by adding
onerous requirements and responsibilities that must be performed on
behalf of employees. For small employers, many of the ACA's arbitrary
provisions, such as narrow rating bands, limits on composite rating,
new levels of minimum coverage, and employer reporting requirements,
have resulted in higher costs. However, the compliance burden does not
end with just employers, as individuals, providers, State and local
governments, and all other elements of the healthcare delivery and
financing system must meet the requirements of the law.
On June 14, 2016, the House Energy & Commerce Health Subcommittee
held a hearing on ``Advancing Patient Solutions for Lower Costs and
Better Care,'' which included a discussion of the age rating bands. The
age rating bands require insurers to charge their older policyholders
three times that of younger policyholders while older policyholders
tend to use up to six times as much healthcare in dollar value. This
current 3:1 age band rating is a change from what was in effect in the
States prior to the ACA when States were able to select their own age
band rating, with the most commonly used rating being 5:1. The shift in
age rating bands to 3:1 caused an increase in cost to younger
policyholders, many of whom would rather drop coverage than pay the
increase in premium; however, these are the same group of young,
healthy policyholders that are needed in the market in order to avoid
adverse selection. I believe that the policy in place prior to the ACA,
which allowed States to determine the appropriate age rating bands to
implement within their borders, is a far better way to control costs,
and in the absence of State action, requiring a 5:1 age band rating
would encourage young, healthy policyholders to maintain their coverage
and support a far more sustainable health insurance market.
Further, final regulations concerning employer reporting have also
burdened employers of all sizes. I can testify that some of my employer
clients have spent 100's of hours in preparation, coordination, and
deployment of these reporting demands. Additionally, the cost for
reporting with either a payroll company or third-party administrator is
excessive at best. In March 2014, the Department of the Treasury and
the Internal Revenue Service (IRS) released final regulations on what
health plan information all employers will be required to report to the
Federal Government annually for enforcement of both the health reform
law's individual and employer mandates. Unfortunately, the final
regulations are confusing and extremely complicated for businesses of
all sizes. I am concerned that many employers may stop offering health
insurance coverage to their employees, especially small employers that
are not mandated to do so, because the reporting compliance burden is
too much for their business to bear.
There is legislation pending (H.R. 2712 and S. 1996) that will ease
the compliance reporting requirements for employers offering health
insurance coverage to their employees. The bill clarifies that any
information regarding health insurance that is communicated to
employees must be aligned with the processes that are already in place
by employer or employee, including the use of electronic notification
for all notification forms. We believe that providing employees with
multiple and similar notices is confusing for employees and both costly
and confusing to employers.
Finally, the legislation requires that the Department of the
Treasury, in consultation with the Department of Health and Human
Services (HHS), Department of Labor, and Small Business Administration,
write a report to Congress that would detail the processes necessary to
develop a prospective reporting system. Greater sharing of employer
plan information between the IRS and HHS to improve exchange subsidy
eligibility determinations would work best if the Administration would
also allow greater employer flexibility to provide information to
employees and health exchanges regarding the employer health coverage
offered on a prospective basis. Under a voluntarily prospective
reporting system, employers could provide to the IRS information about
coverage offered to employees electronically at the employer's open-
enrollment period or by the January 31 statutory deadline at the
employer's election. I believe if greater flexibility was provided and
prospective reporting allowed, it will result in greater coordination
between the exchanges and the IRS, leading to fewer faulty subsidy
determinations and penalty assessments, which, in the long term, will
aid in deterring the steady increase of premium costs.
factors that small businesses must consider when assisting their
employees in purchasing health insurance
It is no surprise that one of the leading factors in considering
the purchase of health insurance is cost: cost to both the employee and
to the employer. When I spoke to this subcommittee's roundtable last
year, I spoke about the dangers of implementing the Cadillac tax. In
contrast, today, I am going to shift to address a tax benefit that is
in jeopardy, and I would like to take this opportunity to encourage the
committee's support for the continuation of the ``employer exclusion.''
The employer exclusion is used to reference the tax benefit that
excludes employer-provided contributions toward an employee's health
insurance from that employee's compensation for income and payroll tax
purposes. This exclusion makes employer-provided health coverage an
attractive form of compensation for workers. According to a new poll
from Accenture, three-quarters of workers see health benefits as a
``vital reason'' for continuing to work for their employers, and one-
third would quit if their employers stopped offering insurance. A
similar percentage said they wouldn't work as hard if their benefits
disappeared.
Employer-sponsored coverage is the bedrock of private insurance
coverage in the United States. According to the Bureau of Labor
Statistics, about 175 million Americans have employer-sponsored
coverage and are statistically more likely to maintain coverage year
after year. Providing coverage through employers or other group
arrangements offers controlled entry and exit in the health insurance
market, which ensures the spreading of risk, federally guaranteed
consumer protections, like portability rights, the ease of group
purchasing and enrollment, and the economies of scale of group
purchasing power. In addition, it is a means for employers to provide
equitable contributions for their employees.
Several recent health insurance and tax-reform proposals have
suggested eliminating or capping the tax exclusion provided to
individuals who have employer-provided group coverage and perhaps
substituting it for some other tax preference. Capping the exclusion
for employees would degrade the benefit and serve as a tax increase for
middle-class Americans. Eliminating the exclusion would mean that most
of the advantages of employer-provided coverage would no longer exist:
No longer would there be a potent means for spreading risk among
healthy and unhealthy individuals; employers and individuals would lose
many group purchasing efficiencies; workers would be less likely to
have their employer as an advocate in coverage disputes; employers
would be less likely to involve themselves in matters of quality
assessment and innovation; and employers could suffer in terms of
worker productivity and labor costs because employer-sponsored
insurance leads far more workers to purchase health insurance than they
would on their own. Some employers would not meet participation
requirements for group coverage so the entire workforce would lose
employer-sponsored coverage. This shift might seem minor, but it could
compel employers to stop providing health insurance, according to the
Congressional Budget Office and the Joint Committee on Taxation.
Companies will expect their employees to secure affordable coverage in
the individual market. For many people, particularly older and lower-
income workers, that may be impossible, even with the implementation of
the ACA.
One plan would eliminate the tax exclusion for employer-provided
health insurance, preventing companies from purchasing coverage with
pre-tax dollars, and instead provides individuals with a tax deduction
of $7,500 a year for buying insurance. Families would receive a
deduction worth $20,500. These types of tax deductions would encourage
young, healthy workers to forgo employer-sponsored insurance because
they could purchase cheaper plans elsewhere. Employers would be left
with an older, sicker risk pool, thus higher costs--if they can get
group coverage at all. As costs escalate, even the most generous
employers may quit offering health insurance altogether. De-linking
coverage from employment like this would make health insurance more
expensive and less accessible, thereby contradicting the objectives of
the ACA.
Adding to the threat to employer-sponsored insurance is the
increase in cost to the employers. In a recent survey, almost 90
percent of businesses reported that their costs had increased because
of the law. Employers are responding by laying off workers, making
full-time employees part-time so the mandate doesn't apply or dropping
coverage altogether. In all three cases, the result is fewer people
with employer coverage.
Getting businesses out of the healthcare business would be a
mistake. We urge you to maintain the system that has worked for
Americans for decades, and preserve employer-sponsored health coverage
through the continuation of the employer exclusion.
Small Group Market Policy Recommendations
We all have a stake in having a functioning, viable health
insurance marketplace for small employers. While the ACA has brought
many changes and market resources to consumers and employers, I am
concerned about policies threatening the small group's viability that
could lead to its erosion. The membership of the National Association
of Health Underwriters feel that the following policy changes would
have a significant impact on improving the cost and coverage options
available today for our Nation's small employers and their employees:
To address the affordability of health insurance we need:
Further delays of the Excise tax;
Continued suspension of the health insurance tax;
Continued moratorium on medical device tax; and
Legislation that allows States to increase the law's
age rating bands from the current 3:1 spread to bands that more
closely resembles the natural breakdown of age and meet the
needs of a particular State. If a State does not set its own
bands, the default should be 5:1.
Preservation of the law's risk-adjustment mechanisms
(often referred to as ``The Three Rs'') since they are crucial to
preserving long-term private insurance market stability.
To address the accessibility of health insurance we need:
To remove agent and broker commissions from the
medical loss ratio calculation in the small and individual
health insurance markets, to ensure small business access to
agent and broker services and to economically help the hundreds
of thousands of agent small business owners nationwide.
To address the simplification of health insurance we need:
A repeal of the employer mandate, or failing, that
establishes the eligibility threshold at 101 or more employees;
and
To allow employers to set the definition of a full-
time employee as one that works 40 or more hours a week for
health coverage purposes.
In closing, I would like to thank Chairman Enzi, Ranking Member
Sanders and all of the members of the subcommittee for the amazing
opportunity to share information about the opportunities and challenges
small business owners like me and my clients are having in today's
health insurance marketplace. If you have any questions or need more
information, please do not hesitate to contact me at either (603) 329-
4535 or [email protected].
Senator Enzi. Thank you.
Ms. Lueck.
STATEMENT OF SARAH LUECK, SENIOR POLICY ANALYST, CENTER ON
BUDGET AND POLICY PRIORITIES, WASHINGTON, DC
Ms. Lueck. Thank you, Mr. Chairman, and thank you, members
of the subcommittee, for having me here today. I really
appreciate the opportunity to talk about issues facing small
businesses with their healthcare.
As my other co-panelists have mentioned, there are
longstanding system-wide trends in healthcare costs that
absolutely affect small businesses, and that's a key question,
obviously, one that we'll be discussing as we get into the
conversation here today. As has been widely documented, also,
the overall healthcare cost growth has slowed considerably in
recent years with health reform likely a key contributor. While
we don't have all the answers, we certainly appear to be making
some improvements in bending that cost curve.
Another piece of good news is that contrary to predictions,
the ACA hasn't caused employers to drop coverage for their
workers so far, and that's really good news. I'm impressed to
hear those small business owners that are on this panel talking
about how important it is to offer benefits. It's nice to hear
the commitment that they have to their employees and the
variety of considerations they make when they decide whether to
offer benefits and what kind of benefits to offer.
As somebody who focuses a lot on the ACA and supports so
many of the provisions that were in that law, I really wanted
to mention the way in which the coverage expansions under the
ACA have actually helped small businesses, the employees of
those small businesses, by making sure that they have access to
coverage and can maintain their health regardless of whether a
small employer that they work for is able to offer them
coverage. That's very important, if they're a low-wage worker,
that they have access to Medicaid in a State that has taken up
the coverage expansion and that they can also access subsidized
coverage through the marketplace, where they both get
assistance with affording the coverage and then reductions in
the high deductibles and other cost-sharing so that they can
also have some access to healthcare.
Notably, many self-employed people have also newly obtained
insurance as a result of the ACA, and it's just worth thinking
about--the situations that people used to face before the law
was in place. Self-employed people might have had trouble
getting access to coverage if they had a preexisting health
condition, and now they can get access to coverage in the
individual market.
The essential health benefits were mentioned as something
that was sort of bad news. In some ways, I think, for many
people, it's good news to have some minimum standards about the
benefits that are covered under small group plans. Before the
ACA, there might have been gaps in the coverage that small
employers were able to choose from in their State. Their
employees, just like individuals that don't have employer
coverage, want access to maternity benefits, for example, or
mental health treatments, and those sorts of things may not
have been covered in their policies before in some cases.
Another story we used to hear before the law was in place
is those cases where a small business might have a sick
employee, somebody diagnosed with a very expensive illness or
an employee who has a baby that's born with a lot of
challenging health problems and has to be hospitalized. Those
sorts of huge costs that one person in a small firm could face
could really impact the cost of coverage for that small
business just the following year.
That might put a small firm, a small business owner, in the
position of thinking, ``Can I even offer coverage now that I
have this expensive claim on my books?'' That is not an issue
now under the ACA. There's broader pooling and limits on the
way that the insurers can rate small groups, just as there are
with the rules in the individual market.
I think with that, I'll pause. I'll just say, also, that
there's a lot of good news here. I think that there's a lot of
flexibility, also, for States that want to take some
opportunities to do things in their own markets to stabilize
it, to make things more competitive, and, hopefully, we will
get into some of those issues as we continue our discussion
today.
Thank you very much.
[The prepared statement of Ms. Lueck follows:]
Prepared Statement of Sarah Lueck
Chairman Enzi and Ranking Member Sanders, thank you for the
opportunity to discuss the challenges and opportunities for small
businesses that want to provide health benefits to their workers.
What factors are driving health care costs for small businesses?
Longstanding system-wide trends in health care costs and
utilization affect all health care payers, including small employers
that offer health insurance to their workers. For example, the entry of
high-cost specialty drugs into the market can raise premiums for small
businesses and the workers they cover. Other trends, however, can slow
growth in health care costs and premiums, including adoption of new
payment models that encourage the use of high-value services and
efforts to increase competition among insurers based on price and
quality of care.
As has been widely documented, overall health care cost growth has
slowed considerably in recent years, with health reform likely a key
contributor. Premium increases for employers have been similarly modest
in most States since the Affordable Care Act's (ACA) enactment; average
job-based premiums rose only 4 percent between 2014 and 2015. Premiums
between 2010 and 2015 rose 27 percent, which was significantly lower
than the 69 percent increase from 2000 to 2005.\1\ There has been,
however, a long-term trend toward workers paying a growing share of
premiums and cost-sharing charges under employer-sponsored plans. For
example, annual deductibles continue to rise, and more workers are
enrolled in plans that include deductibles.
---------------------------------------------------------------------------
\1\ Kaiser Family Foundation and Health Research & Educational
Trust, ``Employer Health Benefits 2015 Annual Survey,'' September 2015.
---------------------------------------------------------------------------
Contrary to predictions, the ACA hasn't caused employers to drop
coverage for their workers. From 2014 to 2015, the percentage of
employees who reported that their employers offer health coverage
increased slightly, as did the share who reported being eligible for
the coverage offered, according to a new analysis of Census data.
Overall coverage rates remained stable for people working at both small
and large employers during that period. \2\
---------------------------------------------------------------------------
\2\ Joelle Abramowitz and Brett O'Hara, ``New Estimates of Offer
and Take-up of Employer-Sponsored Insurance,'' June 2016, forthcoming
publication in Medical Care Research & Review.
---------------------------------------------------------------------------
Smaller employers remain less likely than larger ones to offer
coverage, however. In fact, the smaller the firm, the less likely it
offers coverage. For example, in 2015, 37 percent of firms with three
to nine workers reported offering coverage, as compared to 63 percent
of firms with 10 to 24 workers, 82 percent of firms with 25 to 49
workers, and 92 percent of firms with 50 to 199 workers. Firms that do
not offer health benefits cite cost as the main reason.\3\
---------------------------------------------------------------------------
\3\ Kaiser Family Foundation and Health Research Educational Trust,
op cit.
---------------------------------------------------------------------------
The ACA's coverage expansions have undoubtedly helped small
business employees by ensuring that more people have access to coverage
through Medicaid and the marketplaces. Many small business employees
and their family members who may have been uninsured in the past can
receive needed medical care and maintain their health. Notably, many
self-employed people have also newly obtained insurance as a result of
the ACA. Self-employed people often could not get coverage before the
ACA, when insurers in most States' individual markets could deny
coverage or charge far higher rates based on pre-existing health
conditions. For example, more than one-fifth of the enrollees in
California's individual-market exchange (known as Covered California)
were self-employed as of June 2016.\4\
---------------------------------------------------------------------------
\4\ Covered California data is available upon request.
What Federal insurance market policies have affected premiums for small
---------------------------------------------------------------------------
businesses?
Federal policies under the ACA have produced a much better
functioning small-group market than existed prior to health reform.
Some of these policies have enabled small employers to improve the
coverage they offer, while others have lowered premiums, particularly
for firms with older workforces in poorer health.
Insurers offering coverage in the small-group market must now cover
a package of ``essential health benefits,'' which includes critical
benefits like maternity services and treatment for mental health and
substance abuse disorders; before health reform, these benefits were
often omitted from small-group plans, even if small employers wanted to
offer them. The ACA also bans annual and lifetime dollar limits on the
benefits that insurers pay out and requires plans to limit enrollees'
out-of-pocket costs each year for deductibles, copayments, and other
cost-sharing charges. While these reforms made small-group coverage
more comprehensive and hence pushed up premiums somewhat, they also
enabled small firms to offer coverage more similar to the offerings
from large employers, a choice that many small firms did not have
before the ACA.
Other Federal policy changes affect how insurers set premiums for
the small-group market, including a prohibition on charging higher
premiums based on employees' health status, gender, industry type, or
the overall claims history of a small business, as well as a limit on
how much more insurers can charge older employees than younger ones.
While some small businesses have seen premium increases due to these
changes (for example, those whose workers are mostly younger,
healthier, or male), other firms have seen premium decreases (for
example, those whose workers are mostly older, sicker, or female). As a
result, all small employers covered by ACA-compliant policies,
including those with younger and healthier workers, can rest easier now
that a sudden illness among their workers or their workers' families
will not result in a sudden spike in the firm's premiums the following
year, which was a substantial risk for small businesses prior to 2014.
The ACA also requires each insurer in the small-group market to
pool their enrollees in that market when determining what they will
charge for coverage. Advocates for small businesses have long wanted
the ability to pool small firms together to get more affordable and
stable premiums, similar to large employers, rather than having each
small firm looked at independently when setting premiums. Broader
pooling, too, has allowed some firms to see their rates decrease or to
stay the same. Other firms (such as those with healthier and younger
workers) may have seen higher premiums as a result, but in the long
run, premiums in the small-group market will likely be more stable over
time due to this single risk pool requirement than they would otherwise
have been.
The ACA also required insurers in the individual and small-group
markets to spend 80 percent of the premiums they charge on patient care
and quality improvement efforts. Prior to health reform, only about 70
percent of insurers in the small-group market met this ``medical loss
ratio'' (MLR) standard, which means that more than 20 percent of small
business premiums were going to overhead and profit rather than medical
care. The MLR requirement helps ensure that small businesses get good
value for their premium contributions. In addition, ACA-mandated
improvements in information transparency for small businesses make it
far easier for business owners to compare plan and coverage options.
For example, a standard form called a Summary of Benefits and Coverage
(SBC) allows apples-to-apples comparison of virtually any plan's
benefits and cost-sharing charges. The ACA's standards for plan
benefits and cost-sharing charges, including the ``metal levels'' that
small-group plans must meet, also help consumers compare coverage
options, promoting competition based on price and quality among
insurers--which can help reduce premiums.
While health reform established some minimum Federal standards for
State small-group markets, States remain primarily responsible for
their markets. States have a number of tools to improve affordability
for small businesses (as well as individuals) and create more
affordable, competitive, and stable markets. For example, States that
have the authority to review and either approve or disapprove health
insurers' proposed rates have helped reduce premium increases compared
to what insurers wanted to charge. Some States operate Small Business
Health Options Program (or SHOP) marketplaces, which offer a choice of
plans and carriers to small business employees and allow some small
employers to receive Federal tax credits for offering coverage.
A few States have taken additional steps to ensure that their risk
pools are well-balanced and as competitive as possible. For example,
Vermont and Massachusetts each merged their individual and small-group
markets. Vermont includes small businesses with up to 100 employees in
its merged market, rather than up to 50 employees as in most States.
Many States also decided not to extend the availability of non-ACA-
compliant plans for small businesses. In States that allowed such plans
to continue (under an Administration policy), some degree of adverse
selection likely occurred that weakened the stability of the small-
group market. Firms with healthier workers are likely
disproportionately enrolled in those plans. States that did not
continue to make those plans available likely helped create more
balanced risk pools more quickly in their small-group markets, with
more stable premiums.
What factors must small businesses consider when assisting employees in
purchasing health insurance?
Small employers have a number of options for assisting workers with
purchasing insurance. The first question is whether to offer health
benefits at all, if the employer is small enough to be exempt from the
``shared responsibility'' penalty. Clearly, many small employers view
health benefits as critical to attracting and retaining high-quality
workers and will continue offering them even if not required to. Other
small firms may decide not to offer health coverage, recognizing that
the reformed individual market is far more accessible due to the ACA.
Workers and their family members with pre-existing health conditions
now have guaranteed access to an individual-market plan that covers a
comprehensive set of benefits and protects against very high out-of-
pocket costs.
Many small business employees may also qualify for Federal premium
tax credits and cost-sharing subsidies for coverage purchased through
an individual-market exchange or marketplace if they are not offered
employer-sponsored coverage or the coverage is not affordable or
comprehensive.
Another option for small employers is to offer small-group health
coverage to their workers, possibly by working with an insurer or a
broker, much as they did before the ACA. Some may use private exchanges
to access small-group coverage.
One additional option created by the ACA within the small-group
market is SHOP, as noted above. SHOP gives small businesses an easier
way to comparison shop for insurance options, receive tax credits, and
offer multiple plan options to their workers. The SHOP exchanges got
off to a slower start than the individual marketplaces and have
suffered from some technical and operational problems, so enrollment
remains low. However, it appears the technical issues have largely been
resolved. In 2016, employee choice--which allows employers to select a
metal tier and employees to choose any SHOP plan in that tier--became
available in all States served by the federally run SHOP. This was an
important advance; previously, small firms typically could offer only
one insurance plan from one carrier. In addition to reducing the effort
involved with offering coverage, the SHOP enables small businesses that
want to contribute to the cost of a small-group plan on a tax-
advantaged basis to do so.
Yet another option in many States--and one that raises significant
concerns for the stability of premiums in the small-group market--is
the possibility that small businesses will increasingly decide to self-
insure, meaning they would bear the risk of employees' medical claims.
Some small employers might find this attractive, at least at first,
because it would allow them to offer coverage that doesn't meet many of
the ACA's requirements for the small-group market. Insurers offering to
help small employers self-insure also provide a reinsurance or stop-
loss policy to cover unexpectedly large claims. However, self-insurance
would most likely attract employers with workers that tend to be
healthier and cost less to cover. If a large share of small employers
with lower cost employees opt to self-insure, this would disrupt the
newly balanced risk pools in States' small-group markets and make
premiums less affordable and stable over time.
Finally, the House recently passed a bill allowing firms with fewer
than 50 workers to use a health reimbursement arrangement (HRA) to
contribute to the cost of workers' premiums on the individual market.
Currently such ``standalone'' HRAs are not permitted because they
cannot meet ACA standards for group health plans offered by employers,
such as the requirement to cover certain preventive services at no cost
and the prohibition against annual benefit limits. Similar to self-
insurance by small groups, standalone HRAs for small employers (which
have been banned for all employers since 2014) could have a negative
impact on States' small-group markets. It is unclear how many small
businesses that now offer coverage might shift their workers to the
individual market using an HRA and how that might affect workers and
the risk pool in a given State. However, large numbers of small firms
could decide to make this jump. If they tend to be firms with healthier
workers, this could leave the small businesses remaining in the small-
group market with higher premiums and possibly fewer coverage options.
Supporters of the HRA proposal claim that it would free up more
low-income workers to get subsidized coverage through the marketplace,
rather than requiring them to take an employer offer of coverage that
might not be as affordable or comprehensive. But it isn't clear how
employers would structure their offers in response to the HRA proposal.
Employers have significant flexibility to define the terms of the HRA
they offer, and many low-wage workers might not be better off. Such an
option, if made available to small employers, seems ill-advised because
of its risks for the small-group market.
Senator Enzi. Thank you.
We'll get into a little discussion. As I mentioned, this is
a roundtable, so if somebody wants to make a comment, if you'll
stand your name tag up, you can comment on anything that's been
said or any of the questions that might come up. Of course, one
of the things we're concentrating on here is cost, and I'd be
interested in any suggestions that you might have--you may have
already stated them--on ways to bring those costs down for
small businesses.
Does anybody want to answer that question?
Mr. Glause.
Mr. Glause. Thank you, Senator Enzi. One thing we need to
focus on is that healthcare determines the cost of health
insurance. Health insurance doesn't dictate the cost of
healthcare. I think we need to really take a look at how we're
going to control our healthcare costs and our pharmacy costs.
When you talk to the health insurance companies, the No. 1
driving factor for increase in rates is continued prescription
cost. I think that our discussion, if we're going to really
look at focusing on controlling the cost of insurance, has to
include looking at the delivery of healthcare.
Senator Enzi. Thank you.
Mr. Harte.
Mr. Harte. I figure I'll be a great segue to Commissioner
Glause, because a lot of what we talk about at the Health
Underwriters is something that I've been preaching from the
rooftops for a very long time, and that is that health
insurance is expensive because healthcare is expensive. As a
matter of fact, within the ACA, it talked a lot about the
medical loss ratios, and we've talked about that issue for
years.
When you think about the medical loss ratio from a cost of
healthcare perspective, when formulating healthcare reform,
when medical loss ratio came out, finally, it came out at 85
percent for large group and 80 percent for small group. That
speaks volumes to me about healthcare, because a lot of what we
talk about across the country are health insurance premiums,
but people are bundling it all together to say that the problem
is health insurance premiums.
In fact, when 80 percent to 85 percent of the cost of the
premiums goes toward healthcare, a lot of our focus should be
more on the healthcare side of the delivery equation. When I
reflect back and I look at statistics going back to 2014, when
we look at metrics--and we look at metrics as inpatient
hospital care, physician visits, hospitalization--since that
time, all of those metrics have gone through the roof. As a
result, healthcare costs have exploded, which leads to higher
health insurance premiums.
Then, of course, like I mentioned before, the deductibles
for the individuals are making it unaffordable for them to have
access to care. A 47 percent increase in deductibles from 2009
to 2014 makes healthcare unaffordable for a lot of people. Yes,
they're insured, and that's what we wanted to do. That's what
we wanted to accomplish with accessibility. But in the end,
we're making healthcare very unaffordable.
As it relates to prescriptions, what a lot of people don't
know is when we talk to an employer, 26 percent to 28 percent
of their premium goes toward prescription cost expenses. We
tend to set that aside because we're simply paying a $10 or $25
co-pay. But in the end, we have insureds who have prescriptions
that cost $100,000 per month, $100,000 a month for one
prescription. We need to address the cost of prescriptions.
Then we move into high-cost claimants. Historically, Health
Underwriters--we look at the total healthcare dollar, and it's
commonly known that 5 percent of the claimants produce 50
percent of the total utilization of an employer plan. That's a
challenge for us, because as a health underwriter myself, as a
compassionate individual, I desperately want to make sure that
we take care of those people who are suffering from chronic
illness. But we need a solution to address the 50 percent of
the healthcare equation.
I will yield my time over to Sarah.
Ms. Lueck. I think he was next.
Mr. Harte. Oh, I'm sorry.
Senator Enzi. Mr. Hudak.
Mr. Hudak. Fundamental to shaving the cost of care is
transparency. Americans are great consumers. We consume better
than anybody else. We know how to shop. One could argue under
the Affordable Care Act that there's less transparency, not
more transparency. There's less options, not more options. In
our area, we have three viable options. We are paying $200 a
month more for our family coverage just to keep our doctors, to
stay in--so that my wife can keep her doctors.
Consumer-based health plans gives the flexibility and
allows us to be consumers. I have some stories about being a
consumer. When going to the doctor and they see that you have a
high-deductible health plan, they'll negotiate the price with
you. ``Mr. Hudak, if you pay today, we'll give you a 20 percent
decrease in the bill.''
But it's more than that. It's how I get my care, what care
I get. I had to have a procedure done on my back. The doctor
deemed it elective. I said, ``No, I have a tremendous amount of
pain. It's affecting my work. It's affecting my ability to run
my business.'' The doctor said, ``I can't justify it with the
insurance company.'' I had an HSA. I said, ``I'll pay for it.
It's not a big deal.'' We negotiated our price. I had the
procedure done.
In 2 months, I lost 30 pounds, 30 pounds in 2 months. I
felt better than I had in a decade. My productivity went up. My
business thrived. Today, I need to have the procedure done
again. Guess what? They don't want to do it. I don't have the
flexibility. I don't have the options I had when I was a
consumer. I'd like to be a consumer again.
Senator Enzi. Ms. Lueck.
Ms. Lueck. Thank you. I think one thing I wanted to point
out is there is a lot of discussion about consumer-driven
healthcare, and I think there are some things, particularly, as
you mentioned, related to transparency that can help consumers
be better informed. There are now standard forms called SBCs
that exist for virtually every plan.
If you are trying to decide what plan you want to buy,
whether it's maybe your spouse's plan and yours from two
different employers or you're in the marketplace and you're
shopping for individual market coverage, you can lay these
documents side by side, and this is the first time you've ever
been able to compare apples to apples, sort of. What is the
cost sharing for this plan versus this plan? Which benefits are
excluded? The insurers provide those and the employers provide
those for almost every plan. That's a really helpful thing for
people to begin to understand their plans and how they work and
to try to make wise choices about coverage when they're looking
for coverage.
But when it comes to consumer-directed healthcare, I think
we're often talking about very high-deductible plans, which, as
we've already said, are difficult for people. The problem with
a very high-deductible plan is that it can be kind of a blunt
instrument that makes the person perhaps decide not to get care
and they may not be making the best decision in terms of
whether to get high-value care or low-value care. They may just
sort of be deciding ``I'm not going to get this care because I
can't afford my deductible,'' and that's not something we want
to see.
Some of the more sophisticated and perhaps impactful things
that are starting to go on, I think, to deal with healthcare
costs have to do with driving provider behavior, because
providers have a lot of power in the system. When they're
dealing with consumers, as the anecdote showed, making
decisions about cost and value of care and deciding how to
proceed with treatment, often that's something the consumer
can't do on their own or can't do enough to make a difference
in healthcare costs, because a lot of things either aren't
elective for them or they don't have enough information about
the specific medical benefits and costs to make a decision or
about the prices of the treatment.
I think that we have a lot of work to do. But I think that
there's a lot of promise in trying to change payment structures
in order to drive higher-value care, reduce inefficient care,
and to maybe encourage providers to talk with patients about
how best to proceed with treatments.
Statement of Senator Scott
Senator Scott. Mr. Chairman.
Senator Enzi. Tim.
Senator Scott. These folks are fairly active with these
name tags going up and down, so I figured I'd just jump in here
now.
Senator Enzi. Yes.
Senator Scott. Thank you.
Senator Enzi. We'll come back to that.
Senator Scott. Yes, we certainly will, because I'm going to
focus on the issues, because I think if we take a step back and
realize what we're having a conversation about, we're having a
conversation about healthcare affordability for small
businesses, but really for employees of small businesses, for
average families, who in the last several years have seen their
real income go down, not up. We've seen more small businesses
closed last year than opened. There's a reason why.
In the economy that we are facing today, we have 12 million
more Americans who are living in poverty. We have a 40 percent
increase in Americans who are eligible for food stamps. There's
something going wrong in our economy, and if you look at one of
the primary challenges we face, especially as a former small
business owner for 15 years, the regulatory environment that
exists today is unparalleled in the history of our country.
Six of the last 7 years, we've seen the greatest increase
in regulatory burden: 80,000 new pages proposed last year with
an economic impact of $1.8 trillion. We're asking small
businesses to do what they've never had to do before. If you
look at two of the primary causes for the regulatory burden
that we see today--Dodd-Frank and the ACA.
When you focus specifically on the ACA and you ask yourself
the question between healthcare costs and health insurance,
perhaps it's the wrong debate, because I would tell you that
the ACA may actually be increasing the actual cost of
healthcare, because what you talked about for a moment there,
Mr. Harte, was what I call healthcare rationing. You may have a
card that gives you access, but because of providers--and in
South Carolina, we've had two rural hospitals closed. Yes, you
have a card, but do you have access to healthcare?
With higher deductibles--and we may be talking about HSAs,
where your deductible is $5,000. But, actually, in South
Carolina and throughout this country, it is difficult for the
average American to put $400 together, not $5,000, but $400.
We're talking about people working paycheck to paycheck, who
are struggling to make a $1,000 deductible or a $500
deductible. In November, we're going to hear about higher
health insurance costs, not lower.
Mr. Hudak, who had to negotiate for his healthcare cost
because of the challenges of health insurance, may not always
be in the position to negotiate again for the necessary back
surgery that increases his productivity, not decreases it. I
would love for us to continue the conversation on how small
employers can better afford to provide healthcare coverage for
their employees. But I want to make sure that we do so, looking
through the prism of reality.
Anyone who believes that when 12 out of 23 co-ops fail,
740,000 more folks looking for coverage because of the failure,
when the exchanges are challenged, when health insurance
coverage is becoming more expensive, and when United
Healthcare, one of the largest providers, is saying, ``No, I
can't do that anymore. I'm pulling out''--for us to think that
reducing competition somehow lowers prices, it's only in
Washington where that makes sense, to be honest with you.
Mr. Hudak, I do have a few questions for you and Mr. Harte
as well, and the panel can answer the questions. I'll start
with you, Mr. Hudak.
Sixty percent of small employers suggest--and I would say
states--that the reason why they don't have health insurance
for their employees 52 percent of the time is because of cost.
What are some of the reasons that you've seen, as an
accountant, with folks that you're insuring? You're having a
lot of interaction with folks financially. What are some of the
things that you're hearing from the folks that you work with on
the cost issue, if you can answer that question? No. 2, how
will increased premiums--we see they're coming in November of
this year--impact the number of folks that you think will be
providing health insurance in the future?
Then for the panel, I think--and I can't prove this yet--
but I think the employer mandate and the penalty will actually
create a perverse incentive to provide less healthcare through
your employer, not more healthcare--2,000 versus 10,000 might
be an easy conclusion to reach for many employers. The actual
burden on taxpayers will go up, not down.
First, healthcare costs from the small business
perspective--what have you seen? Mr. Hudak and Mr. Harte as
well, I know that you are in the business. I sold health
insurance for about 5 years and realized, OMG, I need to do
something else. So I went into the property and casualty
business and the financial services business.
I see the pain. I've seen the pain that an increase has
when someone who could barely afford their health insurance
could see doubling of their health insurance costs, even though
they have an HSA. In South Carolina, a guy in Greenville went
from $425 a month to $800 for his family with a $25,000
deductible, family deductible.
Mr. Hudak. The small business community has always
struggled with healthcare premiums. That's why we always liked
the flexibility of consumer-based products. In order to compete
with the State of Pennsylvania, because of our proximity to the
capital, we provided an HRA, an allowance, allow our employees
to have a certain dollar amount that we could afford. We can
budget for it. We can plan. We can figure it into our growth
plan.
What we found, particularly amongst young people,
millennials, is they love that flexibility. They love to be
able to take that money--and maybe their wife has a medical
plan at her employer, but maybe they don't have dental, or
maybe they need help with their co-pays, or maybe they need
help with their co-insurance. This enables us the flexibility
to compete for that labor. All big businesses become big
businesses with the help of great people, and we need to
attract and retain those. Sure, we'd like to provide health
insurance.
You asked about what's happening. We have a business on our
board, on the NFIB board in Pennsylvania. He had been providing
health insurance for 40 years. He was prideful. It was a
bragging point. Do you know that last year, he announced that
he can no longer afford coverage for his firm anymore, and
those individuals ended up in the marketplace? It's
unfortunate. It made him less competitive. It made his
business, some may argue, less attractive to young talented
people that can maybe bring his business to the next level.
What we've found with the Affordable Care Act is we have
greater costs. We went from $1,200 a month for our family plan
to $1,900, if we include my wife's prescriptions, which went
from $100 to $600 a month. When we signed up for the plan, we
specifically asked about the formulary for that drug. They
assured me--but because of the confusion, even the insurance
company got it wrong. We signed up for a plan, and they
couldn't even--when we signed up, they didn't truly represent
the cost to us. There's not less confusion. There's more
confusion.
Senator Scott. Mr. Harte.
Mr. Harte. Thank you. Off testimony, because you were a
broker yourself at one time--yes, maybe you were the smart one.
You got out after 5 years. I've been doing this for almost 30
years.
Senator Scott. Let us pray.
Mr. Harte. I would say brokers across the country--we
struggle every single day. We struggle because those who become
our clients become our family. We take them under our wing. We
help them every single day, not just with the price increases
that they are so fearful of every 12 months, but having access
to care and the other challenges with their health insurance
plan.
Before I flew down here, I took a sampling of my most
recent renewals that I've had, and I gathered 12 of them just
so that I can share with you the insights from my employers.
It's hard for me to walk into a small business and say, ``Your
rate has increased by 29.96 percent,'' or 18.45 percent, 17.73
percent, 15.47 percent. The fact is small businesses have to
make a critical decision--How much of this am I going to pass
on to my employees? How much of it can I absorb on my own? What
must I cut? What type of cost shifting do I need to do? Do I
need to reduce my prescriptions, increase the hospital co-pays?
What do I need to do?--because they can't afford a 30 percent
rate increase.
As you indicated earlier, with the struggles within our
economy, employers are struggling--small, medium, large
businesses, and individuals who are purchasing insurance on the
marketplace. It's unsustainable for us to continue to be faced
with these significant rate increases.
I know we talked briefly about transparency, and I believe
transparency is one of the success factors that we really need
to focus on. Anecdotally, it always helps me when I share
numbers. On my phone, I have this really cool app. It's not
available to you, Senator Scott, because you're in South
Carolina. But I have this app in New Hampshire. It's called My
Medical Shopper, and I can scroll through, and I can find out
what the cost is within 30 miles of my home of any particular
service that I need, and it's all bundled up. It brings one
particular care together.
For your interest, I threw together a couple of examples.
I'll give you four, and they were picked at random for me when
I was out in New Mexico yesterday. For an MRI of a lumbar spine
without dye, the least expensive facility within 30 miles of my
home is $485. The most expensive is $2,114. The percentage is
436 percent. Colonoscopy--the least expensive is $458. The most
expensive is $3,031. The percentage is 661 percent.
Statement of Senator Cassidy
Senator Cassidy. Does that include facility fees?
Mr. Harte. Yes, it is.
Senator Cassidy. Is that soup to nuts?
Mr. Harte. Soup to nuts. This particular app will actually
show you all of the other underlying care that happens with
that particular colonoscopy. The one that's up on my phone
right now is with a biopsy. It can drill down to a very
specific and deliberate procedure. The MRI categories that are
on this app go into maybe 30 or 40 different categories of
MRIs, with dye or not, neck, back, legs, arms.
Senator Cassidy. Is it the provider who is publishing that,
or is it the insurance company which is publishing that rate
schedule?
Mr. Harte. For this particular app, they are doing a
technology platform called scraping, where they're going in to
the back end of the website for the health insurance company
and pulling the data from the health insurance company.
Senator Cassidy. That's pretty cool.
Senator Scott. One last question before we hear more on
this. One of the things that I think escapes us at times is the
impact of the medical loss ratio on a small business person's
opportunity to have an expert come in, because, essentially,
you're shaving commissions, and, frankly, in a world that's
becoming more complicated, you're having fewer experts come in
to provide assistance, which makes it more likely that a small
business owner will opt out of providing care. Remember that 60
percent of employees work for a company with 20 or fewer
employees.
Mr. Harte. You're talking my language, Senator Scott. So,
yes, and within healthcare reform, between small group and
large group, the medical loss ratios must be 80 percent or 85
percent, dependent upon where you fall as an employer. Broker
compensation must be included within the administrative costs.
We have argued for years that that should be pulled out,
because there's no greater value to an employer than accessing
the expertise of an employee benefit professional who can help
small businesses like Mr. Hudak.
The fact is purchasing health insurance is not like going
down to your appliance store and buying a refrigerator.
Purchasing health insurance is overwhelmingly complicated.
Whether you talk about deductibles or co-insurance or
transparency or bifurcated networks, it is likely the most
complicated product that you will ever have to purchase, and
you need the expertise of an employee benefit professional to
help you navigate those challenges.
Senator Scott. Thank you.
Thank you, Mr. Chairman, for your indulgence.
Senator Enzi. Thank you for your questions.
Senator Cassidy, I know, has questions, because he's been
working on this a lifetime, and since he's gotten to the
Senate, he's spent another lifetime working on it.
Senator Cassidy. And my hair has turned your color.
[Laughter.]
Senator Cassidy. It used to be, shall we say, blond.
Ms. Lueck, you had a critique of consumer-driven healthcare
that their high deductibles make perhaps less advantageous.
Oftentimes, I think of consumer-driven healthcare as a health
savings account associated with that catastrophic policy. On
the other hand, the exchange policies typically have a $6,000
deductible without the HSA component.
Now, it seems as if you're OK with the one, but have kind
of a negative critique of the other. How do you reconcile that
impression that I have?
Ms. Lueck. On the exchanges, for people who are low-income,
who are under 250 percent of the poverty line, there are cost
sharing reductions available, and it varies in terms of how
that affects the deductible under a Silver Plan, but it can
affect it quite significantly. For the people that are lowest
income, the deductibles are substantially reduced, and that's
important because there's a lot of research to show that lower-
income people are really sensitive to price, and they would
possibly avoid care that they should be getting because they
can't afford to pay the fee that they owe.
Senator Cassidy. Though what we're hearing from Mr. Hudak
and others is that, really, a single woman who's earning
$70,000 a year would not qualify for a subsidy. Mr. Harte, how
much does a single woman in New Hampshire who is 45 years old
pay for an individual policy, Silver policy?
Mr. Harte. Approximately $600 a month.
Senator Cassidy. She is paying $7,200 a year on a pretax
income of $70,000. She's paying probably roughly 15 percent of
her after-tax income, if not more, and I find that if she has a
$6,000 deductible, she also is foregoing care. Again, if you're
limiting your comments to those who are getting subsidized, I
guess I see your point. If we're going to be more inclusive of
the middle class and these people who are typical employees,
they're getting punished, and I'm not sure how--they have a
$6,000 deductible with a pretax income of--you see where I'm
going with that. Any comments on that?
Ms. Lueck. Yes. I mean, I think that we definitely need to
look closely at the affordability of cost sharing and how it's
impacting people and whether the HSA-style plan with a high
deductible is the best route to go, regardless of your income,
and whether people are able to make the decisions about how to
spend that money, when, as Senator Scott pointed out, a lot of
people have trouble even spending $400 out-of-pocket if they
needed to in a pinch.
Another point I should make about the ACA compliant plan
design is what we've seen over time. A trend that's different
than what was there before in terms of plan design is that,
often, even a plan that has a very high deductible of $6,000,
like you're mentioning, may cover a lot of services that people
commonly use without charging them that deductible.
Senator Cassidy. It will for a colonoscopy, but it will not
for the car accident or the trip to the urgent care center with
their daughter's earache, and that is where they are foregoing
care, anecdotally, in order to still put food on the table.
That seems inherent in the rate structure that is part of the
ACA exchanges.
Ms. Lueck. There's a variety of ways that they design
plans. When there's a car accident, people aren't able to
decide one way or the other, right, and if they don't have the
money to pay----
Senator Cassidy. But they are left with that hanging over
them, and although the ACA was supposed to eliminate medical
bankruptcy, I gather it is actually a worse problem now. Let me
ask as well--sitting here, it's like you're hearing two
different conversations.
From you, sir, I heard dramatic increases in premiums, and
from you and from you, and then--or at least out-of-pocket
exposure and the inability to afford. From Ms. Lueck, I heard
from you that premiums are only rising 4 percent. It really is
a kind of discordance as we listen.
The way I reconcile that--but tell me if you disagree, Ms.
Lueck, because people who defend the ACA mention that 4
percent. But that's not out-of-pocket exposure. That is premium
cost. Premium costs may be only rising 4 percent, but network
is narrowing and out-of-pocket exposure is increasing. That 4
percent rise means the policy now has a higher deductible, a
higher co-pay, tiered benefits for pharmacies--I could go on.
You're nodding your head, Mr. Harte.
Ms. Lueck, do you agree even though premiums are not
rising, that patients' out-of-pocket exposure has increased
substantially?
Ms. Lueck. Premiums are rising more slowly in recent years.
They're still rising, and I think that's a longstanding trend,
obviously. Then there's a longstanding trend toward individuals
bearing more of their own out-of-pocket costs compared to the
employer in things like deductibles and cost sharing. I don't
point at the ACA. That's a trend that predates the ACA, and I
think that the key thing that the ACA did is expand coverage
for people so there are actually a lot fewer people that are
facing the kind of bankruptcy that you're talking about.
Senator Cassidy. I've seen the statistics. The statistics
show that medical bankruptcies have not declined. Imagine a
family in a wreck in December--they have complete exposure--
then they're in the wreck, so there's still pain through the
next year. That's actually an unfulfilled promise, if you will.
Ms. Lueck. We continue to have affordability issues. You
mentioned the woman with a higher income level who's not
subsidy eligible trying to buy her own policy. We should
definitely be looking at the way that you described it, that
global number of what percentage of people's income are they
spending to get their health insurance coverage and to pay for
their out-of-pocket costs for their healthcare and consider
what's affordable and recognize that people at the lower end
don't have the ability to pay as high a percentage of their
income toward that care and that coverage as people with a
higher income.
Senator Cassidy. Mr. Hudak, you have a comment?
Mr. Hudak. Yes. I want to just point out as part of our
business of advising small businesses, as an accountant, more
than 10 years ago, we probably did a financial analysis on HSAs
hundreds and hundreds of times, and the way it worked is when
you buy an HSA compliant plan, it provided no first dollar
benefits except for the exception of prevention. Because of
that, the way the HSA was cost, the savings in premiums would
allow those contributions by the employer into an HSA account
on behalf of the employee to give them the flexibility to use
those dollars.
Today, that's impossible to do. An employer not only has to
deal with the insanity of the premium increases, but they don't
have the ability to assist the employees in that way again,
because the Affordable Care Act says--mandates that an HSA plan
must provide those first dollar benefits. It's priced where an
HSA no longer makes any sense. Some can argue that some of
these plans--none of them make any sense from a financial
perspective except for people who are running away from the tax
penalty for not having a compliant plan. That's unbelievable to
me.
Senator Enzi. Mr. Glause, did you want to comment?
Mr. Glause. Thank you, Chairman, yes. The deductibles for
ACA plans are, in my opinion, extremely high--$6,350. The
average person in Wyoming only spends $7,000 on healthcare
annually, almost equal to the cost of the deductible. In many
cases, these high deductibles are directly related to
uncompensated care. Individuals just do not have the money to
afford that deductible. Our healthcare facilities are then
having to absorb that cost, and in many cases, it's raising the
cost of healthcare.
The providers are pretty sure that they're not going to get
that first $6,000. They're building that into their rates, and
it's caused the rates of healthcare to go up and uncompensated
care to go up, which is threatening the existence of the sparse
healthcare facilities that we do have in Wyoming.
Senator Enzi. When we were first discussing healthcare
changes, there were 49 million people that were uninsured.
Today there are still approximately 30 million people
uninsured. It's a different group of uninsured people. The ones
that couldn't get insurance before have insurance, and the ones
that had insurance can't afford the insurance.
One of the things that comes up in the discussion is the
effect of changing the bandwidths. Have any of you noticed an
impact from that or have any suggestions for solving that?
Mr. Harte.
Mr. Harte. I didn't integrate a lot of my comments with
regard to age bands, but for the edification of the committee,
I will say that ACA declares that a three-to-one ratio is
appropriate for small businesses across the United States. Most
people would first ask me, ``Well, what does that really
mean?''
What you can't see right now is what the rate grids look
like. The rate grids that are handed to a small employer start
off with the age of 21 and go up through the age of 65, and
every individual on the health insurance plan follows by that
grid. That individual who is 21 versus the one who is age 65.
It's a multiple of three or a 300 percent differential.
The majority of healthcare is consumed by those who are
older. Those over the age of 50 consume a lot more healthcare
than those individuals who are younger than the age of 50. What
we're seeing is the premiums for the younger population--and
one of the objectives of healthcare reform was to insure the
younger population--their premiums are too high. A five-to-one
ratio would give greater flexibility to the insurance companies
to make sure that they're collecting enough money for the older
population to provide for their care while at the same time
trying to provide more affordable options for the younger
population.
Senator Enzi. Mr. Glause.
Mr. Glause. Thank you, Senator Enzi. What we've observed in
Wyoming is with the--is that me?
Senator Enzi. That's just us giving ourselves permission
not to speak on the floor.
[Laughter.]
Mr. Glause. With the three bandwidths in the ACA as
compared to the five bandwidths in our high-risk pool, we've
actually found that the rates for young males with a five
bandwidth in our high-risk pool is actually cheaper than
getting coverage on the ACA. I think that that has constricted
the bandwidth and has led to increased costs for the younger,
healthier population.
Senator Enzi. Ms. Lueck.
Ms. Lueck. The other side of that would be if you changed
it, it would obviously increase rates for the older population.
Overall, we really want to make sure that there are healthier
people of all ages in the risk pool so that we have as well
balanced a risk pool as possible. But if you're talking about
changing the age rating rules now from what they are, you're
definitely going to see rate increases for certain groups of
people.
When the rating rules went into place, things changed for
people as well. Women used to be rated more than men. That's a
big change. There are some people that saw lower rates as a
result of the changes and some people that saw higher rates,
and I think they're just different groups of people.
Senator Enzi. That's the 30 million I was talking about.
Mr. Hudak.
Mr. Hudak. I'm not an economist, but before the ACA,
younger people weren't so interested in healthcare. Raising
their prices hasn't made them more interested in healthcare.
I do want to mention one thing. Connecticut some years ago
had an exchange. The Chamber of Commerce had a small business
exchange. If you were an employer, you could sign up for the
exchange, and participating in there were all the different
carriers, the insurance companies. The employee could select
any company and any plan, and it would be billed as a group
plan. It was fully medically underwritten. If you fell outside
of the medical underwriting guidelines, you went into the risk
pool.
I always felt the best way to fund a risk pool would be
based on market share of the insurance companies. If Anthem of
Connecticut had a 30 percent market share, they would be
responsible for funding 30 percent of the risk pool. This was a
system set up by the Chamber of Commerce.
I think it's a viable solution. I think it adds flexibility
and choice, transparency, and, most importantly, one-size-fits-
all wouldn't have to be mandated. In other words, employees
could have their choice of flexibility and the employer could
be the true hero and provide the coverage that's needed.
Senator Enzi. Just to followup on that, you were talking
about the high-risk pool that the State had before?
Mr. Hudak. Correct.
Senator Enzi. Could you just go into that a little more? I
must have missed part of it or something, but I think it was
important.
Mr. Hudak. It was fully underwritten, and if you fell
outside the underwriting guidelines and didn't qualify for the
plan, you would go into the risk pool, and your plan would be
subsidized by the risk pool. Everybody--all comers would get--
it really addressed the adverse selectivity issue, because now
you're dealing with a group plan where the qualifying event is
new employment, marital change. You didn't have to worry about
people jumping on and off, or if you lost your coverage for
some reason. Right now, if for some reason, someone for
whatever reason missed a premium bill, and their coverage
lapsed, good luck trying to get it back. It's a very scary
situation right now.
Senator Enzi. Thank you.
Mr. Glause.
Mr. Glause. Thank you. In response to Ms. Lueck's response,
I'd also like to point out that open enrollment without regard
to preexisting conditions every year also increases cost to all
consumers, whether you're young or old or middle aged. When the
individuals elect not to obtain coverage until they have a need
for it, costs are driven up, whereas if the bandwidth was wider
and those individuals that were healthier had the opportunity
to get into the insurance market at less cost, we may be able
to get them coverage for when they need it without waiting
until they had a condition that necessitated insurance.
Senator Enzi. Ms. Lueck.
Ms. Lueck. I just wanted to mention, since the guaranteed
availability in the individual market and the open enrollment
period issue came up, that it's one of the most important
changes that's happened since 2014. One of the most popular
changes, frankly, if you ask the public, is the fact that
people can get access to coverage in the open enrollment period
and that they don't get denied or that they don't pay higher
premiums because of the fact that they have a preexisting
condition.
That was obviously something that was very concerning
before to people who had those conditions, and it wasn't just
people that had really expensive conditions that experienced
those kind of problems. It was people that had taken
antidepressants or had had chronic sinus infections. It was
really a lot of us that would have faced barriers in the
individual market.
Now, we have a situation where small employers have a
little bit of the pressure taken off, right, because they don't
have to feel like they have to provide coverage. That used to
be the case, right? They used to feel especially responsible to
provide coverage because they may have employees that have
health challenges and that wouldn't have been able to get
coverage in the individual market, and now there's a backstop
there, that people can get access to that coverage, and the
open enrollment period is just a way of making sure that people
can't actually enroll whenever they want to. They have to do it
at a defined time.
Senator Enzi. Thank you.
Back to Mr. Hudak, did you ever look into the SHOP
exchanges?
Mr. Hudak. We did, and it appeared that the plans weren't
very price competitive. Selections weren't very abundant, and
in our area, my wife would have had to change her doctors, and
she's had a preexisting condition for more than 15 years. We've
always struggled with keeping coverage, but we've always
maintained coverage. It's always been expensive. But I will say
today our monthly costs are far above anything that we've ever
faced in the past.
To answer your question about the SHOP exchange, I think
the selections aren't there, the choices aren't there, and the
networks are limited.
Senator Enzi. Anyone else want to comment on that?
Mr. Harte. I would say to you, Senator Enzi, that I
mentioned earlier that we represent 300 companies throughout
New England, and it may be helpful to know that only two of our
clients are involved in the SHOP. When I testified before you
last year, I shared with you some significant challenges that
the SHOP has had. I will share with you today that under the
leadership of Mr. Counihan, the SHOP is better today than it
was a year ago.
However, it still presents the challenges outlined by Mr.
Hudak, that sometimes you're going to find within certain
States lack of options. You will find bifurcated networks, and
sometimes you just don't find the solutions. It does attract a
certain employer with less than 25 lives and an average income
of less than $50,000 so you can take advantage of tax credits.
But the ultimate question for a small business owner like Mr.
Hudak will be: Is the aggravation going to be worth it?
Senator Enzi. Thank you.
Ms. Lueck.
Ms. Lueck. I just wanted to say something, because I happen
to agree with a lot of the panelists--I thought I would take my
chance while I could--that the SHOP has obviously experienced a
lot of challenges across the country in terms of getting
started on time and working well. It had a lot of technical and
operational problems when it first started. The reports that
I've heard since, in the last year, are that it's better, and
that a lot of those problems are resolved. But, of course, the
enrollment still remains quite low.
Small employers still have a lot of different options. They
can keep buying coverage as they always have done on the open
market directly from insurers through their brokers. That's
still an option, and they don't have to go to the SHOP. It
remains to be seen whether enrollment picks up there, whether
there are more concerted efforts to educate employers, or to
continue to bring more brokers into the SHOP marketplace,
because that's another area where things have gotten better,
but perhaps the brokers could have a larger role in the SHOP
and that would help get more employers enrolled.
The verdict is still out on the SHOP, and we'll have to
wait and see what happens. Clearly, the enrollment has skewed
toward those that are eligible for the tax credit that you can
get when you're in the SHOP. If we want to assist the very
small employers that are eligible a little bit more, maybe
that's something to consider.
Senator Enzi. Thank you.
Mr. Glause.
Mr. Glause. I'd just like to reiterate what I said in my
opening comments, that in Wyoming, we have less than 300 lives
covered in the SHOP, and the employers are telling us it's
difficult to determine what the tax benefits are. It's
convoluted, and they just aren't able to figure out what
advantage, if any, there is to providing coverage under the
SHOP. At least in our small State, we just haven't seen the
benefits to date of the SHOP program.
Ms. Lueck. Just one benefit I'll mention, for what it's
worth. There is the ability in the SHOP to offer a defined
contribution toward coverage. There's the ability to compare
different plans. Obviously, the options are variable, depending
upon the market and the State that you're in and the number of
carriers that you have access to. But a number of SHOPs do have
access to--they present access to multiple carriers so that
small businesses can choose from those.
They also have the advantage of not requiring, at least in
the federally run shop, a contribution requirement from the
small business. So often, we hear this idea that, oh, small
businesses just want to provide a little assistance with the
premium cost or to help their employees a little bit with the
cost. That's an option in the SHOP, and those were the kinds of
things that the SHOP was created for, and then, of course, the
option to do employee choice and let employees choose either
different plans in the same level or among different carriers
on their own without the employer making those choices for
them. That's a huge change and a new benefit, especially for
small employers who haven't been able to do that in the past.
Senator Enzi. Mr. Hudak.
Mr. Hudak. I do want to mention that being able to provide
healthcare in a flexible way is very important to small
businesses. The No. 1 issue is, right now, one in three
businesses have a position open that they can't fill. Trying to
attract and retain key people is critical to our success. Great
businesses are built with great people. We need to see
flexibility in the healthcare system so that we can be
inventive. We are finding that younger people like choices,
like to be able to spend money--allow them to be true
consumers.
We hear this time and time again, and when the little guy
is up against the big guy, it's very difficult for us to
compete, and the only way we can compete with the limited
dollars we have is with flexibility. That's why we believe HRAs
are really critical to this puzzle. HRAs allow us to have the
flexibility to let them purchase premiums, insurance plans, and
a whole host of other benefits. But they are in the driver's
seat, and there's a perceived and real value to being in the
driver's seat when it comes to your healthcare.
Senator Enzi. Ms. Lueck, in your opening comments, you
mentioned the need for transparency of cost. Mr. Harte
mentioned that in New Hampshire, they have transparency of
cost. Does anybody know if that's available in any other States
that way?
I know of a couple of companies that testified before us
before that were big enough that they could do those kinds of
comparisons within their company. But I'd like to know more
about this transparency.
Mr. Harte, you talked about that app.
Mr. Harte. In answer to your question, do other States have
transparency tools, I want to answer that question,
definitively, yes. However, I thought it might be helpful to
also help you understand how New Hampshire was a bit of a
pioneer in healthcare cost transparency, because approximately
10 to 13 years ago, the State of New Hampshire Insurance
Department under the leadership of Roger Sevigny came up with
www.nhhealthcost.org, and it was a limited healthcare cost
transparency tool.
The first thing I'll share with you, Mr. Chairman, is that
the first step could be that some of the States, through the
insurance departments, can learn from the model in the State of
New Hampshire, whereby the transparency conversation can start.
That being said, the insurance industry is embracing the
concept of helping their health plan members to have access to
this information. As I shared with you before, the
differentials can be greater than 600 percent from one facility
to another, and, quite frankly, the lower cost facility can
possibly be the higher quality of the two.
There are some significant large companies who are in this
marketplace right now, which I will share with you after
today's hearing. But, also, health plans across the country are
starting to get into the business of healthcare cost
transparency.
Senator Enzi. Mr. Glause.
Mr. Glause. I was just going to echo Mr. Harte's comments.
There are a number of States that have created either an all-
claims database or a multi-claims--multi-payers claims
database. The problem is that research has not borne out that
these all-payer claims databases or multi-payer claims
databases have reduced cost. Even in certain instances, in
California, we've seen them increase cost.
I think the real challenge with the all-payer claims
database is figuring out how to incentivize that for
individuals. For instance, there is a Neiman Marcus approach to
it, that if someone charges more, they must be better. It has
to have a quality concept tied to it. And, as well, the
individuals who have fulfilled their deductible--they no longer
have any skin in the game. We have to figure out how to
incentivize it.
The other issue it creates is the providers have access to
it as well, and you sometimes see providers bringing up their
cost to meet the higher cost rather than bringing them down in
limited competition areas.
Senator Enzi. Thank you.
I'll have some other questions that are probably a lot more
specific, and so I'll submit those.
[The information referred to follows:]
[SUBCOMMITTEE INSERT]
Senator Enzi. But does anybody want to make a closing
comment?
Mr. Harte.
Mr. Harte. Thank you, Senator Enzi. Again, thank you for
having me here today. I don't want this hearing to end without
me talking about a couple of issues that are of great concern
to my employer clients, one of which is the employer mandate
and the management and administration of the employer mandate.
Many employers issued their first tax forms just a few months
ago, and the burden on employers from 50 and up is overwhelming
at best.
The volume of hours, administration, and management for any
employer, regardless of size, to administer the employer
mandate is overwhelming. Many employers, large employers, went
to their payroll company last July and said, ``I need to start
preparing for the employer mandate and my reporting. Can you
help me with that?'' Now, as we know, a lot of healthcare
reform reporting requires that hours be submitted on a monthly
basis for individual employees. The clearinghouse for that is a
payroll company.
Many payroll companies shut down their clients and said,
``I apologize. We cannot do your employer reporting,'' which
left thousands of employers across this country looking for a
third party solution without access to all that data, and they
didn't talk to each other. My hope is that in this coming year,
there will be better solutions so that the employers are not so
overwhelmed.
My other comment to you, Senator Enzi, is I wanted to share
some concern that I have with regard to the consideration of
eliminating the employer exclusion. As many of us know, the
employer exclusion says that if a small business, like Mr.
Hudak, contributes premiums toward their employees' health
insurance benefits, then that benefit, the dollar benefit of
the health insurance plan, is excluded from an individual's
income.
I will share with you, anecdotally, some of my clients. One
of my clients is a large State employees union, and all of
their employees will be subject to a significant tax increase
absent the employer exclusion. In addition, as we're here today
talking more about small businesses, since the rate grids came
out, we have seen some significant discrimination in local
businesses, because they look at these rate grids, and they
say, ``It costs more to hire someone and provide benefits to
someone who is age 55 and older.''
What you'll also find by eliminating the employer exclusion
is that there will be further discrimination amongst people who
are my age and older, because when you work for a small
business, if the volume of premium paid for that individual is
higher than others, then, conversely, the tax to the business,
for the payroll tax, as well as the individual tax to the
employee, will be significant.
I actually have some examples here that one taxable income
for a 25-year-old will be an additional $12,900--and this is a
real-life example from one of my clients--versus a $29,000
additional income, almost like imputed income. Take their
Federal tax rate of anywhere from 10 percent to 39.6 percent,
and you're going to have a substantial tax burden to
individuals.
My concern, Senator Enzi, as you've known me through the
years, my platform is we need to make health insurance more
affordable. If in the event that we eliminate the employer
exclusion, we will absolutely see an increase in the number of
uninsured, because it will be significantly more unaffordable
than you have it today. You'll also have employers who say,
like Senator Scott said earlier, why don't employers just pay
the $2,000 penalty?
In my conversations with my clients every year, when I sit
down and share with them a 10 percent to 30 percent increase,
they're already considering walking away from their health
insurance plan. By eliminating the employer exclusion, I can
assure you that we will see a massive exodus from the small
employer marketplace and the large employer marketplace by
employers who are desperately concerned about the impact of
losing the employer exclusion.
Senator Enzi. Thank you.
I appreciate all the comments today and all of the
suggestions. I've got five pages of things circled here to
followup on and see if we can work them into, again, making
things more affordable for people that work for small
businesses, because that's what we're trying to do, and I know
a lot of people want to do that.
I want to thank you all for your testimony and the ideas
and suggestions. I hope I got them right. But they're very
good. You're a knowledgeable group, and perhaps we'll have some
more questions submitted for you. They have to be given to my
office by close of business on Tuesday, July 5, 2016.
Thank you very much. The roundtable is adjourned.
[Additional material follows.]
ADDITIONAL MATERIAL
Prepared Statement of Senator Hatch
Small businesses in Utah, and across our Nation, are an
important source of employment and economic activity while
serving as the foundation of our communities. According to the
Small Business Administration, Utah small businesses employ
more than 520,000 individuals, which is nearly half of the
private sector workforce. Firms with fewer than 100 employees
make up the largest share of small businesses in Utah. Small
businesses spark innovation, create jobs and complement the
economic activity of large organizations. However, small
business creation and growth is faltering in Utah and
throughout the country because of the Affordable Care Act and
its increased costs.
According to a study conducted by the National Federation
of Independent Business Research Foundation, ``the cost of
health insurance is the most critical concern for small
business owners in operating their business . . .'' This is
further exacerbated by mandates and taxes imposed by Obamacare.
It is time for the Federal Government to stop this assault on
small businesses and hardworking Americans. Through my work as
a member of this committee, as Chairman of the Finance
Committee, and as a Utahn seeking common sense solutions to
unnecessarily complex problems, I have fought to decrease
health care costs for small businesses in a variety of ways.
At the end of 2015, I ensured that Obamacare's 40 percent
excise tax on high cost employer-sponsored health benefits--
referred to as the Cadillac Tax--was delayed until 2020.
Similarly, I worked to enact a 1-year moratorium on the health
insurance tax, which is estimated to increase premiums on
average for small employers by more than $200 per employee.
While these are small steps to address the rising cost of
health care, they provided meaningful relief in the short term.
As Chairman of the Finance Committee, I have also worked
with my colleague, Senator Chuck Grassley, to support the Small
Business Health Care Relief Act (S. 3060). This measure would
allow small businesses that have no more than 50 employees to
offer stand-alone Health Reimbursement Accounts (HRAs) to their
employees if certain conditions are met without subjecting them
to an onerous excise tax that went into effect last July. HRAs
are an important tool used by employers to help employees pay
for health insurance premiums and medical expenses. I will
continue to work with Senator Grassley on avenues to advance
this important piece of legislation.
Many of the other ideas I believe will help to decrease
health care costs for small businesses are included in the
Patient Choice, Affordability, Responsibility, and Empowerment
(CARE) Act I proposed with my colleagues, Senator Richard Burr
and Congressman Fred Upton. The Patient CARE Act would repeal
Obamacare, and instead build the economy, empower the
individual, and reduce health care costs. Of particular
interest for employers should be the repeal of the employer
mandate that imposes a one-size fits all requirement on small
businesses that offer health insurance coverage to their
employees. Small businesses know their employees and their
health needs better than Federal bureaucrats in Washington, and
should have flexibility to design benefit packages that work
best for them. Furthermore, this proposal would allow small
businesses to join together to negotiate small business health
plans to leverage purchasing power, which could help expand
access to coverage and lower health care costs.
Another component of the Patient CARE Act is giving
employers and employees more access to Consumer Directed Health
Plans, also known as HSA-Eligible Health Plans. As the lead
sponsor of the Health Savings Act of 2016, I feel strongly that
giving employees more choice and greater control of their
earnings will enable smarter, more personal decisions about
their health needs.
Starting, maintaining and growing a small business demands
hard work, dedication, and focus. The Federal Government should
do all it can to support small business employers and
employees, rather than increasing burdensome regulations that
make it difficult for businesses to grow and hire more workers.
I will continue to advocate for ways to bend the cost curve for
small businesses purchasing health insurance coverage, and I
invite anyone--Republican or Democrat--to work with me to
address rising health care costs, which is a top issue facing
the economic engines of our country.
[Whereupon, at 3:25 p.m., the hearing was adjourned.]
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