[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]


                    EXPANDING AFFORDABLE HEALTH CARE
                   OPTIONS: EXAMINING THE DEPARTMENT
                      OF LABOR'S PROPOSED RULE ON
                        ASSOCIATION HEALTH PLANS

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

                                HEARING

                               BEFORE THE
                               
                        SUBCOMMITTEE ON HEALTH,
                    EMPLOYMENT, LABOR, AND PENSIONS

                         COMMITTEE ON EDUCATION
                           AND THE WORKFORCE

                     U.S. House of Representatives

                     ONE HUNDRED FIFTEENTH CONGRESS

                             SECOND SESSION

                               __________

             HEARING HELD IN WASHINGTON, DC, MARCH 20, 2018

                               __________

                           Serial No. 115-40

                               __________

  Printed for the use of the Committee on Education and the Workforce
  
  
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                COMMITTEE ON EDUCATION AND THE WORKFORCE

               VIRGINIA FOXX, North Carolina, Chairwoman

Joe Wilson, South Carolina           Robert C. ``Bobby'' Scott, 
Duncan Hunter, California                Virginia
David P. Roe, Tennessee              Ranking Member
Glenn ``GT'' Thompson, Pennsylvania  Susan A. Davis, California
Tim Walberg, Michigan                Raul M. Grijalva, Arizona
Brett Guthrie, Kentucky              Joe Courtney, Connecticut
Todd Rokita, Indiana                 Marcia L. Fudge, Ohio
Lou Barletta, Pennsylvania           Jared Polis, Colorado
Luke Messer, Indiana                 Gregorio Kilili Camacho Sablan,
Bradley Byrne, Alabama                 Northern Mariana Islands
David Brat, Virginia                 Frederica S. Wilson, Florida
Glenn Grothman, Wisconsin            Suzanne Bonamici, Oregon
Elise Stefanik, New York             Mark Takano, California
Rick W. Allen, Georgia               Alma S. Adams, North Carolina
Jason Lewis, Minnesota               Mark DeSaulnier, California
Francis Rooney, Florida              Donald Norcross, New Jersey
Paul Mitchell, Michigan              Lisa Blunt Rochester, Delaware
Tom Garrett, Jr., Virginia           Raja Krishnamoorthi, Illinois
Lloyd K. Smucker, Pennsylvania       Carol Shea-Porter, New Hampshire
A. Drew Ferguson, IV, Georgia        Adriano Espaillat, New York
Ron Estes, Kansas
Karen Handel, Georgia

                      Brandon Renz, Staff Director
                 Denise Forte, Minority Staff Director
                                 ------                                

        SUBCOMMITTEE ON HEALTH, EMPLOYMENT, LABOR, AND PENSIONS

                    TIM WALBERG, Michigan, Chairman

Joe Wilson, South Carolina           Gregorio Kilili Camacho Sablan,
David P. Roe, Tennessee                Northern Mariana Islands
Todd Rokita, Indiana                   Ranking Member
Lou Barletta, Pennsylvania           Frederica S. Wilson, Florida
Rick W. Allen, Georgia               Donald Norcross, New Jersey
Jason Lewis, Minnesota               Lisa Blunt Rochester, Delaware
Francis Rooney, Florida              Carol Shea-Porter, New Hampshire
Paul Mitchell, Michigan              Adriano Espaillat, New York
Lloyd K. Smucker, Pennsylvania       Joe Courtney, Connecticut
A. Drew Ferguson, IV, Georgia        Marcia L. Fudge, Ohio
Ron Estes, Kansas                    Suzanne Bonamici, Oregon
                            
                            
                            C O N T E N T S

                              ----------                              
                                                                   Page

Hearing held on March 20, 2018...................................     1

Statement of Members:
    Blunt Rochester, Hon. Lisa, a Representative in Congress from 
      the State of Delaware......................................     3
        Prepared statement of....................................     5
    Walberg, Hon. Tim, Chairman, Subcommittee on Health, 
      Employment, Labor, and Pensions............................     1
        Prepared statement of....................................     3

Statement of Witnesses:
    Arensmeyer, Mr. John, Founder and CEO, Small Business 
      Majority...................................................    42
        Prepared statement of....................................    44
    Condeluci, Mr. Christopher E., Principal and Sole 
      Shareholder, CC Law & Policy, PLLC.........................    48
        Prepared statement of....................................    50
    McGrew, Mr. Michael, CEO, McGrew Real Estate.................    16
        Prepared statement of....................................    18
    Monson, Ms. Catherine, CEO, Fastsigns International, Inc.....     7
        Prepared statement of....................................    10

Additional Submissions:
    Ms. Blunt Rochester:
        Letter dated March 6, 2018, from National Association of 
          Insurance Commissioners, and The Center for Insurance 
          Policy and Research....................................    95
    Bonamici, Hon. Suzanne, a Representative in Congress from the 
      State of Oregon:
        Letter dated March 6, 2018, from AARP....................    99
    Mr. Condeluci responses to questions submitted for the record   153
    Espaillat, Hon. Adriano, a Representative in Congress from 
      the State of New York:
        Letter dated March 6, 2018, from Attorneys General of New 
          York, Massachusetts, California, Connecticut, Delaware, 
          District of Columbia, Hawaii, Illinois, Iowa, Maine, 
          Maryland, New Jersey, New Mexico, Oregon, Pennsylvania, 
          Vermont, Virginia......................................   103
    Chairman Walberg:
        Letter dated March 20, 2018, from the National Restaurant 
          Association............................................   125
        Letter dated March 23, 2018, from Members of Congress....   128
        Letter dated April 3, 2018, from the Multi-Association 
          Health Plan Coalition..................................   130
        Letter dated March 20, 2018, from the National 
          Association of Home Builders...........................   136
        Questions submitted for the record.......................   151
    Wilson, Hon. Frederica S., a Representative in Congress from 
      the State of Florida:
        Letter dated March 6, 2018, from the American Cancer 
          Society Cancer Action Network..........................   142

 
                    EXPANDING AFFORDABLE HEALTH CARE
                   OPTIONS: EXAMINING THE DEPARTMENT
                      OF LABOR'S PROPOSED RULE ON
                        ASSOCIATION HEALTH PLANS

                              ----------                              


                        Tuesday, March 20, 2018

                        House of Representatives

               Committee on Education and the Workforce,

        Subcommittee on Health, Employment, Labor, and Pensions

                            Washington, D.C.

                              ----------                              

    The Subcommittee met, pursuant to call, at 10:03 a.m., in 
Room 2175, Rayburn House Office Building. Hon. Tim Walberg 
[chairman of the Subcommittee] presiding.
    Present: Representatives Walberg, Wilson of South Carolina, 
Roe, Lewis, Mitchell, Smucker, Estes, Wilson of Florida, 
Norcross, Blunt Rochester, Espaillat, Courtney, and Bonamici.
    Also Present: Representatives Foxx and Scott.
    Staff Present: Courtney Butcher, Director of Member 
Services and Coalitions; Michael Comer, Deputy Press Secretary; 
Rob Green, Director of Workforce Policy; Nancy Locke, Chief 
Clerk; John Martin, Workforce Policy Counsel; Kelley McNabb, 
Communications Director; James Mullen, Director of Information 
Technology; Alexis Murray, Professional Staff Member; Krisann 
Pearce, General Counsel; Benjamin Ridder, Legislative 
Assistant; Molly McLaughlin Salmi, Deputy Director of Workforce 
Policy; Olivia Voslow, Legislative Assistant; Joseph Wheeler, 
Professional Staff Member; Michael Woeste, Deputy Press 
Secretary; Tylease Alli, Minority Clerk/Intern and Fellow 
Coordinator; Mishawn Freeman, Minority Staff Assistant; Carolyn 
Hughes, Minority Director Health Policy/Senior Labor Policy 
Advisor; Richard Miller, Minority Labor Policy Director; Udochi 
Onwubiko, Minority Labor Policy Counsel; and Veronique 
Pluviose, Minority Staff Director; and Kimberly Toots, Minority 
Labor Policy Fellow.
    Chairman Walberg. A quorum being present, the Subcommittee 
on Health, Employment, Labor, and Pensions will come to order.
    Good morning, and welcome to today's Subcommittee hearing. 
I'd like to thank our panel of witnesses and our members for 
joining today's important discussion on the Department of 
Labor's proposed rule on association health plans, or AHPs, and 
how we can make affordable health care options a reality for 
more working Americans.
    The timing of this particular hearing is appropriate, as 
this week marks eight years since the passage of the Affordable 
Care Act. Since ObamaCare became the law of the land, America's 
small businesses have struggled to dig themselves out from 
under the law's crushing weight.
    Since 2008, the share of small businesses with fewer than 
10 employees offering health coverage has dropped by a shocking 
36 percent, leaving working Americans with fewer health care 
options or no coverage at all. It's estimated that 300,000 
small business jobs have been eliminated because of the 
Affordable Care Act, and 10,000 small businesses nationwide 
have been forced to close their doors. The financial burden 
this law has placed on Main Street businesses has been 
debilitating, with its costs and mandates amounting to an 
estimated $19 billion in lost wages for small business 
employees.
    Time and again, those of us on this Committee have heard 
from small business owners that one of their greatest concerns 
is the high cost of health insurance. America's job creators 
deserve better than the failing status quo of limited coverage 
options at sky-high prices. Instead, small businesses should be 
empowered to negotiate for the very best coverage at the very 
best prices on behalf of their employees, just as big 
businesses and labor unions do.
    In 2017, this committee favorably reported the House-passed 
H.R. 1101, the Small Business Health Fairness Act, legislation 
I introduced with our colleague, Representative Sam Johnson 
from Texas, chairman of the Ways and Means Subcommittee on 
Social Security. This legislation would expand health care 
coverage and lower costs for workers by empowering small 
businesses to band together through association health plans 
and negotiate for lower costs on behalf of their employees.
    By granting small businesses the ability to join together 
through AHPs, small businesses would be able to strengthen 
their bargaining power in the health insurance market in order 
to secure health coverage options on par with that of larger 
companies and unions.
    In October of last year, President Trump issued an 
executive order directing the Departments of Labor, Health, and 
Human Services and the Treasury to use their regulatory 
authority to expand access to AHPs. In response to the 
President's directive, the Department of Labor proposed a rule 
in January to broaden the criteria for determining whether 
employers may join together in an employer group or association 
in order to form an AHP.
    Given the Committee's longstanding interest and activities 
on AHPs, this recent action by Department of Labor presents an 
opportunity to examine the Department's plan to expand small 
business access to affordable health care options, and thereby 
decrease the number of uninsured individuals.
    Empowering small businesses to form AHPs is especially near 
and dear to my heart, and I'm pleased to see such strong 
progress on an issue that will directly benefit our nation's 
job creators and their employees.
    I look forward to hearing from our panel of witnesses and 
from other members of the Subcommittee today as we examine this 
proposed rule and work to do right by America's small 
businesses.
    I now yield to our ranking member today, Ms. Blunt 
Rochester, for opening remarks.
    [The statement of Chairman Walberg follows:]

   Prepared Statement of Hon. Tim Walberg, Chairman, Subcommittee on 
                 Health, Employment, Labor and Pensions

    Good morning, and welcome to today's subcommittee hearing. I would 
like to thank our panel of witnesses and our members for joining 
today's important discussion on the Department of Labor's proposed rule 
on association health plans, or AHPs, and how we can make affordable 
health care options a reality for more working Americans.
    The timing of this particular hearing is appropriate as this week 
marks eight years since the passage of Obamacare. Since Obamacare 
became the law of the land, America's small businesses have struggled 
to dig themselves out from under the law's crushing weight.
    Since 2008, the share of small businesses with fewer than 10 
employees offering health coverage has dropped by a shocking 36 
percent, leaving working Americans with fewer health care options or no 
coverage at all. It is estimated that 300,000 small business jobs have 
been eliminated because of Obamacare, and 10,000 small businesses 
nationwide have been forced to close their doors. The financial burden 
this law has placed on Main Street businesses has been debilitating, 
with its costs and mandates amounting to an estimated $19 billion in 
lost wages for small business employees.
    Time and again, those of us on this Committee have heard from small 
business owners that one of their greatest concerns is the high cost of 
health insurance. America's job creators deserve better than the 
failing status quo of limited coverage options at sky-high prices. 
Instead, small businesses should be empowered to negotiate for the very 
best coverage at the very best prices on behalf of their employees, 
just as big businesses and labor unions do.
    In 2017, this Committee favorably reported, and the House passed, 
H.R. 1101, the Small Business Health Fairness Act, legislation I 
introduced with our colleague Rep. Sam Johnson (R-TX), chairman of the 
Ways and Means Subcommittee on Social Security. This legislation would 
expand health care coverage and lower costs for workers by empowering 
small businesses to band together through association health plans and 
negotiate for lower costs on behalf of their employees.
    By granting small businesses the ability to join together through 
AHPs, small businesses would be able to strengthen their bargaining 
power in the health insurance market in order to secure health coverage 
options on par with that of larger companies and unions.
    In October of last year, President Trump issued an executive order 
directing the Departments of Labor, Health and Human Services, and the 
Treasury to use their regulatory authority to expand access to AHPs. In 
response to the President's directive, the Department of Labor proposed 
a rule in January to broaden the criteria for determining when 
employers may join together in an employer group or association in 
order to form an AHP.
    Given the Committee's longstanding interest and activity on AHPs, 
this recent action by DOL presents an opportunity to examine the 
Department's plan to expand small business access to affordable health 
care options, and thereby decrease the number of uninsured individuals. 
Empowering small businesses to form AHPs is especially near and dear to 
my heart, and I am pleased to see such strong progress on an issue that 
will directly benefit our nation's job creators and their employees.
    I look forward to hearing from our panel of witnesses and from 
other members of the subcommittee today as we examine this proposed 
rule and work to do right by America's small businesses.
                                 ______
                                 
    Ms. Blunt Rochester. Thank you, Chairman Walberg.
    Today's hearing comes just days before the eighth 
anniversary of the Affordable Care Act, or the ACA; legislation 
that has helped 20 million people gain health coverage, 
including 38,000 Delawareans, and also expanded protections to 
millions more across the country who had preexisting 
conditions.
    Over the past year, we have seen continual efforts by the 
administration and congressional Republicans to undermine that 
progress, including one of many failed attempts to repeal the 
law this last -- this past year. But with Congress' inability 
to pass legislation to repeal and replace the ACA, the 
administration has been unyielding in its attacks, refusing to 
faithfully implement the law of the land.
    The Department of Labor's proposed rule to expand 
association health plans is another attempt to sabotage 
Americans' access to comprehensive, affordable health coverage.
    Under current law, health insurance coverage offered 
through a group or association to individuals or small 
employers is generally treated like individual or small group 
coverage. This means businesses and individuals with health 
insurance through associations have the same protections as 
people in state-regulated, individual, and small group markets. 
This includes coverage of essential health benefits, including 
maternity care and substance abuse disorder treatment, and 
prohibitions against being charged more based on gender.
    Under current Department of Labor sub-regulatory guidance, 
there are strict criteria under which employer association 
health coverage is treated as a single large group ERISA-
covered plan, and thus exempt from adhering to these laws, 
these rules. The use of this strict criteria in this way helps 
protect against cherry picking only healthy consumers for the 
sole purpose of providing health coverage that has nothing to 
do with the actual employment.
    The Department's proposed rule would weaken the criteria 
for associations to be able to purchase insurance exempt from 
certain federal consumer protections. Simply put, the rule 
takes us backwards.
    While the rule's proponents claim it will help small 
businesses, in fact, this rule could limit access to 
comprehensive coverage for many small businesses and their 
workers, increase costs, and threaten access to those with 
preexisting conditions. Troublingly, it also has the potential 
to leave small businesses and their workers on the hook for 
millions of unpaid medical bills.
    First, this proposed rule would limit access to 
comprehensive health coverage without guaranteed coverage for 
essential health benefits, such as maternity care, mental 
health treatment, and substance use treatment. This means 
people may be left with skimpy and inadequate coverage that 
neither gives them access to the care they need, nor offers 
adequate financial protection against serious medical 
conditions.
    Second, the proposed rule will increase costs and threaten 
coverage for people with preexisting conditions. As healthier 
and lower cost consumers get cheap plans with skimpy benefits 
that may not meet their health needs, older or sicker consumers 
would be left behind in the traditional market with 
skyrocketing costs, making it difficult to obtain coverage.
    Third, the proposed rule could potentially leave small 
businesses and their workers on the hook for millions of -- in 
unpaid medical bills. As we have seen through testimony in 
previous hearings on this topic, association health plans have 
a long history of insolvencies, scams, and fraud. Between 2000 
and 2002, scams impacted more than 200,000 people and left more 
than $252 million in unpaid medical bills. As we all know, 
those who do not learn from history are doomed to repeat it.
    The Coalition Against Insurance Fraud stated that, under 
the rule, quote, ``Small businesses and their workers will face 
a huge and intolerable risk of fraud,'' end quote. It seems to 
me that a commonsense approach to supporting small businesses 
and helping them thrive would not and should include needlessly 
exposing them to the insolvencies, scams, and fraud that could 
force them to shudder their doors for good.
    Taken together, this proposed rule would leave some with 
cheaper coverage that fails to meet their basic health needs 
and leave everyone else with higher costs. While the Department 
of Labor is not represented on this panel today, the gaps in 
the proposed rules' justification and analysis provided by the 
Department are very troublesome.
    Members of Congress and the general public would benefit 
from an opportunity to hear from the Department. I will note 
that members of this Committee have requested more information 
from the Department on its analysis to no avail.
    As pointed out in a comment letter submitted by 17 state 
attorneys general, including Matt Denn, attorney general of my 
home state of Delaware, the rule would reverse critical 
consumer protections and unduly expand access to AHPs without 
sufficient justification or consideration of the consequences.
    Rather than continuing to campaign this campaign of 
interference, I hope the administration and my colleagues will 
join with Democrats to find ways to strengthen the ACA and 
increase access to affordable comprehensive health coverage.
    I thank the witnesses for joining us here today, and I 
yield back.
    [The statement of Ms. Blunt-Rochester follows:]

 Prepared Statement of Hon. Lisa Blunt-Rochester, a Representative in 
                  Congress from the State of Delaware

    Today's hearing comes just days before the eighth anniversary of 
the Affordable Care Act, or the ACA - legislation that has helped 20 
million people gain health coverage, including 38,000 Delawareans, and 
also expanded protections to millions more across the country who have 
preexisting conditions.
    Over the past year, we have also seen continual efforts by the 
administration and Congressional Republicans to undermine that progress 
- including one of many failed attempts to repeal the law this time 
last year. But with Congress' inability to pass legislation to repeal 
and replace the ACA, the administration has been unyielding in its 
attacks - refusing to faithfully implement the law of the land.
    The Department of Labor's proposed rule to expand association 
health plans is yet another attempt to sabotage American's access to 
comprehensive, affordable health coverage.
    Under current law, health insurance coverage offered through a 
group or association to individuals or small employers is generally 
treated like individual or small group coverage. This means businesses 
and individuals with health insurance through associations have the 
same protections as people in state-regulated individual and small 
group markets. This includes coverage of essential health benefits, 
including maternity care and substance abuse disorder treatment, and 
prohibitions against being charged more based on gender.
    Under current Department of Labor sub-regulatory guidance, there 
are strict criteria under which employer association health coverage is 
treated as a single, large group ERISA-covered plan, and thus exempt 
from adhering to these rules. The use of this strict criteria in this 
way helps protect against cherry-picking only healthy consumers for the 
sole purpose of providing health coverage that has nothing to do with 
actual employment.
    The Department's proposed rule would weaken the criteria for 
associations to be able to purchase insurance exempt from certain 
federal consumer protections. Simply put, this rule takes us backwards.
    While the rule's proponents claim it will help small businesses, in 
fact, this rule could limit access to comprehensive coverage for many 
small businesses and their workers, increase costs, and threaten access 
for those with pre-existing conditions. Troublingly, it also has the 
potential to leave small businesses and their workers on the hook for 
millions in unpaid medical bills.
    First, this proposed rule would limit access to comprehensive 
health coverage. Without guaranteed coverage for essential health 
benefits, such as maternity care, mental health treatment, and
    substance use treatment. This means people may be left with skimpy 
and inadequate coverage that neither gives them access to the care they 
need nor offers adequate financial protection against serious medical 
conditions.
    Second, the proposed rule will increase costs and threaten coverage 
for people with pre-existing conditions. As healthier and lower cost 
consumers get cheap plans with skimpy benefits that may not meet their 
health needs, older or sicker consumers would be left behind in the 
traditional market with skyrocketing costs, making it difficult to 
obtain coverage.
    Third, the proposed rule could potentially leave small businesses 
and their workers on the hook for millions in unpaid medical bills. As 
we have seen through testimony in previous hearings on this topic, 
association health plans have a long history of insolvencies, scams, 
and fraud. Between 2000 and 2002, scams impacted more than 200,000 
people and left more than $252 million in unpaid medical bills. As we 
all know, those who do not learn history are doomed to repeat it. The 
Coalition Against Insurance Fraud stated that under the rule ``small 
businesses and their workers will face a large and intolerable risk of 
fraud.''1 It seems to me that a common sense approach to supporting 
small businesses and helping them thrive would not and should not 
include needlessly exposing them to the insolvencies, scams, and fraud 
that could force them to shutter their doors for good.
    Taken together, the Department of Labor's (DOL) proposed rule will 
leave some with cheaper coverage that fails to meet their basic health 
needs, and leave everyone else with higher costs.
    The gaps in this rule's justification and analysis provided by the 
Department are troubling. Members of Congress and the general public 
would benefit from hearing directly from DOL, which is why Members of 
this Committee have requested more information from the Department, to 
no avail. I hope the Majority will join us in having an open and honest 
discussion about the real effect this proposed rule will have on small 
businesses and their employees.
    As pointed out in a comment letter submitted by 17 state Attorneys 
General, including Matt Denn, Attorney General of my home state of 
Delaware, the rule would reverse critical consumer protections and 
``unduly expand access to AHPs without sufficient justification or 
consideration of the consequences.''2
    Rather than continuing a campaign of interference, I hope the 
administration and my Republican colleagues will join with Democrats to 
find ways to strengthen the ACA and increase access to affordable, 
comprehensive health coverage.
    I thank the witnesses for joining us here today. I yield back.
    1 https://www.dol.gov/sites/default/files/ebsa/laws-and-
regulations/rules-and-regulations/public-comments/1210-AB85/00041.pdf
    2 https://www.dol.gov/sites/default/files/ebsa/laws-and-
regulations/rules-and-regulations/public-comments/1210-AB85/00669.pdf
                                 ______
                                 
    Chairman Walberg. I thank the gentlelady.
    Pursuant to Committee rule 7(c), all members will be 
permitted to submit written statements to be included in the 
permanent hearing record. And without objection, the hearing 
record will remain open for 14 days to allow such statements 
and other extraneous material referenced during the hearing to 
be submitted for the official hearing record.
    It's now my pleasure to introduce our distinguished 
witnesses. Ms. Catherine Monson is the CEO and president of 
FASTSIGNS International, Incorporated, in Carrollton, Texas, 
and is testifying on behalf of the International Franchise 
Association. Mr. Michael McGrew is the CEO of McGrew Real 
Estate in Lawrence, Kansas, and is testifying on behalf of the 
National Association of Realtors. Mr. John Arensmeyer is 
founder and CEO of the Small Business Majority, here in 
Washington, D.C. Mr. Christopher Condeluc -- Condeluci -- 
forgive me for that -- is principal and sole shareholder of CC 
Law & Policy PLLC, here in Washington, D.C.
    I welcome each of you.
    I'll now ask our witnesses to raise your right hand.
    Do you solemnly swear to affirm that the testimony you are 
about to give will be the truth, the whole truth, and nothing 
but the truth?
    Let the record reflect the witnesses answered all in the 
affirmative.
    Before I recognize you to provide your testimony, let me 
briefly explain the lighting system. It's just like rules of 
the road. Green, keep on going; when your five minutes hits 
yellow, you have a minute to wrap up; and when it hits red, 
please wrap up as quickly as you can. We will try to do the 
same as members ask questions as well.
    And so now, I welcome Ms. Monson, and recognize you for 
your five minutes of testimony.

 TESTIMONY OF CATHERINE MONSON, CEO, FASTSIGNS INTERNATIONAL, 
   INC., TESTIFYING ON BEHALF OF THE INTERNATIONAL FRANCHISE 
                          ASSOCIATION

    Ms. Monson. Thank you very much.
    Chairwoman Foxx, it's great to see you again.
    Chairman Walberg, great meeting you.
    Ranking Member Blunt Rochester, thank you so much for your 
kind words last week at the minority and franchising event. And 
I hope you met FASTSIGNS franchisee Howard James at the event. 
He was one of the speakers.
    And members of the Committee, my name is Catherine Monson. 
I'm here on behalf of FASTSIGNS International, our 604 
FASTSIGNS franchisees in the U.S., with others in other 
countries, and another 37 franchisees in the U.S. about to open 
their businesses.
    I'm here also with the International Franchise Association. 
I'm the second vice-chair of that association, and we represent 
over 733,000 franchise businesses employing 7.6 million 
employees in the U.S. today.
    I have made my career in franchising. I love franchising. 
I've seen it build wealth for families, create jobs and 
opportunities. It is an amazing ladder of opportunities for 
women, minorities, and immigrants. And our recent IFA minority 
study shows a 50 percent increase in minority ownership of 
franchises since 2007, up to 30.6 percent, something we're 
very, very proud about.
    For each of you, there are about 2,000 franchise businesses 
in each of your districts, and franchising is perfectly built 
for association health plans. We use economies of scale to help 
businesses deliver affordable products and services.
    I guarantee you the Dunkin' Donuts franchisee in your 
district pays less for flour and eggs and coffee than an 
independent donut business does, and the FASTSIGNS in your 
district pays less for printers and inks and substrates. And we 
want to bring that same negotiating power and economies of 
scale to association health plans.
    Small business health plans are great. If I talk about 
FASTSIGNS franchisees, the average has five to seven employees. 
In that very difficult 10 or fewer employees small business 
health care market where they have no negotiating power, they 
can go to Blue Cross Blue Shield and ask for better rates, and 
at 10 employees or less, they don't get it. They come back to 
their employees. Their employees can't afford their part of it. 
Some employees are on their spouses' or parents' plan. It's 
very, very challenging.
    IFA recently surveyed its franchisee members, and 65 
percent do not provide health care coverage. 92 percent of that 
group do not provide it because they just can't handle the cost 
burden. But, 100 percent would look for health coverage and 
provide it if they could get it through an association health 
plan.
    The IFA strongly supports the administration's rule. We 
know we can pull resources. And here's the key: It's getting 
quality health care. It is not about skinny plans. My 
franchisees and other franchisees want to have the best labor 
available. They want to have the best employees. It's about 
competing with large companies for the best employees. Skinny 
plans are not going to be considered at all.
    Under the proposed rule, businesses can band together 
either by commonality of interest or commonality of region, and 
the broader the definition of commonality of interests, the 
better -- the larger the pool, the lower the prices, the better 
quality full coverage health care.
    Franchises know how to do this. We know how to pull 
resources. We know how to negotiate with vendors bringing 
across -- if we will, think about the International Franchise 
Association. 7.6 million employees could be covered by quality 
affordable health care. It's all about a level playing field. 
We want the same exemptions to be able to buy large group 
health insurance coverage as the labor unions have, as large 
companies have.
    The IFA is urging the Department to look at franchising as 
a commonality of interest too, and the Federal Trade Commission 
definition and state laws provide for great guidelines here.
    We've also urged the Department of Labor to include a joint 
employer safe harbor, and this is really, really critical for 
franchising to get involved and to really get the maximum 
benefit out of association health plans. We support the 
adoption of safe harbor in the final rule so that we would not 
be deemed to joint employers just because there was an 
association health plan.
    Without the safe harbor, we feel it's very unlikely that 
the benefits of this important health care policy will really 
take hold. And we're really thankful for the bipartisan 
coalition of members of Congress, including Chairman Walberg, 
who've echoed our request.
    In closing, I want to say thank you very much for having me 
here. The International Franchise Association and FASTSIGNS 
strongly support the administration's rule and urge swift 
implementation. Franchising can and will be a willing partner 
in the effort to expand access to affordable quality health 
care -- that's the key. It's not skinny plans -- bringing more 
options to our very important working families.
    Thank you so much.
    [The statement of Ms. Monson follows:]
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    Chairman Walberg. Thank you.
    I recognize Mr. McGrew for your five minutes of testimony.

     TESTIMONY OF MICHAEL MCGREW, CEO, MCGREW REAL ESTATE, 
  TESTIFYING ON BEHALF OF THE NATIONAL ASSOCIATION OF REALTORS

    Mr. McGrew. Good morning, Chairman Walberg, Ranking Member 
Blunt Rochester, and members of the Subcommittee. Thank you for 
holding this hearing today and the opportunity to testify on 
behalf of the National Association of Realtors' 1.3 million 
members.
    My name is Mike McGrew. I'm a third-generation realtor and 
CEO of McGrew Real Estate, an independent real estate brokerage 
with 70 independent realtors and 14 salaried employees in 
Lawrence, Kansas.
    I'm the immediate past treasurer of the National 
Association of Realtors and a member of the executive 
committee, which establishes NAR's governing policies and 
oversees NAR's member benefits program.
    As a practicing realtor since 1982, I know firsthand how 
hard it is to find and keep health insurance when you're a sole 
proprietor and you have no employer coverage. I also know how 
hard it is to find affordable health coverage for your 
employees when you're the boss.
    The challenges facing the nation's small business and 
independent contractor community when searching for affordable 
health insurance continues to grow each year as costs rise and 
options diminish.
    The Department of Labor's proposed rulemaking seeks to make 
it possible for the self-employed and small employers to 
purchase health insurance through a trade association. Access 
to more health insurance options is key for realtors, a group 
that now purchases coverage primarily in the struggling 
individual markets.
    To understand the insurance challenges we face, it's 
important to know a bit about the structure of our industry. My 
company is a good example of a typical independent real estate 
firm. All of our agents are independent contractors. They have 
broad freedom to build their business as they choose under our 
state-mandated legal supervision responsibilities, and they 
value that independence. They have no limits on what they can 
earn, but they have no guaranteed paycheck. They wake up every 
morning unemployed and have to hunt for their next deal.
    While we provide health insurance to our salaried support 
staff, we do not provide health insurance to our independent 
agents. When real estate agents and brokers forego health 
insurance, the primary reason cited is cost, and it's this 
experience that has driven NAR to seek additional health 
insurance options for our membership.
    NAR has long supported legislation that would allow trade 
associations to create association health plans, including 
Chairman Walberg's Small Business Health Fairness Act. NAR also 
supports the Department of Labor's proposal that will provide 
more small businesses, as well as independent contractors, with 
access to an association health plan.
    It is essential that any final rule makes self-employed 
individuals with no employees or working owners eligible to 
participate in an AHP. It is also important to note that, under 
the rule, association health plans would still be subject to 
consumer protections under the ACA, ERISA, and state benefit 
mandates. In fact, it would not be in NAR's interest to offer a 
benefit program that is not a quality product because it would 
fail to attract members, and our demographics are much older in 
NAR.
    Additionally, since our surveys indicate that realtors' top 
priorities are affordability and access to preferred doctors, 
any association plan must achieve those goals as well.
    The Association has questions about the rule, as it remains 
unclear how state regulation would impact association plans, 
especially those of national groups, like NAR, whose members 
can be found in all 50 states.
    If an AHP cannot overcome barriers that states might 
implement to prohibit it from being classified as a large group 
plan, NAR may not be able to provide a nationwide plan for its 
members who are asking for more insurance options.
    It is essential that the final rule clarify that while 
states may continue to regulate association health plans as 
they do now, they may not use existing authorities to undermine 
the final rule.
    NAR also believes that the Department should reconsider 
eligibility criteria to be considered a working owner, 
especially the disqualification of those who have an offer of a 
subsidized coverage from a spouse's employer.
    The rule's current restrictions could drastically limit the 
potential pool of members that may be eligible for an NAR 
health plan. More importantly, this restriction could bar these 
individuals from an association plan that could provide better 
or more affordable coverages.
    To close, reducing the cost of health insurance while 
maintaining quality coverage is a top priority for NAR, a 
priority that is shared by the growing number of small 
businesses and self-employed Americans who are part of every 
sector of our economy.
    NAR is encouraged by the administration's focus on making 
improvements in this area and the Committee's attention to the 
health insurance challenges that face self-employed real estate 
professionals across the country.
    Thank you again for this opportunity to represent the 
realtors' health care concerns.
    [The statement of Mr. McGrew follows:]
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    Chairman Walberg. Thank you.
    Now I recognize Mr. Arensmeyer for your five minutes of 
testimony.

 TESTIMONY OF JOHN ARENSMEYER, FOUNDER AND CEO, SMALL BUSINESS 
                            MAJORITY

    Mr. Arensmeyer. Good morning, Chairman Walberg, Ranking 
Member Blunt Rochester, members of the Subcommittee. I'm the 
founder and CEO of Small Business Majority. Our mission is to 
empower America's 28 million entrepreneurs to build a thriving 
and inclusive economy. Working from nine offices across the 
country, we work closely with more than our network of 55,000 
small business owners and over 1,000 local business 
organizations.
    Over the past six years, the ACA has provided health care 
to more than 20 million individuals who otherwise couldn't 
access coverage, millions of whom work for small employers or 
are themselves business owners or self-employed individuals.
    Equally important, the small group market has seen rates 
stabilized under the ACA, with an average cost increase of 5.2 
percent, down from a rate of more than 10 percent prior to the 
ACA.
    It should come as no surprise that scientific polling we 
conducted last year found that six in 10 small business owners 
favor retaining and strengthening the ACA. That's why we're so 
concerned about the proposed changes in the Department of 
Labor's rules governing AHPs.
    In order for small businesses to receive affordable 
coverage, the small group market's risk pool must be robust and 
well balanced. The proposed rule would allow associations to 
operate as a single large employer, thus creating separate risk 
pools for different types of small businesses, particularly 
when it comes to things like essential health benefits, age 
rating, actuarial value, adjusted community rating, the single-
risk pool requirement, and risk adjustment.
    While this might mean that some small businesses with 
younger, healthier employees can purchase cheaper plans, the 
remaining risk pool becomes unbalanced, causing rates to soar 
for everybody else.
    What's more, the proposed rule suggests that current 
protections against discriminatory marketing practices would 
not apply to AHPs, which would allow these plans to discourage 
enrollment from companies with employees that have expensive or 
complicated health issues.
    Under this proposed rule, AHPs would also offer fewer 
consumer safeguards. It's concerning that the proposed rule is 
ambiguous about whether it will block states' abilities to 
regulate AHPs. It's unacceptable to prevent state insurance 
commissioners from enforcing rules they deem to be in the best 
interest of their state's small businesses and consumers.
    Small business owners may turn to AHPs in search of lower-
cost options. But without protections in place to prevent 
fraud, they can find themselves the victims of scams, on the 
hook for costly medical expenses for issues they thought their 
plan covered. As Adam Rochon, the owner of a small independent 
insurance agency says, ``The bottom line is AHPs are only good 
as long as you don't get sick.''
    Importantly, AHPs are not a new idea. In fact, states have 
already experimented with these plans with disastrous results. 
An Urban Institute analysis of Oregon's regulations of AHPs 
prior to the ACA found that policies and lack of regulatory 
oversight increased the potential for adverse selection in the 
remaining small group market in the state.
    This issue, as well as the concerns outlined above 
regarding fraud and abuse, is why a coalition of 17 attorneys 
general recently submitted comments to the Labor Department 
opposing the proposed rule. As noted in their comments, the 
proposed rule undermines the intent and structure of the ACA 
and is also contrary to the Labor Department's longstanding 
interpretation of ERISA, which, among other things, requires 
that large groups have a, quote, ``common economic or 
representational interest,'' close quote, unrelated to the 
provision of benefits.
    Finally, much has been made of the proposed rule's 
inclusion of independent contractors or so-called working 
owners. This is a group that has dramatically benefited from 
the ACA's individual market, with as many as one-third of 
participants in California's exchange being sole proprietors. 
As such, enacting this rule would significantly weaken the 
individual markets.
    Rather than pursuing policies to undermine the ACA, we 
encourage lawmakers to advance legislation that would stabilize 
health care marketplaces and protect the robustness of covered 
options for small business owners, employees, and independent 
business owners.
    Legislations like the bill that was recently introduced by 
the ranking members of the Energy and Commerce, Ways and Means, 
and Education and Workforce Committees would be an important 
step in lowering premiums and stabilizing markets.
    Thank you. And I look forward to answering your questions.
    [The statement of Mr. Arensmeyer follows:] 
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    Mrs. Foxx. [Presiding.] Thank you very much.
    Mr. Condeluci, you're recognized for five minutes.

   TESTIMONY OF CHRISTOPHER E. CONDELUCI, PRINCIPAL AND SOLE 
               SHAREHOLDER, CC LAW & POLICY, PLLC

    Mr. Condeluci. Thank you, Chairwoman, Ranking Member Blunt 
Rochester, and members of the Subcommittee, for this 
opportunity. My name is Chris Condeluci, the sole shareholder 
of CC Law & Policy, a legal and policy practice that focuses on 
issues relating to the Affordable Care Act. I am also an ERISA 
attorney by training.
    I want to start today by saying association health plans, 
or AHPs, are not the same as short-term health plans. For 
months now, critics of AHPs have publicly stated that similar 
to short-term health plans, AHPs can deny a person coverage if 
they have a preexisting condition, can refuse to cover 
preventive services, and can impose annual lifetime limits. I 
want to say unequivocally and emphatically that these 
statements are incorrect.
    AHPs as a group health plan under the law are subject to 
the ACA's coverage requirements, meaning they cannot deny a 
person health coverage if they have a preexisting condition, 
cannot refuse to provide free coverage for certain preventive 
services, and cannot impose annual lifetime limits on the 
federal essential health benefits covered under the plan. Other 
notable ACA requirements like coverage for adult children up to 
age 26, free access to emergency care, and the prohibition 
against rescinding coverage absent fraud all apply.
    ERISA's notice and disclosure requirements, fiduciary 
responsibilities, and health plan procedures all apply to AHPs. 
COBRA continuation coverage applies, and HIPAA prohibits an AHP 
from developing premiums based on a particular participant's 
health status. State benefit mandates to -- state benefit 
mandates apply to fully insured AHPs, and state solvency 
requirements will apply to self-insured AHPs.
    So now that we've established that AHPs are subject to 
existing law that requires the provision of comprehensive 
coverage, I will turn to the Department of Labor's proposed 
regulations.
    The proposed rules would allow employers in the same 
industry to offer AHP coverage to their members nationwide or 
on a regional basis. Currently, these related employers can 
only offer AHP coverage within a particular state. This 
proposed change is critical for national trade associations, 
franchisees, and companies with cooperative members.
    The proposed regulations would also allow employers in 
different industries but located in the same state or 
metropolitan area to form an AHP. This change is critical for 
local chambers of commerce and other employer-run organizations 
made up of multiple unrelated employers.
    Prior to 2011, many of these organizations offered AHP 
coverage, but were forced to discontinue their plan due to 
guidance issued by the Obama administration. The proposed 
regulations would also allow self-employed individuals with no 
employees, referred to as working owners, to get health 
coverage through an AHP. This change is critical because 
working owners have limited options when it comes to accessing 
health insurance. Some may be able to access coverage through 
their spouse, but in cases where family coverage is 
unaffordable or a working owner is not married, the option -- 
the only option is the ACA's individual market, which has 
proven problematic for those not eligible for a premium 
subsidy.
    Lastly, the Department of Labor should issue a class 
exemption that would exempt self-insured AHPs from the 
nonsolvency requirements of state MEWA laws. A class exemption 
is advisable because there's a patchwork set of state laws with 
different rules and licensing requirements. And the lack of 
uniformity in the law will likely limit the formation of self-
insured AHPs.
    As a former Republican counsel to the Senate Finance 
Committee who had the opportunity to draft portions of the ACA, 
I wish the ACA worked better. I wish the individual and small 
group markets would have evolved into balanced markets where 
comprehensive coverage is available. But the reality is that 
did not happen, and the reality is the status quo is not 
working for many Americans.
    One way to improve the status quo is by coming up with 
alternatives to the ACA that will continue to provide 
comprehensive coverage at a lower cost. And that is exactly 
what the AHP proposal is. It is an alternative that is going to 
help millions of employers to offer health coverage to attract 
and retain talented workers. It is an alternative that is going 
to help a large number of national trade associations, 
franchisees, and cooperative-run companies to provide 
additional benefits to their members and attract new members. 
And it is an alternative that's going to help working owners 
who have been struggling to afford health coverage in the ACA's 
unsubsidized individual market. This alternative will cost less 
than individual and small group plans, but the coverage will 
continue to be comprehensive as required under the ACA, ERISA, 
HIPAA, COBRA, and state law.
    Thank you for your time. I look forward to answering any 
questions you may have.
    [The statement of Mr. Condeluci follows:]
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    [10:34 a.m.]
    Mrs. Foxx. Thank you very much. And, again, I want to thank 
all of our witnesses for being here today.
    Mr. Condeluci, I will come back to you in a minute, but I 
do want to thank you very much for setting the record straight 
in your testimony. I think that is extraordinarily important.
    Ms. Monson, in your testimony you mentioned that because 
AHPs have a larger pool of enrollees they can more effectively 
balance the risk associated with providing health insurance 
coverage to their employees. For many small businesses, if an 
employee gets sick the individual company or franchise may have 
to bear the increased costs in premiums alone. Do AHPs provide 
more financial stability for small business faced with higher 
claims?
    Ms. Monson. Absolutely. AHPs will provide financial 
stability to small business owners. The biggest complaint of 
all small business owners is the cost of providing quality 
health insurance to their employees. Many can't afford to. With 
AHPs bringing down the cost because of the greater pool and 
lower administrative costs, it will definitely help financially 
those small business owners. And it really all comes down to 
competition for great employees. Nobody wants to hire bad 
employees, but to keep the best employees you've got to have 
great benefits. And too many small employers can't afford to 
have the same similar quality insurance that labor unions and 
large companies do. AHPs will solve that.
    Mrs. Foxx. Thank you very much. Mr. Condeluci, we have 
heard from a number of small business and employer groups that 
small group market costs continue to increase and the number of 
small employers offering health insurance, especially for very 
small businesses, continues to decrease.
    How is small group market size currently defined in the 
states? Is there significant difference in cost or offer rates 
between groups that are fewer than five or 10 and those that 
are over 50 or 100?
    Mr. Condeluci. Thank you for the question, Chairwoman. 
First, the states typically define the small group market as an 
employer employing at least two and up to 50 employees. As you 
may recall, the ACA actually changed that definition and moved 
that up to 100, but that change in the law from the ACA was 
changed by Congress back to 50. So it is two to 50 is the 
definition.
    To your question with regard to the cost as it's--let's say 
the price for groups that are smaller in size versus those that 
are 51 and above, the ACA, as many know, reformed the small 
group market, or enacted reforms to the small group market, and 
in particular, the adjusted community rating rules, the single 
risk pool requirement, essential health benefits, and actuary 
value all apply to small group market plans. So typically the 
prices are not that different between the various groups 
because even if you're a small group of five, relative to a 
small group of 45 still in a small group market, the prices are 
typically going to be the same.
    When you look at the large group market, which is 51 and 
above, often times the cost in the large group market is lower. 
There are administrative efficiencies in the large group market 
that is not present in the small group market. Or stated 
differently, the small group market has a lot of volatility. A 
lot of small employers dropping out of the market, in and out 
of the market, there's underwriting issues. And that just 
drives up administrative cost. And that volatility is not quite 
present in the large group market, and therefore large group 
often times has a lower cost associated with it.
    So those are just some factors between the differences 
between small group and large group market plans.
    Mrs. Foxx. Thank you very much. Mr. McGrew, as you know 
firsthand, health care costs are just one of the many budget 
line items that small business owners have to balance while 
running their companies. Operating costs, payroll, maintenance, 
marketing, and many other duties compete for limited time and 
resources. Can you describe the other costs your business 
incurs and how health care costs factor into strategic 
decisions, including hiring and expansion?
    Mr. McGrew. Thank you, Madam Chairwoman. There is no 
question that when you're a small business owner you wear a lot 
of hats and we don't have an extensive HR department in our 
company. Therefore, we rely a lot on outside advisors. We have 
to count on them for their expertise, and those are costs 
associated with having them help advise us with regard to these 
things.
    If I could spend more time helping my agents create more 
opportunities and help more consumers, my time is better spent 
than spending it on regulations and searching for health care 
options.
    In the state of Kansas, there are two health care insurance 
plans available in the whole state. We don't have a lot of 
choices. And so we spend a lot of time trying to figure out if 
there's a better way to do things. Unfortunately, that's 
spinning our wheels because we really at this point have only 
very limited choices.
    Thank you.
    Mrs. Foxx. Thank you very much. And, again, thanks to all 
of you. Mr. Scott, you are recognized for five minutes.
    Mr. Scott. Thank you. Mr. Arensmeyer, do the AHPs reduce 
the overall cost of health insurance for everybody, or just 
move it around so that different people pay different rates?
    Mr. Arensmeyer. They do not decrease the overall costs. The 
cost factors in the health insurance market are governed by 
many underlying issues. And you're right, they just move it 
around.
    Mr. Scott. Okay. So if you allow healthy people to form 
their own AHPs what happens to everybody else?
    Mr. Arensmeyer. Everybody else gets left in a group that's 
forced to raise prices, and most people are going to have their 
prices go up.
    Mr. Scott. And what happens to stability if healthy people 
start forming their own associations?
    Mr. Arensmeyer. Well, stability of the market decreases. 
Congress decided we've got three basic groups, risk groups. 
You've got large groups, small groups, and individual and each 
one of those needs to be as robust as possible. If you start to 
weaken any one of them you weaken the whole system.
    Mr. Scott. Now, if you form an AHP and people in your 
program start getting sick what can they do?
    Mr. Arensmeyer. If they're in an AHP? If they start getting 
sick and the AHP starts to incur losses, the AHP could go away. 
Unlike a large group, which is there because everyone's got a 
common economic interest, you know, in a big company. You know 
this is a group that's just set up for health insurance 
purposes only and it could just disintegrate.
    Mr. Scott. That means they can go back into the normal 
individual or small market pool?
    Mr. Arensmeyer. They would ultimately have to back into it, 
yes. But you're talking about destabilizing a market in the 
process.
    Mr. Scott. Now, what is the history of insolvency in AHPs?
    Mr. Arensmeyer. There's been a tremendous history of 
insolvency. And as I said, again, if you set up an entity for 
the sole purpose of providing health coverage you don't have 
the foundation that you have in the large group market with a 
large company that's there for many reasons beyond health 
insurance. So once something starts to go wrong, there's 
absolutely no incentive for people to stay in the system.
    Mr. Scott. So if the cost go up because a few people got 
sick, everybody will start bailing? Is that right?
    Mr. Arensmeyer. That's right.
    Mr. Scott. Is it possible to design a benefit package that 
attracts healthy people rather than average people?
    Mr. Arensmeyer. Absolutely. I mean if you don't have the 
same rules regarding essential health benefits you create 
different rules of the road. The reason that--and I should add, 
as I said in my testimony, the small group market, unlike some 
of what you've heard, has actually been relatively stable. In 
fact, between three and 199 employees it has only gone up one 
percent in the last year. So that's how you have a stable 
market is you have as much risk spread out as possible.
    Mr. Scott. But if you had designed a program that you did 
not have services for diabetes, did not have chemotherapy, you 
did not have AIDS medicine on your formulary, you would 
discourage people with those diseases from joining the pool. Is 
that right?
    Mr. Arensmeyer. That's correct.
    Mr. Scott. And you would have a healthier pool as long as 
they stayed healthy, and everybody would be happy until 
somebody got sick?
    Mr. Arensmeyer. That's correct.
    Mr. Scott. Can you give some examples of what happened--you 
mentioned fraud. What happened? Can you mention what happens 
when people get defrauded in this situation?
    Mr. Arensmeyer. Well, if they think they're signing up for 
comprehensive health benefits and then all the sudden the AHP 
weakness, then they are out of luck.
    Mr. Scott. What happens when the AHP goes insolvent?
    Mr. Arensmeyer. The people don't have coverage anymore.
    Mr. Scott. We have heard that nobody is going to really 
sell these skimpy plans because nobody would want to buy it. 
Doesn't a skimpy plan have the advantage of a very low price?
    Mr. Arensmeyer. Absolutely. I mean it becomes very 
attractive on the surface and all of the sudden you find out 
it's not covering what you need it to cover.
    Mr. Scott. And so the whole point of this is to lower the 
prices. And if you can get a low price then people would be 
attracted to it until they get an illness that is not covered. 
Nowhere they have done these, has the cost of the residual 
market, those that didn't get into an AHP, have you seen the 
cost go up for everybody else?
    Mr. Arensmeyer. Absolutely. I mean the cost increases in 
the small group market prior to the ACA, particularly when you 
had AHPs in the system, were much higher. I mean the growth was 
higher, the rate of increase was higher.
    Mr. Scott. Is there any problem with discriminating based 
on gender or designing a pool that has traditional male 
employees?
    Mr. Arensmeyer. You can certainly design a pool, design a 
set of benefits to intentionally exclude, or at least 
implicitly exclude certain people by not having maternity 
coverage, not having coverage for things that people who are 
older tend to get. Again, it's about having separate rules of 
the road than the small group market. The whole point of the 
small group market, as we just heard from Mr. Condeluci, it's 
actually you get pretty common costs across the entire small 
group market because you have a common set of rules and a 
common risk pool.
    Mr. Scott. Thank you, Mr. Chairman.
    Chairman Walberg. I thank the gentleman and, again, thank 
you for the panel for being here. I apologize for having to 
leave to go to two other subcommittee hearings that are going 
on at the same time for me.
    Mr. Condeluci, there has been a lot of discussion about 
whether AHPs will provide adequate consumer protections to 
their members. Some fear that expanding AHPs will lead to 
discrimination against employees who are older, sicker, or more 
expensive than other workers. That has been brought out this 
morning already.
    Can you discuss which nondiscrimination requirements apply 
to AHPs and how those compare to requirements applicable to 
existing plans in the large group market?
    Mr. Condeluci. Thank you for the question. In the 
Department of Labor's proposed regulations, there's a 
nondiscrimination protection that says that members seeking to 
join an employer group, or a group that is going to sponsor an 
AHP, cannot deny membership based on the health status of that 
employer member's employees. So there is a nondiscrimination 
protection when it comes to membership in the employer group, 
which almost by extension is a nondiscrimination protection as 
it relates to participation in the AHP.
    When it comes to the AHP there are current law 
nondiscrimination protections, as I discussed, and they're 
built into the proposed regulations, which say that an AHP 
cannot vary premiums based on a particular participant's health 
condition, nor can they vary eligibility for benefits based on 
a particular employee's or a particular participant's health 
condition. So those are current law, nondiscrimination 
protections that again are built into the proposed regulations.
    Chairman Walberg. Okay. And group market plans are required 
to cover preexisting conditions as well?
    Mr. Condeluci. Yes, sir. Large group plans, self-insured 
plans, as well as small group plans and individual market plans 
are subject to the ACA coverage requirements. And those ACA 
coverage requirements, which apply to all plans in all of those 
markets, have a prohibition against denying someone coverage 
based on a health condition or discriminating against a 
particular participant based on the health condition of that 
individual.
    Chairman Walberg. Okay, great. Thank you. Ms. Monson, you 
briefly talked about the cost of providing health insurance to 
your employees, as well as the challenges that franchised 
businesses can face when obtaining health insurance coverage. 
How does the ability to offer great health insurance coverage 
affect your franchisees' ability to attract and retain talent? 
And what impact do you think that offering an AHP would have?
    Ms. Monson. Thank you for the question. Every business 
requires the best employees to be the most successful that they 
can be. And small employers have really struggled, franchise 
businesses with small staffs have really struggled to find that 
same level of quality care, quality health insurance, at a 
reasonable price. My franchisees, every day, compete for the 
same employee candidates as large corporations do.
    Chairman Walberg. So competition is real?
    Ms. Monson. Competition is real for great employees. And we 
need to help those small business owners and those franchise 
business owners have access to quality, affordable health 
insurance--AHPs will bring that--so that they can have a level 
playing field when competing for the best employees, hiring the 
best employees, and keeping the best employees.
    Chairman Walberg. Okay. Thank you. Mr. McGrew, cost is a 
significant concern for small employers who want to offer 
health insurance. Do you believe that AHPs can offer the 
independent contractors you work with more affordable health 
plans and they can find it and purchase it today?
    Mr. McGrew. Thank you, Mr. Chairman. Absolutely. I am very 
confident, in my case, that the National Association of 
Realtors would be able to provide an option for my independent 
contractor realtor family members. There are so few choices 
when you're in the individual market that are good choices. And 
to have another option from a valued trusted business partner, 
as the National Association of Realtors is, would I think be a 
very valuable and viable option for my realtor family.
    Chairman Walberg. Okay. Mr. Condeluci--excuse me, Ms. 
Monson. I want go to back to her. Can you describe how an AHP 
would help small employers manage the administrative costs of 
their plan?
    Ms. Monson. If I take a look at the International Franchise 
Association representing, you know, 733,000 franchise 
businesses, with the stability of great coverage and an 
affordable price, there's not going to be the small businesses 
joining and leaving all the time. That reduces the 
administrative cost. There's a certain administrative cost that 
goes over one company, no matter if it's small or if it's very, 
very large. And so then we can spread the administrative costs 
over millions of employees or thousands of employees or 
hundreds of employees, rather than just 10 or 15 or 20.
    Chairman Walberg. Thank you. I see my time has expired. 
Thank you.
    I recognize Ms. Blunt Rochester for her five minutes of 
questioning.
    Ms. Blunt Rochester. Thank you, Mr. Chairman. And, again, 
thank you to the panel. You know, as I listened to the 
conversation one of the things that becomes clear to me is that 
we all value affordable, quality health care and access to it. 
I think one of the concerns, and one of the reasons why my 
focus has been on strengthening the Affordable Care Act is 
because to me this is kind of going backwards. It is saying we 
are piecemeal as a country instead of all in this together.
    So I start with that premise and I thank the panel for your 
testimony.
    Mr. Condeluci, I will probably ask you some questions later 
based on the new testimony, so I will come back to you with 
some of that later. But I would like to ask a question, 
starting with the fact that the Affordable Care Act, what was 
really powerful about it was that it afforded protections to 
older consumers, particularly as more people are living longer 
and staying longer in the workforce. And I worry that older 
business owners and older workers who could be left with fewer 
options or even more expensive coverage under this rule. AARP 
states in a comment letter that the rule could ``greatly 
increase the likelihood that working Americans, especially 
those age 50-64, would face higher insurance premiums and the 
loss of access to critical health insurance coverage''.
    Mr. Arensmeyer, are you concerned about the impact that the 
rule could have on older workers?
    Mr. Arensmeyer. Absolutely. I mean if you just look at the 
large group market now, the age banding between the most 
expensive for older workers and the least expensive is five to 
one, whereas in the small group markets, as you know, it's 
three to one. So you're automatically talking about a situation 
where you would have relatively higher prices for older people, 
which would then create problems for small businesses with 
older workforces.
    Ms. Blunt Rochester. And another thing that concerns me 
about the rule is that it could discourage businesses with 
employees who have preexisting conditions and health issues, or 
even people with disabilities, from enrolling in association 
health plans. For example, right now small group plans must 
cover rehabilitative services, but under the rule this 
requirement would not apply.
    In your position, would a plan without that coverage be 
attractive to, for example, a small business owner with a 
physical disability?
    Mr. Arensmeyer. No, it wouldn't. And, again, it gets back 
to the fact that you've got different rules of the road. We've 
heard a lot about the fact there would still be certain 
prohibitions against overt discrimination, but that doesn't 
stop you from setting up a plan that has different benefits 
than the essential health benefits required in the small group 
market, and thereby discouraging people who might be higher 
health risks from joining that plan.
    Ms. Blunt Rochester. Right. And my last question, earlier 
this week the President announced his plan to combat the opioid 
crisis. And while I don't think we are going to debate the plan 
here, I will mention that I think it is really encouraging that 
the President and Congress are having this important 
conversation and actually having it in a bipartisan way. But I 
am a little nervous about the rule and that impact on 
association health plans to avoid covering needed services for 
substance use disorder. Entirely counterproductive to what we 
are saying that we are trying to do with stemming the opioid 
crisis.
    Would you comment on the importance of substance use 
disorder treatment and why maintaining coverage for essential 
health benefits is important?
    Mr. Arensmeyer. Again, it gets back to the fact that you 
have different rules for different risk pools here. And there's 
no question you could again design plans that had less coverage 
for drug abuse treatment and you'd then be skewing the market 
accordingly. So, again, I'm going to stress that in the large 
group market, where you have common economic interest in a 
company, there's an interest in covering everybody, you know, 
with the best benefits as you can in that company. When you set 
up a plan that--or an organization or association is purely for 
the purpose of providing health coverage, you don't have that 
and you don't start off with a pool of people that you want to 
cover. You're saying we're going to set up this particular 
plan, then we're going to attract people to come into it. By 
definition, you're then skewing the risk pool that's in that 
market, making it not only different from the small group 
market, but different from a large group that's actually 
representing a company.
    Ms. Blunt Rochester. I am just going to close out by saying 
the Committee knows I have served as Deputy Secretary of Health 
and Social Services, Secretary of Labor, State Personnel 
Director. This issue of health care cost and quality has been 
one that has plagued us for many, many years. We need to all be 
on the same page and be doing it as one country, not a lot of 
different separate groups.
    Thank you. And I yield back.
    Chairman Walberg. I thank the gentlelady. And now I 
recognize my friend from Tennessee, Dr. Roe.
    Mr. Roe. Thank you, Mr. Chairman. And I have been in the 
small group market when we started our practice and grew now to 
the large group market. I have also served as a mayor of my 
local community where we did self-insurance plans. So I have a 
fairly good understanding of the market. I also have the 
Affordable Care Act and have had two major operations in the 
last 18 months, one for cancer, and I would have been better 
off with each of them just to have written a check. It would 
have been cheaper. In my district, almost as many people paid 
the penalty last year as got a subsidy. So it isn't working 
like a charm in the First Congressional District of Tennessee. 
I will just start by saying that.
    Now, secondly, I could not agree more that we want to 
increase the access to care to people, lower cost, and increase 
quality. I have a good friend of mine I won't mention, he has 
over 15,000 employees in his business. He has been able to put 
a health maintenance plan in that business. And we know what 
the drivers are, hypertension, diabetes, obesity, smoking, 
cancer, we know what those are. And with a large group like 
that, you can manage your health care costs. And he has been 
able to keep those at one percent level for the last several 
years. Why in the world would we put a roadblock up to keep 
these small business owners from doing the same thing? I know 
you are absolutely right, Ms. Monson, one of the hardest things 
to do and one of the most valuable people in my office are my 
employees in a doctor's office or in a realty office. Good 
people are hard to find. They need this coverage for their 
families and themselves and they need it affordable. And the 
way you can provide that is getting a larger risk pool. And, 
look, we had great employees who had serious health benefits, 
we wanted to--as an employer, I wanted to take care of those 
people, not only in a small business. These are not just 
employees, they are your friends. You may have worked with them 
for 25-30 years, which I did routinely. And I found out when we 
got older things happen to us. We didn't abandon those people. 
And it is offensive to me when people come up here and say that 
I would do that, that small business owners would do that.
    So I know them, I work around them, and, by the way, we had 
this Christian sharing ministries that has grown dramatically 
after the Affordable Care Act simply because coverage costs 
went down. And, Ms. Monson, you made a comment--and I think you 
will find this with all small business owners--if they could 
find a product that was affordable and offered quality coverage 
for their employees, they would buy it. The problem is cost, 
and that is how do you get the cost down. And I agree with you 
all, how do you provide quality product.
    So I think, Mr. Condeluci, I read your testimony last night 
and you made some incredibly good points in here, is that this 
is not a fly by night plan, these are quality plans that are 
governed by ERISA, they are in a different silo, agreed, than 
the small group market. And one of the comments, Mr. McGrew, 
that you made, was that there are two insurers in the state of 
Kansas. Well, if I were those two insurers, I wouldn't want any 
competition in the state of Kansas. I certainly wouldn't want 
an association health plan where my people there could buy 
insurance from somewhere else. And in Alabama, I know there is 
a dominant player in that market. In Tennessee there is a 
dominant player in the market. So I bring these up.
    And Ms. Monson, back to you. I want you just to again 
comment on the importance of your employees in your franchise 
business. And quite frankly, if 10 percent of franchise 
employee workers would get health insurance, you would have an 
incredibly large 700,000-1,000,000 people in a market. And, 
believe me, you can control costs doing that.
    Ms. Monson. Thank you. It all comes down to competition and 
competing for the best employees. And the best employees are 
smart, they understand. You know, I keep hearing this, we're 
going to provide skinny plans or poor coverage. That's not the 
case. People today are educated. The employment candidate is 
going to ask questions about the health insurance, they're 
going to know what it covers. There is no upside for any 
employer to offer subpar health insurance because we do, we 
care about our employees, we want them to be healthy, we want 
them to continue and grow within the organization and to 
remain. There's no incentive to have lousy coverage, only good 
coverage.
    And thinking about the 7.6 million employees that work for 
the 733,000 franchise establishments in the U.S., what an 
amazing large pool. Think about the buying power. It's all 
buying power.
    Mr. Roe. Well, the last thing I will say before I close up, 
one of the things I wish the ACA had worked as well, and it has 
for some people, but it has failed a lot of people. And what we 
are seeing in our practice is with the out of pockets and co-
pays so high, people come get a preventive service, but then if 
you find anything wrong with them and you have to send them 
down to the hospital or wherever, to a diagnostic center to get 
testing, all of that is on their nickel. And if you have got a 
$4-5-6-7000 out-of-pocket, you just don't get it done.
    So I think this is an incredible opportunity. I am excited 
about this. I think it will be fun to see if this could work. I 
know it will.
    Thanks and I yield back my time.
    Chairman Walberg. I thank the gentleman. I recognize the 
gentleman from New York, Mr. Espaillat.
    Mr. Espaillat. Thank you, Chairman Walberg, for this 
opportunity. I ask for unanimous consent to enter a comment 
letter submitted by state attorneys general in opposition to 
the Department of Labor's proposed association health plan 
rule.
    Chairman Walberg. Without objection; hearing none it will 
be submitted.
    Mr. Espaillat. Thank you, Mr. Chairman. Mr. Chairman, as I 
have said, 16 state attorneys general and the attorney general 
from the District of Columbia, have submitted this comment that 
stipulates in fact that they have great concerns with this 
proposed action.
    Mr. Chairman, here we are again, talking about association 
health plans, an idea which has failed time and time again. As 
our attorney generals have said, their state and respective 
offices have the duty and experience of protecting consumers 
from predatory practices associated with AHPs, but this 
proposed rule will threaten those very protections and open up 
consumers in states and regions across the country to the real 
potential of fraud and catastrophic wrongdoing.
    Almost 75 pieces of legislation dealing directly with AHPs 
have consistently been introduced in Congress, dating all the 
way back to the 103rd Congress. Let me repeat this again, 
almost 75 pieces of legislation dealing with these issues have 
been consistently introduced in the U.S. Congress dating back 
to the 103rd Congress. Of those almost 75 pieces of 
legislation, nine bills have passed at least one of the 
Chambers of Congress, and of those nine, not one--not one has 
been signed into law. Additionally, during that time, then-
Secretary of Labor Elaine Chao's testimony on AHPs in 2013, it 
was clear that the Department of Labor did not have the 
authority to act on AHPs without legislative action from 
Congress.
    This effort will lead to segregating the insurance pool 
into one that has healthy young people, people with preexisting 
conditions, and the others will have seniors, people with 
catastrophic illnesses, people with preexisting conditions, 
poor people. That is what this actually will do.
    This tells me two things, one, there has never been enough 
support of confidence in this kind of association health plan 
proposal to actually authorize them through federal 
legislation, and, two, until now the Department of Labor has 
never believed it had the authority to establish these kinds of 
AHPs on its own. In fact, this proposal is directly opposed to 
the ratified Congressional intent of both ERISA as well as the 
intent of the ACA.
    Aside from the massive enforcement issue, potential for 
widespread fraud and abuse, and as well as the constant legal 
battles that will be attached to AHPs, it seems to me that the 
Department of Labor requires Congressional authority to 
implement these rules and the Department quite simply lacks 
that authority.
    My question is--recognizing Mr. Condeluci found it 
acceptable to submit a brand new testimony this morning, which 
I am going to completely ignore--I am going to ask Mr. 
Arensmeyer this question. I represent New York's 13th 
Congressional District, which is home to many small businesses 
that are critical to the local economy, our neighborhoods, and 
workforce. If implemented, what exactly does this proposed rule 
mean for those small businesses and the health of their 
employees?
    Mr. Arensmeyer. What it means is if they don't find the 
AHPs that have access to--if they don't have the kind of 
benefits they want they are left in the core small group pool, 
but by pulling out the participants in that pool that are 
healthier and younger, their costs are likely to go up. Or, if 
they chose to join an AHP, they're at risk they don't have 
coverage for certain needs that they might have.
    Mr. Espaillat. One last quick question, as I am running out 
of time, how does this impact the ultimate risk factors that 
are considered for any pool of insurers?
    Mr. Arensmeyer. Well, again, I mean it comes down to you 
want as broad and robust a pool as possible. And there's--
operating with the same rules of the road. So when you start to 
play with that and you start to pull certain people out of a 
pool, you start to create instability in the whole marketplace. 
I mean we're all for competition and we'd love it if there were 
more group plans participating in the small group market. So, 
again, if they come in playing by the same rules that would be 
great. We all are concerned about costs, there's underlying 
costs in the system we need to deal with. It's a question of 
people in the common pools that are joined by common economic 
interests.
    Mr. Espaillat. Thank you, Mr. Chairman.
    Chairman Walberg. I thank the gentleman. I recognize the 
gentlelady from Oregon, Ms. Bonamici.
    Ms. Bonamici. Thank you very much.
    Chairman Walberg. Oh, excuse me, excuse me. I saw you 
hustling around there and--can't keep track of the players 
here. So take your time, take your time, get in place. And now 
I recognize the gentleman I never want to slight, the gentleman 
from Minnesota, Mr. Lewis.
    Mr. Lewis. Thank you, belatedly, Mr. Chairman. You know, I 
am a little perplexed as to the opposition to expanding these 
small business pools. For many, many years we have had large 
businesses operate under the notion of say a self-insured plan 
to get out from under very onerous state mandates. They 
obviously had purchasing power advantages and large networks 
that small businesses didn't have. So the idea of granting in 
the association health plans that same purchasing power, 
economies of scale that self-insured plans had or that larger 
businesses had, seems to me to be something that wouldn't 
generate much opposition, especially since you look at the 
status quo. And as the Committee has pointed out, since 2008, 
the share of small businesses with fewer than ten employees 
offering coverage at all has dropped nearly 40 percent. In my 
home state of Minnesota, just since 2013 and the implementation 
of the Affordable Care Act, some 7000 more small businesses 
have dropped coverage. So we do have a crisis here.
    It seems to me, Mr. Condeluci, that therefore the fallback 
revision of the opponents of this is well, if you allow these 
pools to form, why, they will be offering these skimpy plans. 
Now, you know, my parent used to buy something called major 
medical. When we understood what real insurance models looked 
like, we realized that your automobile insurance doesn't cover 
the tires, doesn't cover the oil change. If so, it would be sky 
high. And therefore health insurance for many, many years used 
to cover a catastrophic event that could bankrupt a family, but 
if you took Johnny or Susie to the annual physical, you paid 
it. We now with the Affordable Care Act gone the other way. We 
ought to have first dollar coverage on everything, I don't want 
any co-pays, I don't want any deductibles. And we put the 
system on the market and all we are left with are spiraling out 
of control premiums.
    But, isn't it true, Mr. Condeluci, that for many, many 
years, businesses, especially self-insured, were trying to get 
out from under very costly state mandates, for that very 
reason, right?
    Mr. Condeluci. Yes. Self-insured plans have ERISA 
preemption protections and therefore the state benefit mandates 
do not apply to those self-insured plans. And therefore, the 
costs associated with the self-insured plan is typically lower. 
While employers, be it small, be it large, they're sponsoring 
those self-insured plans, offer comprehensive coverage that are 
almost as comprehensive as the essential health benefits, as 
well as many of the state benefit mandates that would otherwise 
apply for ERISA preemption.
    Mr. Lewis. And those people under self-insured plans 
weren't shortchanged, they had very good health insurance. But 
the fact is there were costly mandates in my home state of 
Minnesota that some larger corporations wanted to get out from 
under to tailor a health insurance plan to fit their employees. 
And they had that option, but small business didn't have the 
option. But it is also true that the Affordable Care Act wanted 
to limit that, and therefore came up with these essential 
health benefit plans. So the notion that they could get out 
from under those under the ACA simply by an association health 
plan is erroneous, is it not?
    Mr. Condeluci. Yes, it is, sir. And it's important to 
understand that employers offer health coverage to attract and 
retain talented workers. And small employers compete with large 
employers for talent as well as they compete with their own 
small employer peers. And those small employers are going to 
seek to offer comprehensive coverage. And virtually every large 
employer out there offers coverage that includes the essential 
health benefits or offers coverage that is actuarially 
equivalent to the essential health benefits. So the claim that 
these association health plans will offer skimpy plans I think 
is difficult to accept, just basically seeing what large 
employers out there are offering. And I will note, the drafters 
of the ACA specifically exempted large group, fully insured 
plans and self-insured plans from the essential health benefits 
requirement, as well as some of the other insurance market 
reforms because the drafters accepted the notion that these 
large employers were offering comprehensive enough coverage. 
And therefore, the drafters said why should we impose these 
requirements when these employers are already doing the right 
thing?
    Mr. Lewis. So if it is good enough for those large 
employers, it is probably good enough for small business, isn't 
it?
    Mr. Condeluci. Yes, sir.
    Mr. Lewis. Having said all of this, isn't it true, however, 
that we have got to get back to the notion of a catastrophic 
health insurance policy that allows people to buy coverage that 
starts, quite frankly, with a very low deductible, but that 
wouldn't bankrupt their family. Instead, we have gone down this 
road of prepaid medicine, thinking about that first dollar 
coverage, and that is an impossibility in most insurance 
markets, isn't it?
    Mr. Condeluci. Yes, sir.
    Mr. Lewis. Thank you so much. I yield back.
    Chairman Walberg. I thank the gentleman. And now I 
recognize, again, the lady from Oregon, Ms. Bonamici.
    Ms. Bonamici. Thank you very much, Mr. Chairman, and 
Ranking Member, and thank you to our witnesses for being here.
    I used to do financial counseling at Legal Aid and I would 
work with clients who were devastated often times by health 
care costs. And some of them just could not afford insurance 
and some of them had insurance but it didn't cover them when 
they needed it. Also, when I was in private practice, I 
represented franchisees, and I know how hard they work, often 
family owned businesses. And I know they want to do right by 
their employees. And even before that my first job was in my 
mom's small business. I understand and know how important small 
businesses are to our communities, to our economy, and of 
course we all want small business owners and employees to have 
access to affordable, accessible health care.
    But I am very concerned because we have seen a great deal 
of evidence suggesting that association health plans do not 
work as intended. I think back to before the Affordable Care 
Act, which passed before my time in Congress. We knew that 
people who could not afford insurance would get their health 
care in emergency rooms, which is the least effective, most 
expensive way to get health care. Those costs would get passed 
along to everyone. And even Dr. Roe recognized the ACA works 
for some people.
    What we should be doing is, we should be strengthening the 
Affordable Care Act by providing certainty for insurers, we 
should be strengthening and stabilizing the individual and 
small group markets. That is what would really make a 
difference.
    Mr. Chairman, I would like to introduce into the record a 
letter addressed to Secretary Acosta from the AARP, in which 
they note the proposed rule's expansion of AHPs could greatly 
increase the likelihood that working Americans, especially 
those age 50-64, would face higher insurance premiums and the 
loss of access to critical health insurance coverage.
    Chairman Walberg. Without objection; and hearing none, it 
will be introduced.
    Ms. Bonamici. Thank you, Mr. Chairman. Mr. Arensmeyer, you 
referenced a letter signed by 17 state attorneys general, 
including Oregon Attorney General Ellen Rosenblum, from my home 
state. Could you explain why these attorneys general are so 
concerned about this rule and their ability to enforce state 
regulations on association health plans?
    Mr. Arensmeyer. Well, based on the letter I think they're 
concerned about a lot of the concerns that I've raised here 
about separate risk pools. They're concerned that, particularly 
on the interpretation of ERISA, that ERISA is based upon 
regulating plans that may not have the same rules as the small 
group market, but they are based on a common economic interest 
in the--you know, among the participants in that plan.
    So, again, we've heard a lot about comparing large group 
plans with the AHPs. I mean large companies, like General 
Motors, IBM, Google, they have an interest in providing 
comprehensive coverage. We've heard that most of them provide 
essential health benefits because they have an economic in 
doing that. There's no common economic interest in an 
association health plan that is set up purely to provide 
coverage and could go away tomorrow. That's not the case with a 
large group plan. Google is not going to get rid of its large 
group plan tomorrow because, you know, there's some issues with 
risk in it.
    So, again, they're concerned that ERISA, the way it was 
written and the way it's been interpreted, that this flies in 
the face of that. It's also concerned that it flies in the face 
of the intent of the Affordable Care Act.
    Ms. Bonamici. Thank you. And I noticed in your testimony 
you mentioned an Urban Institute analysis of association health 
plans in Oregon prior to the ACA. That analysis found there was 
increasing potential for adverse selection in the state's 
remaining small group market. Could you just briefly summarize 
that study and comment on whether this proposed rule might lead 
to adverse selection?
    Mr. Arensmeyer. Well, again, it gets back to what I'm 
saying. If you have something that's set up with a separate set 
of rules, it's purely to provide health coverage, you don't 
have the built in protections, just sort of market protections, 
that you have with a normal large group plan. So there's a 
tendency to maximize, you know, to try to keep the cost down by 
reducing benefits and by--you know, at some point then people 
start to get sick and they're not covered and the whole 
system--
    Ms. Bonamici. Thank you. I wanted to get one more quick 
question in. Mr.--I know you said Condeluci, I want to say 
Condeluci--it has been referenced before, there has been a long 
and well documented history of health insurance scams promoted 
through AHPs. According to the GAO, between 1988 and '91 
operators of multiple employer entities left about 400,000 
people with medical bills. There is just a whole history here. 
The Department of Labor does not address the fraud that is 
prevalent in this market. There is not clear indication of how 
the rule would protect consumers. So what would the Department 
of Labor need to do to prevent fraud and protect legitimate 
Associations or small businesses or self-employed individuals 
from being scammed?
    Mr. Condeluci. It's a very fair question. And it's 
important to note, because a lot of folks overlook the fact 
that the ACA, driven by the GAO report and the investigation on 
fraudulent activity, led to actually enactment under the ACA 
additional enforcement authority for the Department of Labor. 
So the Department of Labor now can actually impose civil and 
criminal penalties if there's fraudulent activities in these 
self-insured and/or fully insured AHP type plans. In addition, 
the DOL can go in and seize assets if there's solvency concern 
without a court order. So there are now enforcement tools that 
are in the law that have been offered to the Department of 
Labor, which many would argue have contained many of the 
fraudulent activity that occurred in, let's say, the early 
2000s to the 2004 timeframe. And Congress does have the ability 
to provide additional funding to the Department of Labor to 
increase that enforcement authority and/or provide additional 
tools to ensure that there are not fraudulent activities, and 
therefore containing much of the concern and much of the 
fraudulent activity that has happened in the past.
    Ms. Bonamici. Thank you. I see my time has expired. Thank 
you, Mr. Chairman.
    Chairman Walberg. Very adeptly done, to get that last 
question in. Thank you. I thank the gentlelady. I recognize my 
good friend and colleague from Michigan, Mr. Mitchell.
    Mr. Mitchell. Thank you, Mr. Chair. Let me start briefly, 
Mr. Arensmeyer, with a comment for you. I led a couple of small 
businesses, one that evolved into a fair sized business; I was 
chair of an association of those small businesses. I am 
astonished, and frankly a little offended, with your comment 
that somehow there is not a joint economic interest, that we do 
not have the same level of economic interest in the wellbeing 
and health of our employees as large businesses do. And I think 
it is based on the very premise with which you go forward with 
your testimony. So your position, of course, you are welcome to 
it, it is noted, but I think it is based on some false 
premises. I was extremely concerned with the health and 
wellbeing of our employees.
    Let me go through a little history. As with Dr. Roe, I was 
in a large group plan with Chrysler Corporation and a self-
insured plan. We had a business that grew to 650 employees and 
we had part-time employees that were teachers and instructors 
that worked less than--some less than 15 hours a week because 
they were instructors. During the economic downturn we created 
a health insurance plan for employees that were regularly 
scheduled at least nine hours a week, because frankly in many 
cases they were female employees, their husbands were losing 
jobs in the auto industry and they had no health insurance.
    Along came the ACA, which by definition, because we had 
this plan as an option that we created for our part-time 
employees, created obligations that frankly we couldn't afford 
for part-time employees, some of which worked as little, as I 
said, 12 hours a week. It created obligations that we had to 
make a choice between continuing insurance for employees, which 
we did because we thought it was necessary for them and their 
families, or telling them to go to the Affordable Care Act. 
Huge obligations that no one seemed to care much about.
    I met with a large employer recently, a hospital, who told 
me two-thirds of their ER cases should go to primary care--
still primary care or urgent care but still come to the ER. The 
Affordable Care Act has failed to deal with the fundamental 
problems which we are kicking around today, a lack of 
transparency of cost and choice. Try to find out what the cost 
of an MRI at a clinic versus an MRI at the hospital--let me 
know how that works for you. Second, is a lack of user input 
and involvement in the cost and choice. And, third, is the lack 
of the competition on what the cost is. We have disassociated 
the user from the cost, and now we are trying to paper it over 
with one reg. after another.
    Until we fundamentally deal with the Affordable Care Act, 
fundamentally deal with what we are not talking about, which is 
the cost of health care in this nation, and people having a 
choice in understanding what their costs are, we are going to 
continue to try to move costs around from one group to another. 
And then, hope the government will pay for it, the taxpayers.
    So, while we talk about this plan today, the longer we sit 
here and hope that the federal government is going to somehow 
find a way to milk the taxpayer to pay costs for someone that 
doesn't know what their cost is, that goes to the emergency 
room for care they could go to urgent care. Because that is 
what they have done their entire life, our health care costs 
will spiral. And we should do that, we should actually take the 
effort to do that here in Congress.
    A couple of quick questions. I am running out of time, and 
I apologize, but it frankly frustrates me.
    Ms. Monson and Mr. Condeluci--I apologize for the 
pronouncement, sir.
    Mr. Condeluci. Quite all right.
    Mr. Mitchell. Is there some reason there wasn't some 
explicit language put in place on the joint employer to exclude 
them or to clarify the exclusion so in fact it doesn't create a 
further risk as being defined as joint employer? Can you help 
me with that?
    Ms. Monson. I know that the International Franchise 
Association has made a request that we have a safe harbor 
because we do not want to have the risk of being deemed joint 
employers just because there is this valuable affordable 
quality health care plan available, whether it's through the 
FASTSIGN sister or whether it's through the International 
Franchise Association, it's certainly a request we've made.
    Mr. Mitchell. Well, given all the conversation we have had, 
including with the Secretary of Labor, both here and in 
meetings about the joint employer rule, I am frankly astonished 
that there wasn't something done in the regulation to in fact 
address that. I don't understand why and I think by letter I 
may well participate in making a comment on that because I 
don't understand why it is they didn't address that. It has 
been a huge conversation around here, yet it is ignored by the 
Department frankly.
    One more quick question because I know I am going to run 
out of time, but I am going to see if I can use my colleague, 
Ms. Bonamici's, time. You note, Mr. Condeluci, a potential 
conflict between potential state law and the redefinition of 
large group AHPs by state law saying the small groups are 
causing issues there. How do you propose they resolve that?
    Mr. Condeluci. First, the proposed regulations do nothing 
to change state regulation. So therefore, states could, if they 
so choose, enact a law that re-characterizes a large group, a 
large group fully insured AHP, as a small group plan, therefore 
subject to the small group market rules. And there is an 
argument that could be subject to an ERISA preemption 
challenge.
    And, in addition, there is certain language in ERISA that 
requires states to impose certain regulation on fully insured 
MEWAs or fully insured AHPs. And a re-characterization law such 
as this is arguably inconsistent with the ERISA statute as it 
relates to regulating fully insured MEWAs as the state level.
    Mr. Mitchell. Thank you, sir. One quick comment, Mr. Chair, 
is I did review really quickly the letter from the 16 attorneys 
general opposing this regulation. It won't shock you to know, 
Mr. Chair, that all 16 attorneys general have explicitly 
expressed in no small manner their support for the current 
Affordable Care Act, such states as New York, Massachusetts, 
and California. So that will state a great deal their rational.
    Thank you, sir.
    Chairman Walberg. I thank the gentleman for doing your 
homework. And I recognize the gentlelady from Florida, Ms. 
Wilson.
    Ms. Wilson of Florida. Thank you. I want to begin by 
thanking our subcommittee Chairman Walberg and Ranking Member 
Sablan for holding today's hearing. And I would like to thank 
our witnesses for your testimony and for being here today. I 
ask unanimous consent to enter into the record a comment letter 
in response to the proposed rule from the American Cancer 
Society Cancer Action Network.
    Chairman Walberg. Hearing no objection, and I hear none, it 
will be entered.
    Ms. Wilson of Florida. I strongly believe that if the 
Department of Labor's proposed rule is to expand association 
health plans goes into effect it would seriously undermine many 
of the benefits offered under the Affordable Care Act, mainly 
by weakening consumer protections and shifting cost onto 
working people. Indeed, underlying effects of association 
health plans limit access to comprehensive health coverage, 
increase costs for consumers, and threaten coverage for people 
with preexisting conditions. Moreover, they leave consumers 
with even fewer protections against fraud.
    Certainly, without guaranteed coverage for essential 
benefits such as maternity care, mental health treatment, and 
substance use treatment, many people may be left with 
inadequate coverage that neither gives them access to the care 
they need, nor offers adequate financial protection against 
serious medical conditions. And, in fact, the proposed rule 
goes so far as to explicitly state that some association health 
plans might thrive by delivering savings to members by other 
means, such as by offering less comprehensive benefits.
    In addition, these plans would increase cost and threaten 
coverage for people with preexisting conditions, as healthier 
and lower cost consumers get cheaper plans with less benefits 
that may not meet their health care needs. Association health 
plans would leave older, sicker, and higher cost consumers or 
consumers with preexisting conditions behind in a traditional 
market with skyrocketing costs, making it outright difficult to 
obtain coverage.
    I want to ask a few questions of our witnesses.
    Mr. John Arensmeyer, you state in your testimony that 
because most small businesses currently purchase coverage in 
the small group market, it is important to protect the 
stability of this market. In your opinion, does the proposed 
rule contribute to stability or does it undermine it?
    Mr. Arensmeyer. We believe it undermines it. And, again, as 
I said before, by removing certain participants in that market 
who are likely to be at a lower risk, thereby leaving higher 
risk folks in the small group market and increasing costs and 
increasing instability.
    Ms. Wilson of Florida. Under the proposed rule associations 
tied together by the same industry or geographic area can form 
solely for the purpose of offering coverage. This means 
employers could form a new organization for the sole purpose of 
achieving savings, avoiding many of the Affordable Care Act's 
consumer protections. But what about small businesses and 
workers that want these protections? If they choose to stay in 
the traditional market, what could the rule mean for them?
    Mr. Arensmeyer. Well, obviously, if they choose to stay in 
the existing market and you remove lower risk out of the small 
group market, you're going to end up with higher costs, more 
instability in what's left and it's going to jeopardize the 
protections that they have. Again, it's really about, you know, 
we welcome competition and there's been a lot of talk about 
cost reduction. Absolutely, there is a lot of need to reduce 
health care costs in the whole system, but at the same time if 
we're going to be talking about coverage and robust and stable 
markets, we have to have everybody playing by the same rules.
    Ms. Wilson of Florida. What role do you think states should 
play in regulating these health plans?
    Mr. Arensmeyer. Well, traditionally states have played a 
very significant role in regulating health coverage. And right 
now it's unclear, and as Mr. Condeluci said, you know, states 
may believe they can still regulate these or re-characterize 
these groups as small group, but there would be a likely 
challenge under ERISA. So it again creates legal instability on 
top of the economic instability.
    Ms. Wilson of Florida. Mr. Michael McGrew, in its proposal 
DOL speculates that associated health plans will generate 
substantial inefficiencies that result in cost savings for 
their members, but provides no evidence and no actual numbers 
to support its assertions. What specific administrative 
functions will you perform more efficiently than an insurer, 
and what percent savings does that yield?
    Mr. McGrew. Thank you, Madam Congresswoman. I am not an 
insurance expert, but I would say that from the standpoint of 
the National Association of Realtors, if they were given the 
opportunity to provide an AHP plan to our 1.3 million members, 
we would certainly benefit from the fact that the National 
Association of Realtors has a robust value proposition to offer 
the rest of us who are small, independent, and individual 
company owners who do not have the time and the ability to do 
the kind of work that you're suggesting.
    Chairman Walberg. I thank the gentlelady; her time has 
expired. I recognize the businessman and gentleman from 
Pennsylvania, Mr. Smucker.
    Mr. Smucker. Thank you, Mr. Chairman. Mr. McGrew, your 
testimony underscores what I heard just recently in a meeting 
with realtors and their association in the district that I 
represent. I think top concern for them was health care. And I 
think all of them in the room, or almost all of them in the 
room, were covered through the individual marketplace and were 
experiencing the kinds of things that we have been hearing 
here, high cost, prohibitive premium costs, and very high 
deductibles.
    I know in other situations I have heard individuals who 
really wanted to go into business for themselves but saw the 
costs of health care as a barrier to entry essentially. Are you 
finding that with realtors as well? Are they making decisions 
not to go into real estate because of the cost of health care?
    Mr. McGrew. Absolutely. There are career decisions being 
made every day based on your ability to get health insurance. 
And it's interesting to me. The entrepreneurial spirit that is 
embodied in the realtor community is prevalent around the 
United States as well. And why is it that individual sole 
proprietors that have this spirit are discriminated against, if 
you will, from having the ability to access the more affordable 
health care markets?
    Mr. Smucker. That is the way I see it. It was mentioned 
earlier that we want to ensure that everybody can get to play 
by the same rules. And I think, you know, we have seen 
tremendous opportunities, tremendous prosperity in our country 
because of unleashing individuals' ability to start a business, 
to grow their businesses.
    And I was an owner of a large enough business with several 
hundred employees that could self-insure. First of all, we had 
a large enough pool we could buy our own insurance, but as we 
continued to grow we were able to self-insure. And being able 
to attract employees from other businesses, the health 
insurance that we had available was often the deciding factor, 
being able to pull them away from another maybe potentially 
smaller business. So it really isn't a level playing field 
today, is it?
    Mr. McGrew. It does not feel like that, no, sir.
    Mr. Smucker. And do you find that as well, Ms. Monson?
    Ms. Monson. I do find it as well that us as small employers 
don't have the same opportunities to get affordable health care 
for our employees as large employers and labor unions do. And 
it puts us at a competitive disadvantage.
    Mr. Smucker. Mr. McGrew, back to the realtors. In the event 
that the Association could put together an AHP, what percentage 
of realtors do you think participate in that?
    Mr. McGrew. From the standpoint of viewing that as an 
option, I think virtually all of them would. Today 90 percent 
of our members are covered one way or another, many of them 
through their spouses. If they had the opportunity to see 
better options that are provided from a brand they trust, a 
brand they already do business with, the National Association 
of Realtors, I believe many of them would seriously consider 
that as an option.
    Mr. Smucker. Ms. Monson, one of the things that I have 
noticed as well is that small businesses, particularly 
businesses under maybe ten employees, have just simply given up 
on being able to provide health care for their employees. The 
employees go to the individual marketplace and then are faced 
with the kind of high cost that we are seeing. Are you finding 
that with your franchisees as well?
    Ms. Monson. Yes, I am. I find that with our FASTSIGN 
franchisees. And also, on a recent survey that the 
International Franchise Association conducted with its 733,000 
other franchise location members, 65 percent don't provide 
health coverage, primarily because of the cost. But then, when 
they were asked the follow-up question, if quality affordable 
insurance was available through say an IFA AHP or some other 
AHP--and let me just clarify, IFA is a bona fide association. 
This is not a fly by night deal, we are not looking to make a 
quick buck by getting into the association health plan market, 
this is about taking care of our members and our members' 
employees. We have a fiduciary responsibility, we care about 
our brand. We would never do anything to hurt our brand. So 
when I hear accusations that it's fly-by-night, that we're just 
going to put something together to make a quick buck, nothing 
could be further from the truth. And in that survey of our 
members, 100 percent say they would be looking forward to 
offering that quality, affordable health care coverage through 
an AHP.
    Mr. Smucker. Thank you.
    Chairman Walberg. I thank the gentleman and I recognize my 
friend from Connecticut, Mr. Courtney.
    Mr. Courtney. Thank you, Mr. Chairman. And as long as we 
are all doing homework around here, I just would note that the 
letter that was submitted from the National Association of 
Insurance Commissioners that made a forceful argument for 
retaining regaining state authority over the operation of MEWAs 
and these association health plans was actually a very 
bipartisan letter. We have the Commissioner of the Tennessee 
Department of Insurance, as well as the South Carolina 
Department of Insurance who signed this letter. And, again, I 
would ask that it be added to the record.
    Chairman Walberg. It has been already, and duly noted, and 
Mr. Mitchell and Dr. Roe will probably want to discuss that 
with you.
    Mr. Courtney. Well, again, I think, you know, these are the 
folks who are closest to this issue on the ground. And they 
talk about the fact that, you know, these plans have been 
plagued by insolvencies. That is quote, unquote in terms of the 
letter that they submitted. And, again, they raised a whole 
series of questions because, frankly, the Department has been 
very kind of slippery in terms of just, you know, what is going 
to be the lines of authority here, as was stated by some of the 
other witnesses. And because of that, they say at a minimum 
this rule should be put off until 2020, until we get to a 
really clear understanding of this.
    I would just say, you know, to Mr. Condeluci, that, you 
know, the track record of U.S. DOL in terms of enforcing 
pension problems that, again, is their jurisdiction since ERISA 
was passed, is very, very spotty. And we have had casework in 
my office where we have struggled, even under the Obama 
administration, in getting actually help for people in terms of 
pensions. So the notion that, you know, not to worry, you know, 
that the U.S. Department of Labor is going to have jurisdiction 
over 311 million people in this country with, you know, all the 
other authorities that they have to do and take it away from 
the folks in the attorneys general's offices or the insurance 
commissioner's office, in my opinion is really a very risky 
proposition. And, again, we have amply experience to show that 
really is not, in my opinion, the way to go given, again, the 
real empirical history that we know about in terms of 
association health plans.
    Now, we have heard some conversations here about the fact 
that, you know, we really should give people the option for the 
catastrophic coverage. Mr. Lewis talked about that earlier.
    Again, Mr. Arensmeyer, you know, I actually just had a hip 
surgery eight weeks ago and, you know, after one night in the 
hospital it was, you know, get out of here, because, as we 
know, health care has shifted outside of hospitals now. I mean 
the notion that the old days of catastrophic coverage--
actually, that was where the majority of health care was 
delivered, you know, back in the '60s and the '70s, in the 
heyday of catastrophic coverage. The essential health benefits, 
which was part of the Affordable Care Act, was grounded in the 
Institute of Medicine going out and analyzing, you know, what 
is health care, you know, where is it delivered. And that is 
really what was sort of the structure in terms of making sure 
that people are going to get the necessary care that they need.
    And catastrophic plans, which just take care of 
hospitalization, that doesn't work in the 21st century. And I 
was wondering if you could comment on that.
    Mr. Arensmeyer. Well, absolutely. And I want to echo what 
the Ranking Member said, that the way we're going to--first of 
all, the ACA needs some fixes. I mean we're the first to argue 
that. But we need to do this on a common ground, working 
together with a common risk pool, with common rules of the 
road. And if you start to sort of Balkanize or break off 
different pieces of the market it makes it much harder.
    Essential health benefits not only were put in place to 
cover, you know, what was generally perceived among 
professionals to be stuff that should be covered, there also 
was a common set of rules. And, again, to say it again, Mr. 
Condeluci said the small group market as a result doesn't have 
a lot of price differences in it because of that. So we would 
absolutely--we want to see more competition, we want to see 
fixes made to the Affordable Care Act, but we want that done 
with a common set of rules.
    Mr. Courtney. Thank you. And, again, as a small employer 
myself before I was elected to Congress ten years ago, and saw 
what was happening to age rating pre-Affordable Care Act, I 
mean every time I had an employee who hit the age of 50 their 
rates went through the roof because age rating was about six to 
one back then under the market. The ACA contracted that down to 
three to one. And, again, I wasn't here earlier, but I just 
want to reinforce that point. We are opening the door here now 
to age rating, which I have a lot of realtor friends back home, 
I mean they tend to be, you know, folks in their 50s and up and 
they tend to be frankly more women. And, you know, gender 
rating and age rating, you are reintroducing that. You know, 
careful what you ask for.
    And I would just note again, lastly, that there are 652 
operating association health plans in this country right now, 
so this is not like the ACA posed some existential threat to 
association health plans, they are out there and they are 
working. The question is how are they going to be organized. 
And we want to make sure that people get the care that they 
need in 21st century terms, not 20th century terms. And we also 
want to make sure that the benefits are going to be fair in 
terms of how they are allocated.
    With that, I yield back.
    Chairman Walberg. I thank the gentleman. And now I am 
privileged to recognize the gentleman and hero from South 
Carolina, Mr. Wilson.
    Mr. Wilson South Carolina. And thank you very much, 
Chairman, Tim Walberg. I appreciate your leadership to promote 
positive health care, to address that Obamacare has destroyed 
300,000 business jobs and forced 10,000 small businesses to 
close.
    And, Mr. McGrew, thank you for your testimony on behalf of 
the National Association of Realtors. As a former real estate 
attorney myself and a grateful dad of a realtor, I appreciate 
your service on the executive committee and board of directors 
of the Association.
    You mentioned in your testimony that many of your real 
estate agents serve as independent contractors. Can you explain 
the system in the real estate industry and elaborate on the 
advantages that operating as an independent contractor provides 
for real estate agents and for the agencies they work?
    Mr. McGrew. Thank you, Mr. Congressman. Yes, independent 
contractors are a notion that not everyone understands. When 
you have the opportunity to make a living with the least number 
of restrictions on the way that you do your business, that is 
the spirit that most independent contractors, certainly realtor 
independent contractors bring. They want that opportunity to 
build their own brand within the confines of the required 
supervision that companies like mine provide for them, but they 
can build their own business with a minimum of interference. 
And that's the good news.
    The bad news is, as I mentioned in my testimony, it's an 
eat what you kill business. They have to have something to hunt 
and we do not guarantee them a paycheck.
    Mr. Wilson South Carolina. Well, I just want to point out, 
too, as Mr. Courtney, that we appreciate realtors in our 
community. They are leaders in the Chamber, the Rotary Club, 
the Lions Club, wherever you need a volunteer, there are 
realtors. So thank you very much for such professionals.
    Mr. McGrew. Thank you.
    Mr. Wilson South Carolina. And, Ms. Monson, I want to thank 
you for being here today too on behalf of the International 
Franchise Association. Your organization is appreciated for 
providing entry-level jobs leading to extraordinary achievement 
for workers. What a great opportunity to provide for young 
people in particular to achieve.
    You mentioned that the recently proposed rule to allow 
small businesses to band together to help lower cost, create 
greater flexibility, increase access, and reduce administrative 
expenses. You noted that many of the same principles have 
allowed the franchise model to be successful, having 
franchising especially suitable to the formation of association 
health plans. You say ``franchising is perfectly built for 
AHPs.'' Can you explain how the franchise model utilizes its 
distribution communication and business practices that would 
complement an association health plan?
    Ms. Monson. Yes. Thank you very much. So if we take a look 
at just what FASTSIGNS International does for its franchisees, 
with over 600 locations in the United States and then another 
30 in Canada, and in other countries as well, when we look at 
the supplies that they use every day, we negotiate with 
vendors. Because of the volume purchases, we get lower prices. 
Even for services like payroll processing, we have an amazing 
rate with some of the payroll processing companies, giving our 
franchisees lower cost compared to their independent 
competitors. And we do that with equipment, supplies, services, 
everything that a franchisee in our business would need. We 
have that expertise, we have a supply chain group that focuses 
just on lowering costs for franchisees through negotiating.
    Likewise, the International Franchise Association could do 
the same, bringing that same knowledge and expertise of 
franchising, of group buying power, and negotiating. And so we 
are very confident that we can bring the cost down and compete 
for the same quality coverage that large companies and unions 
have, at a lesser price using that supply chain negotiating 
skill and experience.
    Mr. Wilson South Carolina. And, again, I appreciate 
franchises. On Sunday, I was at a Wendy's and I couldn't 
believe how hardworking the people were as they were confronted 
with a baseball tournament at a next door park. A line as far 
as you could see. And then a bus full of Chinese tourists in 
West Columbia, South Carolina. And the people behind the 
counter had a smile the whole time, which was startling.
    And then, Mr. Condeluci, in your written references to the 
2011 guidance by the Department of Health and Human Services 
prohibiting forming a fully insured large group plan. What 
impact did this have on association health plans?
    Mr. Condeluci. I first want to set the record straight that 
when I said that small group plans typically have uniform 
prices, that's based on the fact that there are uniform rules 
within a particular market. But different state, small group 
markets vary widely, so costs vary widely. And relative to the 
large group market, small group market costs are much higher. 
So I just want to set the record straight because Mr. 
Arensmeyer continues to point out the point that I had made 
earlier. So I just want to clarify that point.
    Sir, to your question, thank you very much for that. The 
2011 guidance had an adverse effect on employer-run 
organizations like local chambers of commerce and otherwise who 
are offering fully-insured association health plans. It 
essentially blew up their plan. They had a choice to either 
discontinue their plan or shift to a self-insured plan because 
the guidance required the insurance company to look through the 
association, the underlying size of the group, to apply the 
ACA's new market reforms. And that had an adverse impact and 
discouraged these employer-run organizations offering these 
plans. And that is the adverse effect that the 2011 guidance 
had on those fully insured arrangements.
    Mr. Wilson South Carolina. And thank you all for being here 
today.
    Chairman Walberg. I thank the gentleman. I want to at this 
time thank the panel for your competency and your commitment to 
presenting your case in the real worlds that you live in. So 
thank you for taking the time to be with us today.
    So at this point I would ask my friend and colleague from 
Delaware, Ms. Blunt Rochester, for your closing comments.
    Ms. Blunt Rochester. Thank you, Mr. Chairman. I want to 
first thank the Chairman and the witnesses for your testimony. 
Ms. Monson made a comment about caring about the brand and also 
about our people. And that is evident by the fact that you are 
all here on this panel. I think one of the challenges that we 
face as lawmakers, and the same with our attorneys general 
across the country, and our insurance commissioners, is that we 
are protecting folks because of folks that are not in this 
room, that do not care as much as you do, which reminds me of a 
clarification that we would like to share on the letter that 
Mr. Courtney referenced. It was not a duplicate, it was 
actually from the National Association of Insurance 
Commissioners. So we would like to submit that letter on his 
behalf.
    Chairman Walberg. Without objection, I hear none, it will 
be submitted.
    Ms. Blunt Rochester. Thank you. And I opened this hearing 
by noting the eighth anniversary of the ACA, and just a 
reminder of the progress that we have made in ensuring that 
more Americans have access to affordable, comprehensive 
coverage. This anniversary also serves as a call to action to 
strengthen the ACA and to do more to increase access to 
coverage. Instead, it feels like we are again defending the 
health care system. And at the latest, we are now attacking 
this from the small business owners and their employers' 
perspective, their employees.
    I just want to be clear that I fully support small business 
owners, both in my home state of Delaware and across the 
country. Small businesses are the driving force of our economy 
and it is critical that we work to ensure that owners have the 
resources they need to build thriving businesses of their own.
    That is why I am deeply concerned about the potential 
impact of this proposed rule on small businesses and their 
workers. There is no doubt that the expansion of the 
association health plans as proposed under the rule would 
needlessly expose hardworking small business owners and their 
workers to inadequate coverage and out of pocket expenses. Many 
of the over 900 comment letters from legal experts and consumer 
advocates that were submitted to the Department have been 
mentioned here today, and many of these comments raised 
concerns that the proposed rule could destabilize the state 
regulated individual and small group markets, leaving consumers 
with less comprehensive coverage, undermining state's authority 
to regulate health insurance markets and protect consumers, and 
exposing small businesses and workers to fraud and 
insolvencies.
    As you are aware, there are serious doubts as to the 
Department of Labor's legal authority to make the policy 
changes envisioned in this proposed rule. Mr. Condeluci in his 
testimony characterized the rule as changes to the law.
    If we want to help small businesses and their employees we 
should not advance a rule that would leave them with 
insufficient coverage that renders them unable to access vital 
health services, such as mental health treatment, maternity 
care, and substance use disorder treatment.
    I do think the Committee would benefit from the opportunity 
to hear from the Department of Labor on this rule and I will 
look forward to working with Chairman Walberg to make that 
happen.
    In the meantime, I think our time would be better spent 
talking about efforts to strengthen the Affordable Care Act and 
increase access to affordable, comprehensive health coverage.
    I yield the remainder of my time.
    Chairman Walberg. I thank the gentlelady. And, again, this 
hearing has been just that, a hearing opportunity to have ideas 
and concerns raised to give us a better opportunity to address. 
Yes, eight years of the Affordable Care Act is coming to 
fruition. During the course of all of those eight years since 
the Affordable Care Act was passed in a non-bipartisan fashion 
and pushed through, we have had to deal with it. And multiple 
times, in fact, we have reformed portions, repealed portions 
that didn't work in the Affordable Care Act, and have done that 
to a great degree in a bipartisan fashion, with even President 
Obama signing some of those changes. We did pass in the House 
very significant comprehensive reform, to a great extent to 
repeal. We did our work on that. We continue to address 
concerns, and this indeed is one of those areas that we have to 
work toward.
    As I listened today to the panel, it just reinforced my 
memory on the fundamental strength of this country that was 
developed as a result of small businesses, entrepreneurial 
efforts, people who took risks to provide goods and services to 
our developing nation that brought about a financial system, a 
finance system that was enabled to assist businesses, small 
businesses, entrepreneurs, in starting out their life and the 
opportunity to succeed in this great new formed country, which 
had an idea never before tried in the world. Doggonit, we have 
been pretty successful, haven't we? And I think our process is 
to continue that and to find means by which we can encourage, 
not simply corporations--and we love that, certainly in 
Michigan--but the auto industry and many other large 
corporations that have helped this country be what it is. We 
still go back to those small businesses, business men and women 
who take that risk and want to move forward, who don't want to 
be a part of a large corporation necessarily, but I would also 
state, want to acquire a workforce that makes them successful. 
And in this day and age, unlike not all that far back, there 
are communication abilities that allow individuals to know what 
is working and what will work better for them in another 
business opportunity. And so the competition has been ramped 
up.
    And I think it is a moral obligation for us to be as least 
restrictive as possible with the basic preventative and 
protection requirements still put in place, yes, but least 
restrictive to allow these entities as well, small businesses, 
to compete on as level of a playing field as we can make it, by 
allowing them to offer and afford to their employees an equal 
opportunity to have the most important care that they feel for 
themselves, and that is health care, brought to them in a least 
restrictive way, in the fullest possible way.
    And so that is the purpose of this hearing today. I think 
the issue will go on. I think we will continue to discuss it. 
We certainly want to hear from the Department of Labor. We want 
to know that they are doing good work to make sure that our 
people back in our Districts have that good work made available 
to them to continue to advance, to care for their employees, 
and to do it in the best way possible.
    So, again, I thank you for our Committee's efforts, I thank 
the panel for being here today. But with no further agenda 
before the Subcommittee today, it stands adjourned.
    [Additional submission by Ms. Blunt Rochester follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

    [Whereupon, at 11:55 a.m., the Subcommittee was adjourned.]

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