[House Hearing, 118 Congress]
[From the U.S. Government Publishing Office]
ERISA'S 50TH ANNIVERSARY: THE VALUE
OF EMPLOYER-SPONSORED HEALTH BENEFITS
=======================================================================
HEARING
Before The
SUBCOMMITTEE ON HEALTH,
EMPLOYMENT, LABOR, AND PENSIONS
OF THE
COMMITTEE ON EDUCATION AND THE WORKFORCE
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED EIGHTEENTH CONGRESS
SECOND SESSION
__________
HEARING HELD IN WASHINGTON, DC, SEPTEMBER 10, 2024
__________
Serial No. 118-61
__________
Printed for the use of the Committee on Education and the Workforce
[GRAPHIIC NOT AVAILABLE IN TIFF FORMAT]
Available via: edworkforce.house.gov or www.govinfo.gov
__________
U.S. GOVERNMENT PUBLISHING OFFICE
57-404 PDF WASHINGTON : 2024
-----------------------------------------------------------------------------------
COMMITTEE ON EDUCATION AND THE WORKFORCE
VIRGINIA FOXX, North Carolina, Chairwoman
JOE WILSON, South Carolina ROBERT C. ``BOBBY'' SCOTT,
GLENN THOMPSON, Pennsylvania Virginia,
TIM WALBERG, Michigan Ranking Member
GLENN GROTHMAN, Wisconsin RAUL M. GRIJALVA, Arizona
ELISE M. STEFANIK, New York JOE COURTNEY, Connecticut
RICK W. ALLEN, Georgia GREGORIO KILILI CAMACHO SABLAN,
JIM BANKS, Indiana Northern Mariana Islands
JAMES COMER, Kentucky FREDERICA S. WILSON, Florida
LLOYD SMUCKER, Pennsylvania SUZANNE BONAMICI, Oregon
BURGESS OWENS, Utah MARK TAKANO, California
BOB GOOD, Virginia ALMA S. ADAMS, North Carolina
LISA McCLAIN, Michigan MARK DeSAULNIER, California
MARY MILLER, Illinois DONALD NORCROSS, New Jersey
MICHELLE STEEL, California PRAMILA JAYAPAL, Washington
RON ESTES, Kansas SUSAN WILD, Pennsylvania
JULIA LETLOW, Louisiana LUCY McBATH, Georgia
KEVIN KILEY, California JAHANA HAYES, Connecticut
AARON BEAN, Florida ILHAN OMAR, Minnesota
ERIC BURLISON, Missouri HALEY M. STEVENS, Michigan
NATHANIEL MORAN, Texas TERESA LEGER FERNANDEZ, New Mexico
LORI CHAVEZ-DeREMER, Oregon KATHY MANNING, North Carolina
BRANDON WILLIAMS, New York FRANK J. MRVAN, Indiana
ERIN HOUCHIN, Indiana JAMAAL BOWMAN, New York
MICHAEL A. RULLI, Ohio
Carson Middleton, Staff Director
Veronique Pluviose, Minority Staff Director
------
SUBCOMMITTEE ON HEALTH, EMPLOYMENT, LABOR, AND PENSIONS
BOB GOOD, Virginia, Chairman
JOE WILSON, South Carolina MARK DeSAULNIER, California
TIM WALBERG, Michigan Ranking Member
RICK ALLEN, Georgia JOE COURTNEY, Connecticut
JIM BANKS, Indiana DONALD NORCROSS, New Jersey
JAMES COMER, Kentucky SUSAN WILD, Pennsylvania
LLOYD SMUCKER, Pennsylvania FRANK J. MRVAN, Indiana
MICHELLE STEEL, California PRAMILA, JAYAPAL, Washington
AARON BEAN, Florida LUCY McBATH, Georgia
ERIC BURLISON, Missouri JAHANA HAYES, Connecticut
LORI CHAVEZ-DeREMER, Oregon ILHAN OMAR, Minnesota
ERIN HOUCHIN, Indiana KATHY MANNING, North Carolina
C O N T E N T S
----------
Page
Hearing held on September 10, 2024............................... 1
OPENING STATEMENTS
Good, Hon. Bob, Chairman, Subcommittee on Health, Employment,
Labor, and Pensions........................................ 1
Prepared statement of.................................... 3
DeSaulnier, Hon. Mark, Ranking Member, Subcommittee on
Health, Employment, Labor, and Pensions.................... 4
Prepared statement of.................................... 6
WITNESSES
Schuman, Ilyse, Senior Vice President, Health and Paid Leave
Policy, American Benefits Council.......................... 8
Prepared statement of.................................... 11
Wade, Holly, Executive Director, National Federation of
Independent Business Research Center (NFIB)................ 23
Prepared statement of.................................... 25
Wright, Anthony, Executive Director, Families USA............ 31
Prepared statement of.................................... 33
Fronstin, Dr. Paul, Director, Health Benefits Research,
Employee Benefit Research Institute (EBRI)................. 52
Prepared statement of.................................... 54
ADDITIONAL SUBMISSIONS
Allen, Hon. Rick W., a Representative in Congress from the
State of Georgia:
Analysis dated September 28, 2024, by The AIDS Institute
entitled ``Health Insurance Issuers in Violation of
State Copay Accumulator Adjustor Laws''................ 87
Bean, Hon. Aaron, a Representative in Congress from the State
of Florida:
Statement dated September 10, 2024, from the National
Association of Professional Employer Organizations
(NAPEO)................................................ 89
Foxx, Hon. Virginia, a Representative in Congress from the
State of North Carolina:
Letter dated September 10, 2024, from the Associated
Builders and Contractors............................... 92
Statement dated September 10, 2024, from AHIP............ 93
Statement dated September 10, 2024, from the Business
Group on Health........................................ 97
Statement dated September 10, 2024, from the Partnership
for Employer-Sponsored Coverage........................ 102
QUESTIONS FOR THE RECORD
Responses to questions submitted for the record by:
Dr. Paul Fronstin........................................ 105
Ms. Ilyse Schuman........................................ 112
Mr. Anthony Wright....................................... 115
ERISA'S 50TH ANNIVERSARY: THE VALUE
OF EMPLOYER-SPONSORED HEALTH BENEFITS
----------
Tuesday, September 10, 2024
House of Representatives,
Subcommittee on Health, Employment, Labor, and
Pensions,
Committee on Education and the Workforce,
Washington, DC.
The Subcommittee met, pursuant to notice, at 10:15 a.m., in
Room 2175, Rayburn House Office Building, Hon. Bob Good
(Chairman of the Subcommittee) presiding.
Present: Representatives Good, Walberg, Allen, Bean,
Burlison, Chavez-DeRemer, Foxx, DeSaulnier, Courtney, Norcross,
Wild, Mrvan, McBath, Manning, and Scott.
Staff present: Annmarie Graham, Deputy Communications
Director, Mindy Barry, General Counsel; Sheila Havenner,
Director of Information Technology, Alex Knorr, Legislative
Assistant; Georgie Littlefair, Clerk; CJ Mahler, Professional
Staff Member; Hannah Matesic, Deputy Staff Director; Audra
McGeorge, Communications Director; Carson Middleton, Staff
Director; Jacob Pletcher, Staff Assistant; Kelly Tyroler,
Professional Staff Member; Seth Waugh, Director of Workforce
Policy; Maura Williams, Operations Manager; Gavin Anderson,
Intern; Illana Brunner, General Counsel; Ni'Aisha Banks, Staff
Assistant; Nikita Chellani, Intern, Daniel Foster, Senior
Health and Labor Counsel; Carrie Hughes, Director of Health &
Human Services Policy; Cira Vera, CHCI Intern; Jessica
Schieder, Economic Policy Advisor; Dhrtvan Sherman, Research
Assistant; Raiyana Malone, Press Secretary; Madeline McBride,
Grad Intern; Brashanda McCoy, CBCF Intern; Marie McGrew, Press
Assistant; Veronique Pluviose, Staff Director; Isabella
Sanchez, Intern and Banyon Vassar, Director of IT.
Chairman Good. The hearing on the Subcommittee on Health,
Employment, Labor and Pensions will come to order. I note that
a quorum is present, and without objection, the Chair is
authorized to call a recess at any time.
I thank everyone for being here today. I hope our members
enjoyed, and our staff a particularly long district work period
over the last 6 weeks. I have heard a lot from my constituents
about the issues that impact their everyday lives. High gas
prices, housing, utility costs, food inflation, and fears of an
economic downturn, all top of the list, and give working
Americans a real concern about their economic insecurity.
With costs for everything rising under the policies of the
Biden Harris administration, it is important for Congress to
look at ways to lower costs for American families. With
constituent concerns top of mind, we meet today to discuss the
bedrock law that helps provide economic security, stability and
protection to a majority of the people we serve because it
protects employee benefits.
Specifically, we will discuss the value of employer
sponsored healthcare benefits under the Employment Retirement
and Income Security Act of 1974, or ERISA. In the 50 years that
ERISA has been the law of the land, it has helped incentivize
employers to offer healthcare benefits that cover over 153
million Americans, or roughly half the population.
ERISA works because of its preemption clause. As a
conservative, you will not often hear me say I support Federal
preemption of State law, but in this instance, ERISA's effect
is to alleviate the burden of government on employers, which
actually helps workers.
Without ERISA preemption of State law, the patchwork of
State regulations would hamper a business's ability to offer
uniform coverage options. Imagine being relocated within the
same company to a different State. It happened to me several
times, and having to navigate an entire new system of
healthcare regulation.
Thanks to ERISA we can avoid that disaster. Employers can
simply comply with the protections outlined in ERISA and
provide healthcare to employees around the country. According
to a Society for Human Resources Management Survey, 90 percent
of workers consider healthcare to be an extremely important, or
very important benefit.
Another survey, by Protecting Americans Coverage Together
found that 93 percent of Americans are satisfied with their
employer sponsored coverage. With stats like that, it seems
hard to believe that there are politicians who want to
dismantle ERISA in favor of government run healthcare.
Private health insurance is at risk due to the push of the
left for Medicare for All. The Biden Harris administration
wants to make private healthcare unaffordable and unattainable,
so that Americans think that they have no choice but to support
government run plans. They have saddled employer sponsored
healthcare with more regulations and have removed viable
coverage options like association health plans and short-term,
limited-duration plans.
The Democrats misnamed, Inflation Reduction Act, shifted
billions of Medicare dollars to fund failing Obamacare plans.
Now, Democrats plan to extend expanded premium tax credits
beyond 2025 at a cost of 335 billion dollars. I do not think
they understand that using tax dollars to pay for certain
American's healthcare costs is robbing Peter to pay Paul, and
actually makes healthcare less affordable for everyone.
It costs the government over $1,000.00 more per patient per
year to place someone on an Obamacare plan, than on employer
sponsored insurance plan. Beyond Obamacare, the proposal from
this administration Democrat nominee, Kamala Harris, are
somehow even more radical.
Vice President Harris has explicitly endorsed Medicare for
All, a plan which calls for the elimination of private health
insurance. This would prevent over half of America from keeping
the plans they have now, and that they overwhelmingly prefer. A
single payer system would mark the end of ERISA as we know it,
and cost taxpayers an estimated 32 trillion dollars.
Worse, her plan provides taxpayer funded healthcare for
illegal immigrants. If the government has any legitimate
responsibility in healthcare, it should at least be to benefit
its own citizens. Before I close, I want to take a moment to
play a video from the Washington Post that highlights just how
real this threat to ERISA is.
[Video playing]
Mr. DeSaulnier. Mr. Chairman, a point of order here please.
Mr. Chairman, point of order please.
Chairman Good. Thank you to our staff. It is interesting--
we just had the Vice President in her own words without any
commentary. For some reason, some members did not want anybody
to hear that. It is very interesting. What she said----
Mr. DeSaulnier. Okay, a point of order please.
Chairman Good. The gentleman is not recognized. She says
under my plan of Medicare for All, private insurance companies
will be able to provide coverage if they play by our rules.
Although she tries to moderate and disguise her position by
acting like private insurance companies can keep functioning as
normal, does anyone really think they will get better
healthcare when they are playing by Kamala Harris' rules.
The Democrat plan is to make private healthcare
unaffordable, and ultimately non-existent. One way to do this
is to provide artificially, and temporarily lower cost
government provided healthcare to drive providers out of the
market, but everything the government does ultimately costs
more, especially with the initial costs of the exploding debt
that causes higher taxes and higher inflation.
Every government expenditure either causes higher taxes,
higher inflation, or debt exploding to the taxpayers. At a time
when many Americans are living paycheck to paycheck, and
personal savings rates are near historic lows, rising
healthcare costs are driven by government interventions are
unmanageable. Permitting ERISA plans room to expand and
innovate is the solution.
Now it is time for Congress to work to strengthen ERISA and
employer sponsored health benefits for the next 50 years and
beyond. With that, I now yield to the Ranking Member for his
opening statement.
[The Statement of Chairman Good follows:]
Statement of Hon. Bob Good, Chairman, Subcommittee on Health,
Employment, Labor and Pensions
Over the last six weeks, I heard a lot from my constituents about
the issues that impact their everyday lives. High gas prices, housing
and utility costs, food inflation, and fears of an economic downturn
all top the list and give working Americans a real concern about their
economic insecurity. With costs for everything rising under the
policies of the Biden-Harris administration, it is important for
Congress to look at ways to lower costs for American families.
With constituent concerns top of mind, we meet today to discuss the
bedrock law that helps provide economic security, stability, and
protection to a majority of the people we serve, because it protects
employee benefits. Specifically, we will discuss the value of employer-
sponsored health care benefits under the Employee Retirement Income
Security Act of 1974 (ERISA).
In the 50 years that ERISA has been the law of the land, it has
helped incentivize employers to offer health care benefits that cover
over 153 million Americans--roughly half the population. ERISA works
because of its preemption clause. As a conservative, you will not often
hear me say I support federal preemption of state law. In this
instance, ERISA's effect is to alleviate the burden of government on
employers, which actually helps workers. Without ERISA preemption of
state law, the patchwork of state regulations would hamper a business's
ability to offer uniform coverage options. Imagine being relocated
within the same company to a different state and having to navigate an
entire new system of health care regulations. Thanks to ERISA, we can
avoid that disaster. Employers can simply comply with the protections
outlined in ERISA, and provide health care to employees around the
country.
According to a Society for Human Resource Management survey, 90
percent of workers consider health care to be an extremely or very
important employee benefit. Another survey by Protecting Americans
Coverage Together found that 93 percent of Americans are satisfied with
their employer-sponsored coverage.
With stats like that, it seems hard to believe that there are
politicians who want to dismantle ERISA in favor of government-run
health care. Private health insurance is at risk due to the push of the
Left for Medicare-for-All.
The Biden-Harris administration wants to make private health care
unaffordable and unattainable, so that Americans think they have no
choice but to support government-run plans. They have saddled employer-
sponsored health care with more regulations and have removed viable
coverage options like Association Health Plans and short-term, limited-
duration plans. The Democrats' misnamed ``Inflation Reduction Act''
shifted billions of Medicare dollars to fund failing Obamacare plans.
Now, Democrats plan to extend expanded premium tax credits beyond
2025 at a cost of $335 billion. I do not think they understand that
using tax dollars to pay for certain Americans' monthly health care
costs is robbing Peter to pay Paul, and actually makes health care less
affordable for everyone. It costs the government over $1,000 more per
patient per year to place someone on an Obamacare plan, than on an
employer-sponsored insurance plan.
Beyond Obamacare, the proposals from this administration and
Democrat nominee Kamala Harris are somehow even more radical. Vice
President Harris has explicitly endorsed Medicare-for-All, a plan which
calls for the elimination of private health insurance. This would
prevent over half of America from keeping the plans they have now and
overwhelmingly prefer. A single-payer system would mark the end of
ERISA as we know it--and cost taxpayers an estimated $32 trillion.
Worse, her plan provides taxpayer funded health care for illegal
immigrants. If the government has any legitimate responsibility in
health care, it should at least be to the benefit of its own citizens.
Before I close, I want to take a moment to play a video from the
Washington Post that highlights just how real this threat to ERISA is.
She says: ``Under my plan of Medicare-for-All, private insurance
companies will be able to provide coverage if they play by our rules.''
Although she tries to moderate and disguise her position by acting like
private insurance companies can keep functioning as normal, does anyone
really think they will get better health care when they are playing by
Kamala Harris's rules?
The Democrat plan is to make private health care unaffordable, and
ultimately non-existent. One way to do this is to provide artificially
and temporarily lower cost government-provided health care to drive
private providers out of the market. Everything the government does
ultimately costs more, especially with the initial hidden cost of the
exploding debt that causes higher taxes and higher inflation.
At a time when many Americans are living paycheck to paycheck, and
personal savings rates are near historic lows, rising health care costs
driven by government interventions are unmanageable. Permitting ERISA
plans room to expand and innovate is the solution.
Now, it is time for Congress to work to strengthen ERISA and
employer-sponsored health benefits for the next fifty years and beyond.
______
Mr. DeSaulnier. Just a question to the point of order is a
question of the relevance of the video in particular. It is
more of a political statement, and I know that there is some
license here in Congress for that, but that was extreme in the
10-years I have been here in Congress.
Mr. Chairman, it is unfortunate there are--there is work we
can do with ERISA, clearly, but being as partisan as you just
introduced this, and using absolutes about every time there is
a tax increase, every time the government spends money it leads
to all of these horrible things.
This is a mixed market economy, capitalistic economy, and
it requires rules and guidance that we all come to agreement on
to make it work, including unfortunately, some of the worst
aspects of human nature's greed, and lack of ethics, and we are
going to talk about that a little bit today, for instance with
MultiPlan.
In the spirit I think we have had for the last 4 years when
we have been on this Committee, I appreciate our differences,
but that was a rather extreme opening comment in my
perspective.
To the witnesses, thank you for being here. All of your
perspectives are valuable. We appreciate it at this important
hearing on ERISA. When ERISA was enacted in 1974, Congress made
its intent clear. The law's primary purpose is to ``protect the
interest of participants in employee benefit plans, and their
beneficiaries.''
To that end, ERISA established crucial consumer protection
standards, provided remedies to workers whose claims are
denied, or whose plans are mismanaged, and required fiduciaries
to act solely in the best interest of the plan participants. As
our Subcommittee discusses ERISA today, it's vital to keep this
fundamental purpose at the forefront.
It is about consumers. We must also keep in mind the urgent
need to improve the efficiency of our health care system. Our
country currently spends more than 17 percent of our gross
domestic product, over 4.5 trillion on health care, far more
than our peer countries.
Workers and consumers are increasingly shouldering their
costs through rising premiums and deductibles. Our health
outcomes are among the worst in the developed world. In the
other developed countries, they have a form of universal health
care, so everyone can get quality health care. Different
versions in different countries allow for the private sector to
participate in it.
They have better outcomes, longer lifespans. The healthcare
system is plagued by numerous challenges and inefficiencies,
including, excuse me, the lack of price transparency, the
excessive fees charged by self-dealing third-party
administrators and pharmacy benefit managers, and the
escalating cost of medical care and prescription drugs.
As the New York Times has documented, companies like
MultiPlan and major third-party administrators make huge
profits by charging high fees to employers, short-changing
health care providers, and leaving workers on the hook for
exorbitant medical bills, and yes, frequently their actions
lead to death.
This is not an efficient use of our health care dollars,
which is why Ranking Member Scott and I have written to the
Department of Labor in support of their oversight on these
practices, and more funding for them so they can do a
reasonable job.
I sincerely hope my Republican colleagues will consider
joining us to address these issues, including by supporting
adequate funding for the vastly under-resourced Employee
Benefit Security Administration and extending the bipartisan No
Surprises Act implementation fund, which expires at the end of
the year.
Despite the challenges we continue to face, it is also
important to acknowledge the significant progress we have made
in recent years. The Affordable Care Act has provided
preventative health services at no cost, protected tens of
millions of Americans with pre-existing conditions, and
allowing young people to remain on their parents' health plans
until they turn 26.
The American Rescue Plan Act, and the Inflation Reduction
Act, strengthened ACA premium tax credits. The tax credits
reduced monthly costs for low-income individuals and provided
premium relief to millions affected by the subsidy cliff,
particularly self-employed, small businesspeople.
Just yesterday the Biden administration, Biden-Harris
administration, finalized landmark new rules that will benefit
compliance with the Mental Health Parity and Addiction Equality
Act, and ensure that behavioral health needs are treated fairly
by insurers and in health plans.
While these reforms have strengthened workers' benefits,
and improved the efficiency of our health care system, I am
concerned by the proposals to take us backward. For instance,
one of our biggest recent successes in that Biden-Harris
administration, for the first time recently completed
negotiations under the Inflation Reduction Act, to reduce drug
prices for nearly 9 million Medicare beneficiaries, while
slashing seniors' out of pocket costs by 1.5 billion dollars in
2026 alone.
Despite these historic savings, the Republicans' extreme
Project 2025 policy agenda proposes to repeal this program, and
instead put billions in the pocket of big pharma. I am a
recipient of one of those ten drugs. When I first got it to
save me from stage 4 cancer, it cost as much as $500.00 a day.
Now, next, thanks to this, and the pressure we put on them, it
is close to what the European Union charges of under $90.00 a
day.
In Australia it costs $37.00 a day. American taxpayers are
subsidizing lower costs in other developed countries. Rather
than roll back our historic progress, this Committee should
move forward with House Democrats' legislation to extend drug
price negotiations beyond Medicare and save billions for
workers and businesses with private health insurance.
While we may not agree on every issue, I hope that today
will be a robust discussion of the future of employer-sponsored
coverage, and how we can collaborate across the aisle to
address the challenges we face and get rid of the
inefficiencies and the greedy profit-taking by some of private
sector entities. I yield back.
[The Statement of Ranking Member DeSaulnier follows:]
Statement of Hon. Mark DeSaulnier, Ranking Member, Subcommittee on
Health, Employment, Labor and Pensions
As a point of order, I question the relevance of that video in
particular. It was more of a political statement. I know that there is
some license here in Congress for that, but that was the most extreme
in the ten years I have been here in Congress.
Mr. Chairman, there is work we can do with ERISA, clearly. Being as
partisan as you just introduced us, in using absolutes about ``every
time there's a tax increase, every time the government spends money, it
leads to all of these horrible things.'' This is a mixed market
economy, a capitalist economy, and it requires rules and guidance that
we all come to an agreement on to make it work--including,
unfortunately, some of the worst aspects of human nature--greed and the
lack of ethics. We will talk about that a little bit today, for
instance, with MultiPlan.
In the spirit that we have had for the last four years we have been
on this committee, I appreciate our differences. That was a rather
extreme opening comment from my perspective.
To the witnesses, thank you for being here. All of your
perspectives are valuable, and we appreciate it during this important
hearing on ERISA.
When ERISA was enacted in 1974, Congress made its intent clear: the
law's primary purpose is to ``protect the interests of participants in
employee benefit plans and their beneficiaries.'' To that end, ERISA
established crucial consumer protection standards, provided remedies to
workers whose claims were denied or whose plans were mismanaged, and
required fiduciaries to act solely in the best interest of the plan
participants.
As our Subcommittee discusses ERISA today, it is vital to keep this
fundamental purpose at the forefront. It is about consumers.
In addition, we must also keep in mind the urgent need to improve
the efficiency of our health care system.
Our country currently spends more than 17 percent of our gross
domestic product, over $4.5 trillion, on health care--far more than our
peer countries. Workers and consumers are increasingly shouldering
these costs through rising premiums and deductibles, yet our health
outcomes are among the worst in the developed world. In other
countries, they have a form of universal health care so everyone can
get quality health care. Different versions in different countries
allow for the private sector to participate in it. They have better
outcomes and longer life spans.
The health care system is plagued by numerous challenges and
inefficiencies, including:
the lack of price transparency;
the excessive fees charged by self-dealing third-party
administrators and pharmacy benefit managers; and
the escalating costs of medical care and prescription
drugs.
As The New York Times has documented, companies like MultiPlan and
major third-party administrators make huge profits by charging high
fees to employers, shortchanging health care providers, and leaving
workers on the hook for exorbitant medical bills--and yes, frequently,
their actions lead to death. This is not an efficient use of our health
care dollars, which is why Ranking Member Scott, and I have written to
the Department of Labor to support their oversight on these practices
and more funding for them so they can do a reasonable job.
I sincerely hope my Republican colleagues will consider joining us
to address these issues, including by supporting adequate funding for
the vastly under-resourced Employee Benefits Security Administration
and extending the bipartisan No Surprises Act Implementation Fund,
which expires at the end of the year.
Despite the challenges we continue to face, it is also important to
acknowledge the significant progress we have made in recent years. The
Affordable Care Act has provided preventive health services at no cost,
protected tens of millions of Americans with preexisting conditions,
and allowed young people to remain on their parent's health plans until
they turn 26. The American Rescue Plan Act and the Inflation Reduction
Act strengthen ACA premium tax credits. The tax credits reduced monthly
costs for low-income individuals and provided premium relief to
millions affected by the subsidy ``cliff,'' particularly self-employed
small businesspeople. Just yesterday, the Biden-Harris Administration
finalized landmark new rules that will benefit compliance with the
Mental Health Parity and Addiction Equity Act and ensure that
behavioral health needs are treated fairly by insurers and health
plans.
While these reforms have strengthened workers' benefits and
improved the efficiency of our health care system, I am concerned by
the proposals to take us backwards.
For instance, one of our biggest recent successes--the Biden-Harris
Administration, for the first time, recently completed negotiations
under the Inflation Reduction Act to reduce drug prices for nearly 9
million Medicare beneficiaries while slashing seniors' out-of-pocket
costs by $1.5 billion in 2026 alone. Despite these historic savings,
the Republicans' extreme ``Project 2025'' policy agenda proposes to
repeal this program and put billions in the pockets of big pharma.
I am a recipient of one of those ten drugs. When I first got it, it
saved me from stage four cancer, and it cost me as much as 500 dollars
a day. Now, thanks to this and the pressure we put on them, it is
closer to what the European Union charges, 190 dollars a day. In
Australia, it costs 37 dollars a day. American taxpayers are
subsidizing lower costs in other developed countries.
Rather than roll back our historic progress, this Committee should
move forward with House Democrats' legislation to extend drug price
negotiations beyond Medicare and save billions for workers and
businesses with private health insurance coverage.
While we may not agree on every issue, I hope that today will be a
robust discussion on the future of employer-sponsored coverage and how
to collaborate across the aisle to address the challenges we face and
get rid of the inefficiencies and greedy profit-taking by some private
sector entities.
I yield back.
______
Chairman Good. Pursuant to Committee Rule 8-C, all members
who wish to insert written statements into the record may do so
by submitting them to the Committee Clerk electronically, in
Microsoft Word format by 5 o'clock p.m., 14 days after the date
of this hearing, which is September 24, 2024.
Without objection, the hearing record will remain open for
14 days to allow such statements and other extraneous materials
referenced during the hearing, to be submitted for the official
hearing record. I note for the Subcommittee that some of our
colleagues, who are not permanent members of this Subcommittee,
may be waving on for the purpose of today's hearing.
I will now turn to the introduction of our distinguished
witnesses. Our first witness is Ms. Ilyse Schuman, who is
Senior Vice President for Health and Paid Leave Policy, for the
American Benefits Council in Washington, DC. Welcome, Ms.
Schuman.
Our next witness is Ms. Holly Wade, who is the Executive
Director of the National Federation of Independent Business
Research Center in Washington. Welcome, Ms. Wade.
Our third witness is Mr. Anthony Wright, who is the
Executive Director of Families USA in Washington, DC. Welcome,
Mr. Wright.
Our final witness is Dr. Paul Fronstin, who is the Director
of Health Benefits Research for the Employee Benefit Research
Institute, EBRI, am I saying that right, in Washington as well.
Thank you, Dr. Fronstin.
We thank the witnesses for being here today, and we look
forward to your testimony. Pursuant to Committee Rules, I would
ask that you limit your presentation to a 5-minute summary of
your written statement. I would also like to remind the
witnesses to be aware of their responsibility to provide
accurate information to this Subcommittee, and we will now
recognize Ms. Shuman for 5 minutes.
STATEMENT OF MS. ILYSE SCHUMAN, SENIOR VICE PRESIDENT, HEALTH
AND PAID LEAVE POLICY, AMERICAN BENEFITS COUNCIL, WASHINGTON,
D.C.
Ms. Schuman. Chair Good, Ranking Member DeSaulnier, and
distinguished Subcommittee members, thank you for the
opportunity to testify on behalf of the American Benefits
Council. Employers play a critical role in the healthcare
system, providing health benefits to nearly 180 million
Americans.
In sponsoring these benefits, employers have made
significant contributions not only to the health and well-being
of working families, but to taxpayers, the economy, and the
healthcare system as a whole. For 50 years ERISA, and ERISA
preemptions specifically has been the cornerstone of the
employer sponsored health benefits.
America's employers recognize that their investment in
health coverage is an investment in their workforce, and in
their business success, and working families and voters
recognize its value too. According to polling data from the
Winston Group on behalf of the Alliance to Fight for
Healthcare, more than three-quarters of registered voters
expressed satisfaction with their employer-sponsored health
coverage, far preferring it to a stipend to shop in the
individual market, and in even more stark preference over a
system where employers do not provide health benefits at all.
Employer-sponsored health benefits yield a significant
return on investment to the Federal Government and taxpayers.
For every dollar of Federal expenditure for the tax exclusion
of employer sponsored health benefits, employers pay more than
$5.00 in benefits. It would cost said taxpayers substantially
more to provide the same level of health benefits through a
direct government program.
With a vested interest in securing the health and well-
being of their employees, far from being mere payers that just
sign checks for health benefits, our member companies employes
have been innovators in market driven approaches to provide
high value benefits. Our member companies also clearly
understand that their innovation and ability to provide
affordable, high-quality health coverage, are built on the
foundation of ERISA, by enabling self-funded multi-State
employers to offer uniform benefits to their employees
nationwide.
However, ERISA preemption is under assault, as states seek
to impose their own requirements on self-funded group health
plans. Without ERISA uniformity, these plans will be
extraordinarily difficult to administer, forcing employers to
offer different benefits to their employees based on their
location.
ERISA's 50th anniversary comes at a critical time to convey
this important message. I also want to stress that employers
are deeply concerned about overly burdensome Federal health
plan regulations that add cost and complexity, but without
commensurate value to either plan sponsors or employees.
I also want to stress that employers are deeply concerned
about rising healthcare costs, fueled by a lack of transparency
and competition. While employers continue their innovative
efforts to lower cost, Federal legislative solutions are needed
to create a more competitive and transparent healthcare
marketplace.
90 percent of voters with employer sponsored coverage agree
that it is important for Congress to take action this year to
lower healthcare costs. There are solutions at hand. The
Council strongly supports the lower cost, more transparency,
including its PBM provisions, and more than 80 percent of
voters agree that it should be a priority for Congress to pass
price transparency legislation.
The Healthy Competition for Better Care Act is critical
that with growing market power, large hospital systems are able
to demand higher and higher prices and impose anti-competitive
contracting restrictions that stifle competition. The Council
urges the Committee to pass the Healthy Competition for Better
Care Act.
Allowing hospital facility fees to be charged for
telehealth appointments is precisely the type of payment
distortion and obtuse billing practice that increases costs for
patients and payers. Voters agree by an overwhelming margin of
8 to 1, that patients should not be charged for this. The
Council urges the Committee to approve the Transparent
Telehealth Bill's Act to address the concern.
On this 50th anniversary of ERISA, the message is strong
and clear from employers, employees and voters about the
significant value of employer sponsored health coverage, that
is built on their foundation--is the call for Congress to take
action this year to lower healthcare costs.
These steps rely on and must be taken in concert with the
uniformity ERISA preemption affords. 50 years after this
landmark legislation was enacted, these provisions are even
more important today. I appreciate the opportunity to testify.
[The prepared statement of Ms. Schuman follows:]
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Chairman Good. Thank you. I now recognize Ms. Wade for 5
minutes.
STATEMENT OF MS. HOLLY WADE, EXECUTIVE DIRECTOR, NATIONAL
FEDERATION OF INDEPENDENT BUSINESS RESEARCH CENTER, WASHINGTON,
D.C.
Ms. Wade. Chairman Good, Ranking Member DeSaulnier, and
distinguished members of the Subcommittee, on behalf of NFIB, I
appreciate the opportunity to testify. Small businesses are the
foundation of the U.S. economy, but unfortunately in recent
years, the small business half of the U.S. economy has been
significantly impacted by inflation, along with significant
challenges in attracting qualified applicants for open
positions.
Operating a business in these conditions is particularly
difficult for small business owners. Most small business owners
compete for talent by offering competitive wages and attractive
benefits. Health insurance is one of the most popular, but
costly benefits offered by about 30 percent of small employers.
However, escalating health insurance costs add to the
inflation pressures many business owners face. These higher
costs limit their ability to compete in the marketplace. The
relationship between small businesses and health insurance has
been a long-standing challenge for owners, whether they offer
or do not offer the benefit to their employees.
63 percent of all employers believe that providing health
insurance to recruit and retain employees is very or moderately
important to them. Almost all, 94 percent of small employers
find it challenging to some degree to manage the costs of
providing employer-sponsored health insurance.
The cost of health insurance continues to rank as the most
burdensome issue for small business owners, a ranking it has
held since 1986. Currently, 41 percent of small business owners
reported as a critical issue in operating their business. The
average cost of individual health insurance plan has increased
112 percent in the last 20 years for small employers.
The average deductible for those policies has increased by
194 percent. Small businesses are not only paying significantly
more for their health insurance, but their deductibles are more
costly as well. In response to these escalating costs, the
offer rate among small businesses has declined from 42 percent
in 2004 to 30 percent in 2023.
Lack of insurance options, and affordability issues create
significant headwinds for small business owners, and that most
of them find the benefit important in retaining current
employees and recruiting applicants. Broken down by employers
who do and do not currently offer health insurance, 94 percent
of owners who currently offer, believe that it is important,
and 58, over half, percent of owners who do not currently
provide health insurance find it important in those aspects of
retaining and retention of employees.
Almost two-thirds of non-offering small employers say that
the health insurance is too expensive for them to offer it as a
benefit. Most small business owners are offering health
insurance purchase fully funded plans in the small group
market. However, the small group market has experienced a sharp
decline in issuer participation, and overall membership.
Down 7.4 percent from 2022 to 2023, ending the year with
8.5 million participants. This decline is driven primarily by
the escalating cost of insurance. The coverage options in this
market have declined. Alternatives, like those provided under
ERISA framework become vital.
Recent reports point to an increase in the percentage of
small firms offering health benefits through a level funded
plan, for instance. As we mark the 50th anniversary of ERISA,
it is an opportune time to reflect on the rule that employer
provider coverage has played in the U.S. and on small
businesses. While most small firms remain fully insured, ERISA
protections have been crucial in ensuring that even the
smallest businesses can offer health benefits to their
employees, while having the flexibility and predictability to
design benefits in a way that works best for them.
Moving forward, ERISA should be protected and strengthened
to empower those small businesses with greater coverage choices
under this framework, enabling them to offer valuable benefits
that will contribute to their growth, stability and success in
the U.S. economy.
Some policy solutions to strengthen small firm's coverage
choices; allowing small businesses and self-employed
individuals to band together to achieve savings through
economies of scale, protect small business's access to stop
loss insurance, re-evaluate and right size mandates that drive
up premium costs, and promote price transparency and price
certainty.
We thank the Committee for its vital work in the past year,
expanding coverage choices for small businesses under ERISA,
and look forward to partnering with you to continue building on
this law's success. Thank you for allowing me the opportunity
to testify for you today.
[The prepared statement of Ms. Wade follows:]
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Chairman Good. Thank you. I will now recognize Mr. Wright
for 5 minutes.
STATEMENT OF MR. ANTHONY WRIGHT, EXECUTIVE DIRECTOR, FAMILIES
USA, WASHINGTON, D.C.
Mr. Wright. Thank you. Good morning, Chairman Good, Ranking
Member Scott, Ranking Member DeSaulnier, and members of this
Committee. My name is Anthony Wright. I serve as the Executive
Director of Families USA, a national health care consumer
advocacy organization.
I appreciate the opportunity to testify on behalf of
consumers and workers on the 50th anniversary of ERISA, which
is an excellent excuse to have some cake, but also to reflect
on the employer-sponsored coverage, and its State, which is the
pillar of our healthcare system that covers 60 percent of the
Nation, 164 million Americans, including two-thirds of them in
self-insured plans under ERISA.
Workers with on-the-job benefits often consider themselves
lucky to have group coverage, having a large employer share in
the cost of coverage, and negotiate for the best quality and
cost. They increasingly need help to access basic benefits, or
key consumer protections, and most of all on affordability.
Only Congress can provide that help. Since ERISA's broad
State preemptions significantly diminish states' ability to
innovate and improve healthcare quality, access, and
affordability. Limiting states from even enacting modest
efforts, like requirements to contribute to State health
payment data bases for greater price transparency.
Therefore, it is Congress that needs to be vigilant and
proactive in updating ERISA, and other Federal laws, to improve
health access and affordability. That is why Families USA, over
the last many decades, has supported the many congressional
actions to improve ERISA, such as COBRA, HIPAA, mental health
parity and the Affordable Care Act. The most recent example is
the No Surprises Act, which bans surprise bills.
Prior to that, 33 states passed their own protections, but
they did not apply to millions of their residents in self-
insured plans. Congress should continue to take steps that
supplement State action, whether on the unfinished work on
surprise ambulance bills, or on filling holes on ERISA's
standards and patient protections.
For example, should all large employers be required to
provide the same essential health benefits that small employers
give their workers? Some states are now working to update and
improve their essential health benefit standards to better meet
consumers' needs. The Federal Government should follow.
Similarly, only Congress could provide relief to those in
self-insured plans who need more comprehensive remedies for
denials of medically necessary care. Another issue, when
consumers have these or other problems, no one knows where to
go for help. I mean no one. While 40 percent of the Nation are
in these self-insured plans, in a recent KFF survey, zero
percent of respondents guessed that their plan was regulated by
the Federal Department of Labor.
Congress should ensure that the Department has the adequate
staffing and resources to ensure proper oversight of ERISA
plans and their finances, to take complaints, and to support
consumer assistance programs to help people navigate our
complex health care system.
Ultimately, the biggest issue for ERISA plans is the
biggest issue in all of health care: affordability. No one is
insulated from high health care costs, not even large employers
and their workers. Inflated and irrational health care prices
are putting Americans' health and financial security at risk.
More than 100 million Americans are saddled with medical
debt. Half of all Americans report foregoing medical care due
to cost, and a third of Americans indicate that the costs of
medical services interfere with securing basic needs, like
groceries and rent.
Over the past 25 years, the cost of family employer-based
plan has increased from $6,500.00 to almost $24,000.00. The
worker's share of premium and out-of-pocket costs has risen
dramatically as well. In 2007, 60 percent of individuals in
employer-based coverage had minimal deductibles under $500.00.
Now 60 percent have deductibles over $1,000.00.
For most low-wage workers, that means they have to pay more
than what they have in the bank before most of their coverage
even kicks in. For workers and employers alike, as we see
today, rising healthcare costs have become unsustainable.
Fortunately, Congress has the opportunity to take action to
improve health care affordability, including addressing the
underlying market failures that drive rising health care costs,
ensuring price transparency, site-neutral payments, and other
reforms advanced by this Committee in the Lower Costs, More
Transparency Act. Broadening the prescription drug cost
containment policies in the Inflation Reduction Act into the
commercial market, so that we have more discounts for more
drugs for more people.
Taking timely access to extend enhanced tax credits to
prevent dramatic premium spikes if they are allowed to expire
next year and instituting and updating caps on out-of-pocket
costs, both for prescription drugs and generally.
Thank you again, for the opportunity to join in today's
discussion on the ways to build on the foundation of ERISA to
improve access to affordable coverage to everyone, including
workers and their families. I yield back.
[The prepared statement of Mr. Wright follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Chairman Good. Thank you. I will now recognize Dr. Fronstin
for 5 minutes.
STATEMENT OF DR. PAUL FRONSTIN, DIRECTOR, HEALTH BENEFITS
RESEARCH, EMPLOYEE BENEFIT RESEARCH INSTITUTE, WASHINGTON, D.C.
Mr. Fronstin. Chairman Good, Ranking Member DeSaulnier, and
distinguished members of the Subcommittee, my name is Paul
Fronstin. I am the Director of Health Benefits Research at the
Employee Benefit Research Institute. Established in 1978, EBRI
is committed to data dissemination, and policy research in
education on financial security and employee benefits.
Consistent with our mission, EBRI does not lobby or
advocate specific policy recommendations. Thank you for the
opportunity to appear before you today. Employers' commitment
to worker health established its roots in the late 1800's.
Examples of health programs include the mining, lumbering and
railroad industries. Employers had a practical interest in
their workers' health.
During World War II, employers began to offer more formal
health insurance. Because employer contributions to insurance
did not count toward wage controls, health insurance became an
attractive means to recruit and retain employees.
Employers today offer health coverage because of their
belief that offering has a positive impact on the overall
success of the business, and ERISA's preemption of State law
has created an environment of national uniform standards for
employee benefit plans, thus giving employers the regulatory
means to continue to offer health benefits as they do today,
yet there have been questions along the way as to whether
employers have reached the tipping point with health benefits.
Predictions have been made that employers would stop
offering coverage. In this testimony, I examine how the
availability of employment-based health coverage has been
changing, by examining employer sponsorship of coverage, as
well as employee eligibility for coverage.
There is no comprehensive dataset that allows us to go back
to the days of ERISA. However, the percentage of the population
with employment-based health benefits can be tracked. It was at
or near 70 percent between 1970 and 1989, between 1989 and 2007
it varied between 62 and 68 percent. Since then, it has varied
between 58 and 62 percent, with 61 percent in 2022.
The declines in coverage often coincided with relatively
high increases in premiums, though there were years when the
correlation was far from perfect. The more recent stability in
premiums coincided with stability in the percentage to
population with employment-based health coverage.
In 2022, employment-based health coverage continued to be
the most common source of health coverage. When examining data
since 1996, the percentage of employers offering health
benefits was at a near record low in 2023. However, it is
important to put this in context. Small employers are in large
part responsible for the decline in coverage, and most
employers in the U.S. are small.
Just about every employer with 100 or more employees offer
health benefits today. Despite the overall decline and the
percentage of employers offering health coverage, the
percentage of workers eligible for health benefits has been
mostly constant since 1996. The eligibility rate has not
changed much because the majority of workers are employed by
large firms.
Workers have historically rated their health coverage as
favorable and continue to do so. Just over one-half are
extremely, or very satisfied with their current plan, and one-
third is somewhat satisfied. Only 12 percent say they are not
at all satisfied, and these figures are essentially unchanged
since the late 1990's.
ERISA effectively preempts State and local regulation of
self-funded health benefits. The scope of this has generated
some degree of debate. Proponents of ERISA preemption point to
the creation of a uniform and predictable regulatory
environment for employers, while detractors believe that State
and local governments ought to have a great role in pursuing
healthcare reform, beyond their current ability to regulate
health insurance.
On Thursday, EBRI is releasing the findings from a series
of focus groups, with benefits decisionmakers of large
employers. Three main themes emerged from these discussions.
First, under ERISA preemption, there is a uniform landscape of
regulations, rather than a patchwork of different State level
regulations, which makes it possible for an employer operating
in more than one State to administer and offer benefits
equitably to their employees.
Second, ERISA preemption reduces administrative costs, thus
enabling employers to deliver richer benefits and lower cost
coverage to their workers. Third, ERISA preemption fosters
innovation that would otherwise be stifled by different states
requiring different coverages or administrative rules.
Employers remain committed to providing health benefits to
employees and their families. If ERISA preemption were eroded,
however, benefits executives worry about higher costs for
providing health benefits.
Chairman Good, thank you again for the opportunity to
appear before the Committee today. My colleagues and I look
forward to working with you and members of the Committee in the
future. Thank you.
[The prepared statement of Dr. Fronstin follows:]
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Chairman Good. Thank you. Under Committee Rule 9, we will
now question witnesses under the 5-minute rule, and I will wait
to ask my questions at the end, and therefore, recognize Mr.
Walberg from Michigan for 5 minutes.
Mr. Walberg. Thank you, Mr. Chairman, and thanks to the
panel for being here. The Employer Retirement Income Security
Act, ERISA, enacted in 1974 is a cornerstone of American labor
law that has profoundly shaped the landscape of employer
sponsored insurances we have all mentioned today.
ERISA has played a vital role in elevating the quality of
employer sponsored insurance over the past 50 years. It has
empowered workers, retirees, and others to make informed
decisions about their health and retirement benefits, ensuring
that their needs are met throughout their careers, and into
retirement.
ERISA has not only contributed significantly to the
stability and security of millions of working families, but
also brings tremendous values to taxpayers and the economy
overall. Thank you to the witnesses for being here to help
commemorate ERISA's 50th anniversary.
Mr. Chairman, I do not see any balloons in the room, but we
probably should have had some, though we do have some hot air,
I guess, in the room. Ms. Schuman, thank you for being here. In
what key ways has the healthcare industry changed since the
passage of ERISA in 1974?
Ms. Schuman. Thank you, Congressman, for that question. The
healthcare industry has changed dramatically in the past 50
years. It has certainly become more complex and consolidated,
but it has also become more innovative, and a lot of this
innovation has been enabled and fueled by ERISA, and the
employer innovation that that enables and fuels.
Mr. Walberg. Let me jump on that and ask you to suggest
some top recommendations that you might give to Congress on how
ERISA can continue to protect employer's ability to offer high-
quality and affordable health benefits.
Ms. Schuman. Well, first of all let me thank you by
recognizing the connection between ERISA and the ability of
employers to offer affordable, high-quality coverage. That is
predicated on ERISA and ERISA preemption, and the ability to
offer affordable high-quality coverage to their employees
nationwide.
My top recommendation for you on how ERISA can continue to
protect employer's ability to do so, is to protect ERISA
preemption, mindful of expanding efforts at the State to erode
that. Congress does need to do more to address the lack of
transparency and competition in the healthcare marketplace that
are driving higher costs for employer sponsored coverage, and
those two can and must be taken in step, protecting ERISA and
ERISA preemption, and at the same time taking action to lower
healthcare costs. Thank you.
Mr. Walberg. Thank you. Ms. Wade, could you discuss the
challenges small employers face when they try to offer coverage
to their employees, and what kinds of innovative coverage
models would make it easier for small businesses to offer
health coverage, and also if you would comment on how expanding
access to association health plans would help small businesses
to offer coverage?
Ms. Wade. Certainly. Thank you for the question. For small
firms, they are challenged in a whole myriad of ways, one of
which is whether they offer health insurance at the beginning
of operating their business as an employer firm. The challenge
of costs and affordability is impacting their ability to
construct competitive packages to attract talent, to retain
their current employees.
One of the key components for small business in the
affordability aspect, is allowing a diverse array of plans and
structures and the benefit to offer their employees that makes
sense to them. More transparency in the cost part of it but
offering more plan designs that makes sense for them to offer
to their employees.
Association health plans, the way it is constructed is very
specific and confined, and restricted to a lot of small
business owners currently. Expanding the availability of
Association health plans to a larger population would allow
them to purchase in economies of scale that are more afforded
by large firms and will give them a competitive leg up from
their current status right now in being able to afford.
As I mentioned in my statement, those who are not able to
afford health insurance and offering currently are looking to
do that. They want to be able to compete for talent and retain
current employees, so many of them are hoping that in the
future the affordability will be more manageable, and that they
will be able to offer the benefit to their employees because
they know that that is the second most valuable, outside of
wages, for competitive structure of that.
Mr. Walberg. Thank you. My time has expired. I yield back.
Chairman Good. Thank you. We will now recognize Mr.
Courtney from Connecticut for 5 minutes.
Mr. Courtney. Thank you, Mr. Chairman. To the witnesses,
you know, Mr. Fronstin I think did a really nice job about
going back to the origins of employer-sponsored insurance that
the World War II decision to make the value of those plans tax-
exempt, really has been sort of foundational.
Again, I would just like to ask all the other witnesses,
the simple question yes or no, do you think Congress should
reduce the tax-exempt status of health care--employer-sponsored
health plans?
Ms. Schuman. Absolutely not.
Mr. Courtney. Ms. Wade.
Ms. Wade. Absolutely not.
Mr. Courtney. Mr. Wright.
Mr. Wright. Given that it is a foundation for 60 percent of
people to get coverage, no.
Mr. Courtney. Again, the reason, and as a former employer,
is that if Congress made that move, it basically would add to
the taxable income of all the employees of Ms. Wade's
membership, as well as Ms. Schuman's membership. Unfortunately,
this is a very relevant issue in 2024.
Project 2025, which is the document generated by the
Heritage Foundation, with dozens of former Trump officials,
Russell Vought, the former budget director of the Trump
administration, also the Chair of the Republican National
Committee's Platform Committee, again, in that package in
Project 2025, it proposes to cap the tax exclusion below 100
percent, which is a tax increase for workers of employee-based,
employer-sponsored plans.
The Republican Study Conference, which again is closer to
home here in the House, about 70 percent of the membership of
the majority caucus issued their 2025 budget document earlier
this year, which proposed the same thing. Again, if you look at
the history surrounding this issue, Milton Friedman, the
Godfather of conservative economics, wrote an essay.
Mr. Fronstin is probably familiar with it, How to Fix
Health Care Costs, where he proposed eliminating the tax-exempt
status of employer sponsored insurance. This year, in 2024,
given the fact that we have Project 2025, which again, has got
the fingerprints of the former President's former employees, as
well as people working on his campaign, proposing to cap the
tax exclusion, as well as the Republican Study Conference doing
exactly the same thing.
When we are talking about threats to employer-sponsored
insurance in 2024, that is really the elephant in the room in
terms of making sure that the foundational cornerstone that
created employer-sponsored insurance, back during World War II
remains intact. I can say this as somebody who when we passed
the Affordable Care Act, and Ms. Schuman knows this, it
included a Cadillac tax, which we furiously were succeeded in
terms of delaying the impact of that for 10 years after the law
passed.
Then finally, in the House, with a bill that I was the lead
sponsor, and had great bipartisan support, stripped that from
the law by a vote of 419 to 6. There is strong bipartisan
support for maintaining the tax-exempt status of employer-
sponsored insurance. However, that is very much, very, very
much at risk in terms of just the positioning of different
forces, think tanks and other groups, that really want to go at
this.
Which again, if you go back and read the Godfather, Milton
Friedman's economic treatises on this, I mean that is a, you
know, just a fundamental tenant of a lot of conservative
economists in this country, which is that that's really the
source of a lot of the problems for the costs of health care
insurance.
Mr. Wright, you mentioned the fact that the Inflation
Reduction Act last August 15th during the recess, announced the
first ten medications, in terms of the negotiated prices. 80
percent cut in cost of some of those very high-cost, high-
utilized medications in Medicare.
We have a bill, the Lowering Drug Costs for American
Families Act, which would extend the benefits of that
negotiation to employer-sponsored plans, or individual plans,
optional. Do not have to do it if you do not want it, but can
you, from Families USA, would that help small employers as well
as individuals get the benefit of lower costs, which are
driving higher premiums?
Mr. Wright. The short answer is, yes, that individuals,
businesses, insurers, other payers, are all struggling with the
cost of high inflated and irrational health prescription drug
prices. Using the authority of negotiation that is in the
Inflation Reduction Act to extend those discounts, not just to
the Medicare program, but more broadly in the commercial
market, would be a big boon, and start to chip away at the
affordability issues that people have at the pharmacy, and when
paying premiums.
Mr. Courtney. Thank you. I yield back.
Chairman Good. Thank you. We will now recognize Mr. Allen
from Georgia for 5 minutes.
Mr. Allen. Thank you, Mr. Chairman, and first, just
quickly, my position on employer health insurance or ERISA. We
can always have a government program in this country, but we
need to give the business community the flexibility to provide
the best coverage at the best value for their employees. The
business community will figure this out.
My position is to give this coverage the same waivers that
the Affordable Care Act gave to unions and the faith-based
company--faith-based part of the healthcare industry, so that
we can get totally away from Federal regulatory issues dealing
with ERISA, as far as compliance, and all the costs, and
everything that is being added to that.
I also want self-employed people to be able to participate
in ERISA. We do not have time to discuss that today, but I
would like your written response to that idea as far as going
forward and how to solve the tremendous cost increase in health
insurance.
In recent years, another matter is growing adoption of so-
called alternative funding programs and employer sponsored
plans. Some stakeholders have suggested that AFP vendors divert
employees into their programs, and push employers to adopt
discriminatory benefit designs that single out medicines that
treat specific conditions.
They suggested this type of action could violate ERISA and
HIPAA compliance. Representative McBath and I recently sent a
letter urging the Department of Labor to investigate the
prevalence of AFPs in the employer sponsored health coverage
market, and asked the DOL to take action to prevent these
predatory practices.
Ms. Schuman, how well do you think employers are aware of
potential ERISA compliance risks with AFPs? Have you provided
any education about compliance risk to member companies?
Ms. Schuman. Thank you for that question, Congressman. The
Council's membership typically rely on traditional PBM and drug
payment models, so members have not raised AFPs as an issue
that I am aware of, and the Council has not actively addressed
AFP with its members. It does sound like this is certainly a
concerning practice, but I said it has not been brought to our
attention by our membership.
Certainly drug costs are a big concern for our members, and
just want to take this opportunity to again offer my support
for the great bipartisan work of this Committee already in the
Lower Cost More Transparency Act, to bring more transparency
and oversight of PMBs in an effort to do that.
Mr. Allen. Well, it is a long and frustrating fight to get
your medications approved through the PBM step therapy process.
It often results in missed days of work, and a worsening of
their condition. The lack of transparency, as you mentioned,
PMB practices makes it difficult for employers to assess
whether the administration of drug benefits aligns with their
employees' best interest and well-being.
Many people I represent in the Georgia's 12th District,
experience these same frustrations, which is why I am proud to
cosponsor the Safe Step Act, which would ensure employer health
plans, including their contracted PBMs, offer an expedient and
medically reasonable step therapy exceptions.
Dr. Fronstin, how would legislation such as Safe Step Act
help people with chronic conditions, who are covered by the
ERISA plan?
Mr. Fronstin. I have not studied the Safe Step Act,
specifically, but it sounds like it would streamline prior
authorization process, and speed up the process again for
certain medications, when all the medications are not working
as expected.
Mr. Allen. What can be done to help employers navigate the
complex benefit structures, pharmacy networks, and formularies
that are obscured by the PBM incentives?
Mr. Fronstin. PMB incentives are complex, and I think
building an employee benefit program is complex as well for
many employers, even large employers, and sometimes beyond the
expertise of many benefit managers. That is why they use
consultants, use ERISA attorneys.
They often learn from each other at conferences. There are
some purchasing coalitions that employers have joined to help
them navigate a complex healthcare system, and provide them
some leverage.
Mr. Allen. Thank you. I am out of time. I have additional
questions I would like to submit for the record. With that I
yield back.
Chairman Good. Thank you. Without objection.
[The information of Mr. Allen follows:]
Chairman Good. I now will recognize Ms. Manning from North
Carolina for 5 minutes.
Ms. Manning. Thank you. With regard to the antics at the
top of this hearing, I did not realize we were playing campaign
ads here. In fact, I thought there were ethics rules that
separate our official acts from campaigning, and if I had
known, I certainly would have brought a few campaign ads of my
own to play.
I would like to turn to the actual subject of this hearing,
and I want to start by thanking our witnesses for being here,
to celebrate the anniversary of ERISA. It is the essential
cornerstone of our Nation's health care policy, and the
consumer protections Congress has passed to strengthen it, such
as the Affordable Care Act, have ensured better outcomes for
millions of Americans.
Sadly, for almost 15 years, the Republican Party has waged
an all-out war on the ACA, and the landmark consumer
protections it has enshrined into law for millions of working
people in this country. These include protections for more than
130 million Americans with pre-existing conditions, requiring
coverage of contraceptives, prohibiting charging women higher
premiums than men for the same coverage and so much more.
In April of this year, 62 percent of the public had a
favorable opinion of the ACA, and these protections are
critical to my constituents and frankly, they are critical to
my family. I have a daughter who has a serious pre-existing
condition, a chronic illness that thankfully is successfully
treated with a biologic that would cost her $23,000.00 every
month, if not for the protections of the ACA.
I am grateful that we passed the IRA, which will finally
allow our government to negotiate over some of the most
expensive prescription drugs available, and I am also
astonished that the Republicans continue to push for the repeal
of the ACA. In fact, Project 2025, Trump's Project 2025, lays
out a plan for undermining and destroying the ACA.
Project 2025 has a detailed plan from a right-wing think
tank for the next Republican administration. Mr. Wright, let me
ask you about this. One of the key policies of Project 2025 is
to separate the subsidized ACA insurance market from the non-
subsidized insurance market.
Can you explain what this would mean for Americans left out
of the ACA's protections?
Mr. Wright. I think the things that we would be concerned
about is the loss of consumer protections and ultimately
coverage for millions of Americans who depend on that coverage,
that would have--losing those protections, and for some would
be a problem. Losing the coverage would also have a
destabilizing impact on the overall market because those who
are no longer covered would be left in a smaller and sicker
risk pool, and thus have ever increasing premiums as a result.
The loss of consumer protection would be broader than that,
and that would be the concern, whether it is access to basic
essential health benefits, or as you mentioned, an issue with
regard to being able to get the care that you need, regardless
of pre-existing condition.
Ms. Manning. For example, it could cause the loss of
protections for people like my daughter, who have a pre-
existing condition, as do millions of Americans across the
country. Is that correct?
Mr. Wright. That is correct.
Ms. Manning. Thank you. Overall, would this reduce
American's health care costs, or increase them?
Mr. Wright. As I mentioned, the destabilizing effect would
not be just an impact on the people who would lose the subsidy,
or lose the coverage, but also have a broader impact on the
system as a whole, in terms of leaving people in a smaller and
sicker risk pool, with higher premiums. Yes.
Ms. Manning. To put it plainly, it could increase health
care costs overall. Is that correct?
Mr. Wright. Yes.
Ms. Manning. Project 2025 also calls for keeping ``anti-
life benefits'' out of benefits plans, including coverage for
abortion care, and I assume, including coverage for
contraception or birth control, and this is actually written in
the plan, including costs for surrogacy. Mr. Wright, could you
speak to the benefits that reproductive care coverage has had
for Americans?
Mr. Wright. It is critical that people have the ability to
plan and start families when and how they want them, but also
to get the prenatal and postnatal care to have healthy babies,
and children, and adults. This is critical, especially now that
we are in a maternal--we have a maternal mortality crisis, and
so those kinds of services are incredibly important to make
sure that we deal with both disparities and the overall quality
of care.
Ms. Manning. Thank you. I have more questions. I will
submit them in writing. Thank you very much.
Mr. Wright. Thank you.
Chairman Good. Thank you. We will now recognize Chairman
Foxx from North Carolina for 5 minutes.
Mrs. Foxx. Thank you, Mr. Chairman, and I want to thank our
witnesses for being here today. It is a very important issue to
the majority of people in this country, particularly those who
are covered by employer sponsored healthcare.
Ms. Schuman, your written testimony highlights anti-
competitive contracting terms, such as all or nothing, and
anti-steering clauses, which prohibit a plan sponsor from
contracting with a business associate's competitors or using
providers outside of a business association's network.
How did these restrictions affect plan benefit design and
cost?
Ms. Schuman. Well, thank you very much for that, for that
question. As large hospital systems have increasingly acquired
other hospitals and physician practices, these healthcare
systems dominate the market, and they use their market power to
push out lower priced, higher quality competitors. One of the
ways that they can do that is through these anti-competitive
contracting terms, that they demand are included in contracts
with health plans, insurers and third-party administrators.
These anti-competitive contracting terms come in several
forms, anti-steering, or anti-tiering provisions, that prevent
employers from utilizing value-based design to direct employees
toward lower cost, higher quality providers, or all or nothing
clauses, for example, that would require the health plan to
contract with all affiliated facilities and providers,
including lower quality ones.
These contract provisions are designed to do one thing, to
limit access to lower cost, high quality care, and to tie the
hands of employers in their efforts to promote more value
driven care. That is why the Council is so strongly supportive
of the Healthy Competition for Better Care Act, that would
restrict these anti-competitive provisions, and urges the
Committee to approve it. Thank you.
Mrs. Foxx. Thank you very much. You just answered my second
question. Ms. Wade, the Affordable Care Act does not require
employers with fewer than 50 employees to offer health coverage
to their employees, and yet NFIB reports that many employers
still choose to offer coverage. Can you discuss the benefits
for small employers, and their employees of offering employer-
sponsored health benefits?
Ms. Wade. Certainly. NFIB, we have surveyed our members
periodically over the years, and with the tight labor market
that they are experiencing now, but have been for years, the
ability to offer health insurance as the primary benefit
outside of wages is incredibly important to many of them in
attracting talent and retaining current employees.
The availability, the affordability, of this benefit for
them being able to have a large choice of benefit structures to
offer their employees is critical for them in those purposes of
retaining talent and recruiting for open positions. This is one
of the main hurdles that they face in offering the benefit, is
cost.
We survey our members, and they tell us that in the next
five to 10 years, most of them are very concerned about their
ability to keep the affordability aspect of offering the
benefit to their employees, and so they are concerned whether
they are going to be able to offer the benefit going forward.
They are concerned about their ability to compete for
talent in their workforce.
Mrs. Foxx. Thank you. Dr. Fronstin, your written testimony
states that ERISA's preemption of State law created an
environment of national uniform standards for employee benefit
plans and allows employers to continue to offer health
benefits. What would health benefits look like today without
ERISA?
Mr. Fronstin. That is a really interesting question. I
think if you go back before ERISA, employers offered coverage
for business reasons, to be competitive in the labor force.
Just about every large employer still does. Some small
employers do, and if you ask the employers, small employers
that do so, they are doing so for business reasons, to be
competitive in the labor market.
They are concerned about employee health and their
productivity. I do not know that if we did not have ERISA it
would look any different than that. I think ERISA certainly has
enabled employers, perhaps large employers to--made it easier
to offer benefits across State lines, but I still think they
believe in the reasons why they offered benefits to begin with,
which is to be competitive in the labor market, and to invest
in worker health.
Mrs. Foxx. Thank you very much. My time is expired. I yield
back.
Chairman Good. Thank you. Pursuant to previous order, the
Chair declares the Subcommittee in recess, such to the call of
the Chair. We will plan to reconvene promptly in 5 minutes at
11:25. Thank you, so the Subcommittee stands in recess.
[Recess]
Chairman Good. The Subcommittee will now come to order
following a recess. I will now recognize Ms. Hayes from
Connecticut for 5 minutes.
Ms. Hayes. Thank you. Thank you to our witnesses for being
here today. I also want to just thank my colleague, Ms.
Manning, who left, for bringing up the idea about the ethics
separation on Committee. I was in the back and saw how this
Committee opened, and that is not the way we should be doing
our work, and she brought up the ethics guidelines, which I
think would be a real issue, except that the people of
Virginia's 5th have already worked that out for us.
While hardworking American people are struggling to afford
medications, drug companies are reporting billions in profits.
According to Protect Our Care, in the first 3 months of 2024,
15 of the biggest drug companies reported nearly 173 billion in
revenue, and nearly 29 billion in net profits.
In 2022, I voted to pass the Inflation Reduction Act, which
empowered Medicare for the first time in history, to negotiate
lower drug prices for millions of seniors. The ten drugs
selected for the first round of negotiations accounted for over
55 billion dollars in total Part D gross prescription drug
costs in 2023.
These negotiations resulted in a reduction of 38 to 79
percent on the selected drugs. Mr. Wright, in Project 2025, and
what we have heard from many Republicans on this Committee,
there have been calls for repealing the Medicare drug price
negotiation program. What consequences will seniors face if the
Inflation Reduction--if that portion of the Inflation Reduction
Act is repealed?
Mr. Wright. Thank you for the question. I think there will
be impacts to both the individual beneficiaries, and to the
program as a whole. Individual beneficiaries are getting the
benefits in the Inflation Reduction Act of an overall cap on
prescription drugs of $2,000.00, access to free vaccines, a cap
on $35.00 for insulin, but more they are getting the benefit of
getting the negotiated discount rate when they go to the
pharmacy, especially if they are under insured.
If that was to be repealed, those benefits would--those
direct-to-consumer benefits would go away, but also would be
the savings to the Medicare program and would have a
problematic impact on the solvency of Medicare and the trust
fund.
Ms. Hayes. Thank you. We are seeing that even with these
negotiations, these companies are still putting up record
profits. House Democrats are looking to expand the drug pricing
negotiation program to private healthcare markets, like those
covered under ERISA.
Could you explain how applying the prices secured through
the Medicare drug price negotiation program will reduce costs
for millions of Americans with private health insurers?
Mr. Wright. To the extent that the Medicare, and the
government is using its purchasing power to negotiate
discounts, it makes sense that those discounts should be
applied to the broader public, whether through including in the
commercial market that would help bring down the premiums that
payers pay, whether employers, union trusts, or individuals who
pay out of pocket for premiums.
Ms. Hayes. Well, will this also have a benefit on the
employer?
Mr. Wright. As I said that it would be since the employer
is often the one that is paying the main premium often with a
shared cost by the worker, it would have a benefit for both,
the employer and also the worker, whether the share of premium,
or as the ability to have those wage increases in other ways.
Ms. Hayes. Both the employer and the employees would
benefit from negotiated drug prices, and lowering the cost of
prescription drugs. Thank you so much for being here.
Mr. Wright. Thank you.
Ms. Hayes. The Inflation Reduction Act dramatically lowers
costs by requiring drug companies to provide rebates when they
raise list prices faster than inflation limits--then inflation.
Limits total out of pocket costs through Medicare Part D at
$2,000.00 annually, and caps insulin costs at $35.00 per month,
but it is imperative that we pass legislation that would expand
the drug price negotiation program, and the inflation rebate
savings to ensure that individuals with private health coverage
also benefit.
Can you just speak in my last 40 seconds, about how we are
talking a lot about Medicare Part D, and people who participate
in these programs would benefit. How would this expand to
everyone that would benefit from this type of work?
Mr. Wright. I think the more we can do to expand these
benefits broader than the Medicare program, that would be a
direct benefit to consumers. At the pharmacy, this is one of
those monthly costs people feel every time they go to the
pharmacy, but also even for folks who do not use prescriptions
because it is the premiums everybody pays.
Ms. Hayes. Thank you. As we are talking about rising
inflation, and the cost of living, the amount that families are
paying should be considered as we are thinking about these
things, and this is something that will definitely help. Thank
you so much, I yield back.
Chairman Good. Thank you. We will now recognize Mr.
Burlison from Missouri for 5 minutes.
Mr. Burlison. Thank you, Mr. Chairman. Dr. Fronstin, in
your written testimony you said that small employers have been
responsible for the decline in the number of employers that are
offering health benefits. What has happened to cause that to
occur?
What steps can we take so that small employers are wanting
to offer those health benefits?
Mr. Fronstin. Yes. Keep in mind that small employers were
never as likely to offer health benefits as large employers,
and there is clearly an affordability issue there.
Mr. Burlison. It is just a complexity--part of being a
small business, right?
Mr. Fronstin. I think the complexity part comes in because
a small business, you do not have as many people that you could
allocate these responsibilities to. You can certainly hire a
broker to help you navigate the health insurance part of it,
but that is just one more piece when you are potentially
starting a business.
I think the challenge with small businesses is that we have
done surveys that are dated, right, about 20 years ago, where
we asked small businesses that did not offer coverage why, and
whether they thought it had a negative impact on their
business.
For the most part they did not. If you cannot convince
them, and the NFIB was asked a similar question like that
recently. If you cannot convince these businesses that not
offering it has a negative impact, I think it is going to be
very tough to convince them to offer, even if premiums were
more affordable, they are just not focused on it.
Mr. Burlison. I had a whole list of questions, and I am
going to kind of go a little--I am going to wax philosophically
here if that is okay. I am reflecting on the fact that in
American at one point employers created pensions, right? They
managed those pensions, and over time, decades, they became
unsustainable, they became a liability. There was a lot of
uncertainty with those, that sometimes you would have people
that would lose out because their employer might go belly up
and now their pension is gone.
The result was this institution created a tax incentive for
individuals, or created a mechanism so that employers can offer
IRAs, can offer 401K's, that put the money in the hands of the
individual. Let me choose where their investments are going,
let them choose that.
Could something like that be done with health insurance,
where the Federal Government is giving the same tax benefits,
but encouraging the employer to provide a benefit that the
employee then takes, and takes control of?
Mr. Fronstin. You could do that now by existing rules with
individual coverage health reimbursement arrangements.
Employers can give workers money, a tax-free basis, let them go
buy insurance on their own. It is not a very popular benefit. I
think at most there are different estimates, on how many people
are in such an arrangement. They are all small, right, maybe--
--
Mr. Burlison. It is not--I have not heard of it, so it is
very under-utilized?
Mr. Fronstin. Maybe a million people are in such an
arrangement, but I do not think we know exactly. I have seen
numbers of 200,000, maybe 400,000, you add in independents, you
could double that number, so that is like where the million
estimate comes from.
We have asked large employers about it. Some of them we
have asked about it to see if this is something they would be
interested in, did not even know about it. I think the NFIB
survey asked about it as well, and it was a lack of familiarity
there. I do not remember the specific numbers.
Mr. Burlison. Um-hmm. Being a former State legislator, I
saw firsthand how a lot of employers were happy to move to an
ERISA plan to escape all of the State regulations. The health
and the mandates on what they have to provide care for, and I
can only imagine how difficult that would be to go if you were
occupying or had employees in multiple states.
What--let me ask this, what else can we do, for example, to
ramp up that individual program for small business owners. I
know that we have got the association opportunities as well. Is
there anything else that you can see?
Mr. Fronstin. I am not--I do not know to what degree--small
business. You have got two kinds of small businesses, both
those that offer coverage, those that do not. I do not know
that those that offer coverage are going to go in that
direction, if they are already committed to offering coverage.
While you have seen some erosion, it has not been very
large erosion. I think this would be more appealing to
employers, small employers that did not offer coverage as a way
just to give their employees some tax-free benefit.
Mr. Burlison. Has--Ms. Schuman, have these associated
plans, these plans that where you are grouping people based on
association, have they experienced any savings?
Ms. Schuman. Well, you know our member companies are
primarily large, multi-State employers that provide
comprehensive healthcare coverage to their employees, so it is
just not as----
Mr. Burlison. This may be a question Ms. Wade can answer.
Ms. Schuman. Yes. I think.
Chairman Good. The gentleman's time has expired.
Mr. Burlison. She can answer.
Chairman Good. We would like her to submit that written for
the record. Thank you, I apologize. I now recognize Ms. Wild
from Pennsylvania for 5 minutes.
Ms. Wild. Thank you. Mr. Wright, I have a particular
interest and concern about the role of private equity in health
care, and I do see in your written testimony that you mention
the role of private equity in health care, and I want your
opinion on a couple of things in a minute, but just for the
benefit of people who might not understand what private equity
is, and tell me if I am incorrect about anything that I say.
Basically, this is private investors who contribute
capital, but they leverage their investment with a whole lot of
debt, and in the case of health care, they may use and likely
do use physical assets, whether it is hospitals, buildings, or
whatever, as collateral for that debt.
Then they have to pay off the debt, which to my mind means
they probably have to generate a whole lot of revenue in order
to keep up with payment of that debt. Have I stated it
correctly so far?
Mr. Wright. Yes.
Ms. Wild. Okay. Thank you. I have read that private equity
has invested nearly a trillion dollars in the health care
system in the United States since 2006. That means private
equity collectively, and would it be a fair statement that when
a consumer, a patient goes to a health care provider, goes to a
hospital, that the chances are they do not know much about the
ownership structure of the hospital, or the health care place?
Mr. Wright. That is a fair statement.
Ms. Wild. Okay. It is not like there is a big plaque on the
side that says owned by private equity investors, so and so,
and so and so. Okay. There has been a number of studies,
including one by Harvard Medical School about the fact that
private equity actually results in higher prices to consumers,
that more profitable services are often performed, but do not
match either the need for them, or the benefit that they would
convey, surprise medical bills.
Then, one study, the Harvard one in particular, found
significantly worse outcomes for patients, particularly
Medicare patients in private equity locations. My question to
you after all that is, what can Congress do to manage this
problematic role of private equity in our health care system?
Mr. Wright. Thank you for the question. I think there is a
number of things that Congress can do. It is an issue of
concern. We have seen a lot of money come in from private
equity. It has certain incentives that are not necessarily
aligned with community health and more for short-term profit,
even in some cases, stripping the assets of institutions to get
the most value, or at least short-term value from them. I think
there needs to be some transparency in this regard, just to
even know when these transactions are happening.
It has been actually surprising how quickly these ownership
relationships have changed, even in the last five, 10 years,
whether it is to medical groups, or in certain parts of our
health system, and so having greater transparency of ownership,
particularly with private equity would be important, and also
oversight over the actual transactions themselves, whether by
the FTC, the DOJ.
I know states are introducing laws to have oversight by
State Attorney Generals, multiple states had bills this year. I
believe one is on the California Governor's desk, and I think
it is a concern because the growing body of literature is that
private equity is associated with higher costs--the growth and
ownership of private equity is associated with higher costs,
and in fact, a lower quality, and even closures, depending on
the business model.
Ms. Wild. My understanding is that so far at least, it is a
relatively small percentage of health care systems in the
United States that are owned by private equity, but would it be
fair to say that struggling hospitals, for instance, in smaller
communities might be more susceptible to a private equity
buyout or takeover?
Mr. Wright. I think that is certainly true, and it is
becoming a big percentage in certain pockets of our system
where those investors are seeing the opportunity to extract
more dollars out of our health system.
Ms. Wild. Can you elaborate on that? What do you mean?
Mr. Wright. Whether it is on ambulances, whether it is in
certain specialties, whether it is in certain areas.
Ms. Wild. Okay.
Mr. Wright. Like if you look at overall, it is a relatively
small percentage, but in certain markets or certain areas that
is a problem.
Ms. Wild. Got it. You were not talking about geographic
areas, you were talking about areas of medicine or services
provided. One of the things I read was that the higher risk,
more specialized areas of medicine are more susceptible to
private equity takeovers.
Mr. Wright. That is right.
Ms. Wild. Is that fair to say. Thank you. I think it is a
huge problem. I hope that we can address it in the coming years
in Congress, and I think that it is a problem that is going to
continue to grow unless we reign it in. Thank you for your
information.
Mr. Wright. Thank you.
Ms. Wild. I yield back.
Chairman Good. Thank you. I recognize now Mr. Bean from
Florida for 5 minutes.
Mr. Bean. Thank you very much, Mr. Chairman. Good morning
to you, and good morning HELP Committee. What an honor to be
here, and to our distinguished panelists, it is great to see
you. Since the COVID pandemic the rise of telehealth has taken
American by storm, and it is a popular option for many, many
Americans, and there is a convenience factor, it is all kind of
things.
Now, we are seeing that it is not as affordable as you
would think. You would think with innovation and with the
efficiency of telehealth it would be a much less expensive
option, one of which, one of the problems is different fees
that providers and facilities are putting on telehealth visits
to make it just not as affordable as it could be.
Ms. Schuman, you have mentioned it in your testimony. I
want you to talk about it. Is it a problem? I am considering,
this is just between you and I, I am considering doing a bill
to limit fees, and add-ons, which sometimes Americans are
confused, and I would be confused if you get a bill from a
doctor, but then get a bill from a hospital, then you will get
a bill from somebody else facilitating it.
Is it a problem? What do you think? Is there a need to fix?
What say you, Ms. Schuman?
Ms. Schuman. I say that it is a problem, and that it needs
a fix. Allowing hospitals to charge a facility fee for
telehealth appointment is a prime example of a payment
distortion that is increasing healthcare costs for employers
and patients. If these services are delivered via telehealth,
but the facility is a phantom, but the fee is very real.
We strongly support legislation that would protect group
health plans from having to pay facility fees for telehealth
services. It just does not make sense to pay a facility fee, a
hospital facility fee when the facility involved is basically
an internet connection, and voters see through this too.
By an overwhelming margin of 82 percent to 9 percent, 8 to
1, voters believe that patients should not be charged a
hospital facility fee.
Mr. Bean. Ms. Schuman, it sounds like that if you were a
member, and I presume that you would vote yes. Is that correct?
Ms. Schuman. That is correct.
Mr. Bean. Yes. Fantastic. You think it is worthwhile to do
this bill?
Ms. Schuman. Absolutely.
Mr. Bean. Fantastic. All right. I am very close to
launching this bill. Ms. Wade, NFIB is the forefront, it is the
freedom loving businesses that want to get government out of
the way, and just provide a service, make money, and be the
backbone of small business. I did a roundtable in--I partnered
over the break with the Clay County, if they are listening,
thank you the city of Orange Park gave us their facilities.
It was town hall. We partnered with the Clay County Chamber
of Commerce. They invited just a handful, a variety of
businesses, and I sat there and listened to obstacle after
obstacle of challenge, inflation, taxes, hiring practices,
regulation, and we talked a little bit about healthcare, and
many of these small businesses are just--they are challenged by
the immense costs of offering health plans.
What say you, Ms. Wade, and NFIB? What do we need to do to
make healthcare more affordable in America? That is a big
question, and welcome to the world we live in. It is such a
little tight window, but is there some 50,000-foot view of what
we need to do to get healthcare more affordable in America?
Ms. Wade. Sure. Not surprisingly, our studies find similar
to what you heard in the roundtable, that 41 percent say it is
a critical issue in operating their business, the cost of
health insurance, and their ability to afford it themselves as
the owner, but also in offering it to their employees, or
potentially offering it to their employees if they do not offer
it already.
Transparency, better design choices, more plans available
to small business owners will help in having stabilized and
lower costs for them to offer benefit, association health
plans, expanding those opportunities.
Mr. Bean. It sounds like you are saying if I could
summarize it, choice and competition, that is what the American
consumer and small businesses want. How devastating, if we went
to a one size fits all, single-payer system, how devastating
would that be to Americans and small businesses?
Ms. Wade. Small business owners would be less able to
compete for talent in retaining current employees, and
attracting applicants for those positions, if not given the
choice to offer the benefit.
Mr. Bean. You nailed it. Devastating is what you are
saying. It would be devastating to have single-payer, that
would eliminate single plans, health plans, and wreak havoc
across America. Thank you so much. Mr. Chairman, I yield back.
Chairman Good. Thank you. I now recognize Mr. Scott from
Virginia for 5 minutes.
Mr. Scott. Thank you, Mr. Chairman. Mr. Wright, we have
heard a lot about association health plans. It has always
seemed to me that if you got a group of lower-cost healthier
people, and make an association out of it, the association
might save a little bit, but everybody left behind ends up
paying more.
Is there any evidence that eroding consumer protections
promoting association health plans actually lowers health care
prices in general, rather than shifts them to somebody else?
Mr. Wright. I think a lot of the savings comes from the
fact that they do not have to abide by certain consumer
protections, and patient protections, which is a detriment
obviously to the workers or employees, and also this issue of a
risk shift, where if you are skimming off the healthiest
populations, then you are shifting those costs onto the broader
market for small businesses, and having an impact of increased
premiums there.
We would--I also just want to make sure that with regard to
association health plans, that there is strong financial
oversight because you do not want to have a situation of
financial fraud or issues where because of lack of due
diligence, you know, people are left high and dry without
health care because the money went someplace else.
Mr. Scott. You are talking about solvency of these plans?
Mr. Wright. Yes.
Mr. Scott. What happens when they go broke?
Mr. Wright. Well, then that is a huge obstruction both to
the health care for the workers, but also for the employer,
issues of liability, issues of great concern. It is not good
for anybody.
Mr. Scott. What kind of--you talked about consumer
protections before, you mentioned a protection if you have a
pre-existing condition, what other kinds of consumer
protections would you lose if you get into an association plan?
Mr. Wright. Some of the consumer protections are just
whether certain basic benefits are covered, whether
preventative care, whether, you know, prescription drugs,
equipment and services, et cetera.
Mr. Scott. The American Rescue Plan Act and Inflation
Reduction Act improved tax credits, Mr. Wright, and
particularly for those earning over 400 percent of poverty,
where there is a cliff, and you have got no benefits. Now you
get benefits, you just pay a percentage of your income. At some
point on the income scale, you will meet the sticker price.
You would not be entitled to anything, but how have the
premium tax credits helped both low-and middle-income
individuals?
Mr. Wright. They have been a lifesaver and a lifeline for
millions of Americans. Over 5 million more Americans are
covered, in part due to the enhanced tax credits that have been
put in place in the last several years. People have gotten
reduced costs at a time when people are screaming about
affordability and have been screaming about health care
affordability for decades.
This is a direct form of assistance that says you do not
have to pay more than a certain percentage of your income for
coverage, and you are right, those folks just over 400 percent,
for those under they will have the guarantee that they did not
have to pay 8 and = percent of the income on coverage, but just
those over, especially if they were older, would be paying 20-
30 percent of their income on coverage, having a huge impact on
their ability to make ends meet for other needs.
It is incredibly important that those tax credits get
extended because they run out next year, and that needs to be
done sooner, rather than later in order for them to take effect
in 2026.
Mr. Scott, Now, for small businesses where the owner may be
just over the threshold, association plans start to look like a
nice alternative. How does the elimination of the cliff affect
the attractiveness of association health plans?
Mr. Wright. In fact, the--if I had a chance to respond to
the Representative here, I think the ACA Marketplace is an
especially, with these enhanced tax credits, provide a real
benefit for small business. A lot of the people in these
Marketplaces are solo entrepreneurs, real eState agents,
contractors, and people who are starting family businesses who
are in the exchanges and marketplaces right now and getting
this benefit.
If these tax credits are not extended, that would be a
premium spike of literally hundreds of dollars, and in many
cases thousands of dollars to their bill. It would also have
the impact of meaning that some of those 5 million people that
got coverage, would lose coverage, and then have an impact on
premiums overall in the overall marketplace.
Mr. Scott. Now, if you are in an association plan, you are
not getting a tax credit, right?
Mr. Wright. No.
Mr. Scott. The association plan would be competing with an
ACA plan with a tax credit?
Mr. Wright. That is right.
Mr. Scott. That makes it virtually impossible for
association plans to compete.
Mr. Wright. I think that at this moment the ACA marketplace
is a much better deal for people up and down the income
spectrum.
Mr. Scott. Thank you, Mr. Chairman.
Chairman Good. Thank you. I will now recognize the Ranking
Member DeSaulnier, for 5 minutes.
Mr. DeSaulnier. Thank you, Mr. Chairman. Last spring the
New York Times published the results of an investigation to
MultiPlan, a private equity-backed data analytics company that
works with many employer-sponsored health plans, and their
third-party administrators, or TPAs.
The investigation found that when MultiPlan lowered
reimbursements to providers, consumers would be on the hook for
exorbitant balance bills that employers were liable for huge
fees. In many cases, the fees paid to MultiPlan and the TPAs
were more than reimbursements being paid to health care
providers.
To me, this is a clear example of the inefficiencies, and
unethical behavior plaguing our health care system. Mr. Wright,
can you comment on MultiPlan and its inefficiencies for
consumers?
Mr. Wright. Yes. Thank you for the question. I think we are
deeply concerned about the potential price fixing, and anti-
competitive behavior. I wish I could say I was shocked, but
this is the kind of scheme that we have seen in the health care
system with corporations trying to take a profit often to shift
costs onto consumers.
We are particularly concerned about the issue of a
proprietary algorithm that is not public, that is making these
decisions, and the issue of the shifting of costs onto
consumers through balance billing. We do support the call for
investigations by you, and others in the House and in the
Senate, to look into this and deal with this appropriately.
Mr. DeSaulnier. Ms. Schuman, much like PBA's, the
inefficiencies of the system.
Ms. Schuman. Okay. Well, thank you so much, and I think
this just brings the light to need, the need to bring more
light to healthcare system, and the need for transparency, to
shine a light on these kind of payment distortions and
practices that are driving higher costs for employers, and also
for working families.
Again, the important work that the Committee has already
done to advance those transparency requirements in the Lower
Costs, More Transparency Act.
Mr. DeSaulnier. Thank you. The last hearing we had on ERISA
we heard testimony about claim denials. Many of us have
experienced at least one instance of a denied claim. We all
know that claim denials can impose serious health and financial
hardships. During our last hearing, the Democratic witness
recounted the tragic death of Kyree, 27-year-old flight
attendant who was denied prior authorization for a heart
transplant, over criterion that never existed in the plan's
documents.
The denial would eventually be reversed, but the decision
came almost a month after Kyree's death. Despite stories like
Kyree's, we do not even collect adequate data to help us
understand the extent of the problem. The Affordable Care Act
required the Department of Labor to issue regulations to
require group health plan reporting on claim denials, and in
2016, the Department proposed to do just that.
Unfortunately, the Trump administration ignored the ACA
requirement and pulled the proposal in 2017. Mr. Wright, at
least anecdotally, I am hearing the problem is getting worse
from providers that claims that they regularly put in to
providers, are being denied, denied, denied, and either they,
or their clients give up. Do you have any comments about claim
denials, and the possible effect of companies like MultiPlan?
Mr. Wright. Thank you for the question. Claim denials is a
big issue for both patients and providers who are trying to
provide care to their patients, and you do not want a plan or
an employer to be judged during an execution, you want
independent review.
You want the ability to appeal if your claim--if your care
was denied, that was medically necessary. Right now, the relief
under ERISA is very limited, and so I think we need to look
into this, and right now we basically even just need the
transparency to even know why the claim denials are happening,
because right now we do not even have that.
We need to be able to know that the timeliness of these
claims, how many claims are filed, what is the rate of denial,
and for what reasons. Then I do think we need to have a greater
look at what kind of relief can be provided under ERISA.
Mr. DeSaulnier. Ms. Schuman, claim denials?
Ms. Schuman. Yes. Well certainly I could not agree more
about the need to have more transparency again for these claim
denials. I will say that there is an important service that
appropriate medical management, and prior authorization plays
without a doubt. Again, I think the need for greater
transparency to understand where those distortions are.
Mr. DeSaulnier. Thank you. I yield back.
Chairman Good. Thank you. I will now recognize myself for 5
minutes. Dr. Fronstin, President Biden and VP Harris have tried
to expand even further, government's role in healthcare,
including as we saw in the video, a Medicare for All, and
lowering the age to qualify for Medicare.
As government control of healthcare expands, like when
Democrats increase subsidies for Obamacare plans, what happens
to employer-sponsored health insurance?
Mr. Fronstin. Yes. We have talked to large employers about
expanded subsidies, and for the most part, it does not affect
what they do. They are concerned about recruitment and
retention. They recognize that their employees value health
benefits more than any other benefit, something I remind my
retirement colleagues of all the time at EBRI.
Small employers--we have not polled them on how subsidies
might affect their behavior, but I would point out to the
degree offer rates have eroded in a small group market, that
was happening before the ACA passed, so I think its premiums
are driving that more so, and the ones that continue to offer
coverage are doing so, I think because of business reasons.
They are concerned about recruitment and retention, and
even with enhanced subsidies, they are still going to be
concerned about recruitment and retention.
Chairman Good. No question about it. A CBO report estimates
3 and a half million people would leave employment-based
coverage if Democrats are successful in permanently expanding
eligibility for enhanced Obamacare subsidies. Why do you think
government wants to move more people--why do you think
government wants to move more people from a quality private
healthcare plan, to a more expensive one, fully paid for by the
taxpayer? Why would the government want to do that?
Mr. Fronstin. They are different markets, and they serve
different purposes. The employment-based market is, you know,
those are groups that are formed for reasons other than the
provision of health insurance. They are considered a natural
group, and the non-group market, it is different, right?
It is people that cannot get coverage through their job,
maybe they are in between jobs, subsidies are much higher in
that market. I think they are temporary because of people
moving in and out. I do not know that one--certainly one system
has an advantage over the other, but there are purposes that
they both serve.
Chairman Good. Ms. Wade, more small businesses would like
to offer health insurance to their employees, but many cannot
afford it due to the cost of paying for the benefits, the
reporting requirements, the bureaucratic burden of offering
employer sponsored plans, but how can Congress make it easier
for more small businesses to manage this bureaucracy that comes
with operating a healthcare plan?
Ms. Wade. First of all, businesses--16 percent are in the
self-insured markets, so protecting ERISA, and allowing them to
still have the flexibility and affordability of offering those
sorts of plans to their employees is hugely important.
Expanding the marketplace for the fully insured market and
offering association health plans. Those sorts of tools that
they can use to better access affordable plans that they can
offer their employees. They are competing with larger
businesses for talent that are better able to afford these
benefits, and the labor market is still quite difficult for
them, and a challenge in recruiting and retaining talent at
their business.
Because health insurance is the primary benefit that they
are offering, or would like to offer, having that marketplace
be affordable and flexible for them is important.
Chairman Good. I am glad you mentioned it. I introduced,
and this Committee passed, the Self-Insurance Protection Act,
which prevents Federal regulators from redefining and
regulating stop loss insurance, like a traditional health
insurance. Many employers, as you know, choose to self-insure,
and they purchase the stop loss insurance to protect themselves
from the catastrophic claims.
Why would some want to make it more difficult, some on the
other side, for businesses to obtain stop loss insurance,
unless it's just to prevent them from being able to provide
private insurance?
Ms. Wade. Without having that ability for the small
business owners in the self-insured marketplace, it would be
catastrophic for them in being able to offer the benefit to
their employees and mitigating the catastrophic risk that they
might incur with high costs associated with it.
Protecting stop loss insurance, making it widely available
to small business, is crucial in keeping that marketplace
available to them.
Chairman Good. Very good. Thank you. All right. We are
going to go to Ranking Member DeSaulnier, for his closing
remarks.
Mr. DeSaulnier. Thank you, Mr. Chairman. Thank you to all
the witnesses. I appreciate you being here. First, a comment
just on this idea that universal health care versus a complete
free market. I think what the Congress has tried to do over the
years is balance, is to create an avenue for the private sector
and employers.
As a former employer, who provided healthcare for my
employees, and some of the struggles we had when employees
actually needed to use that, and how confused they were about
their copays. I can remember instances where employees were
crying because they could not afford their copays, and never
understood the documentation.
This balance between the private sector and creating
employer/employee good relationship, and NFIB, I was once a
member when I was a small business owner, having that balance
of a good responsible employer to good, valued employees,
healthcare benefits are really important.
Healthcare benefits that are easy for the employer, and the
employee to understand, and require value, good quality of
care. Too much of this hearing has been about costs, costs,
cost. Cost is only important if you get value in exchange for
the cost. This idea, Mr. Chairman, with all due respect, that
it is one way or the other, just is not the American model.
It is a balance, and I grant you there are some people who
would like to switch that balance on both sides. Preemption is
important when it is a national issue, but there are states
issues. There was another interesting debate today, take the
other side of states' rights, I guess in this instance, which I
do not regularly do, but maybe from California, as a Member of
Congress, I have become more of a states' right person than I
was before, Mr. Wright, because I knew you when we both worked
in Sacramento.
This balance is important. I do not think it is a choice of
either/or. Then last, on universal health care. We already have
a universal health care system in this country, it is just
really bad. If you call 911, the ambulance will show up. If you
go to the emergency room, you will get care. It is called
indigent care, and basic adult care. It is required under law.
It is just that it does not pay. The idea that somehow this
free market is the heaven on earth that we could get, just is
not reality. If we had an efficient delivery system of health
care system that had a high quality of care, both in the
employer/employee market, and also Medicare and Medicaid,
people would live longer lives in this country.
We would have a lower GDP ratio for health care, and we
would have a better system. Maybe not perfect, but certainly
better than it is right now. ERISA was enacted with a goal of
protecting workers and their families. Given the dramatic
changes since 1974 when ERISA was enacted, it is clearly
evident that ERISA must evolve to effectively address new
challenges and opportunities that improve the efficiency of our
health care system.
House Democrats' primary goal is to support and build our
middle class from the bottom up, and the middle out. This
involves not only addressing the immediate needs of workers and
their families, but also creating an environment where middle
class prosperity can thrive, and small businesses are a part of
that middle class.
Ensuring that ERISA has strong consumer protections reduces
waste, inefficiencies, and excessive costs, and enhances
transparency in this critical effort. Congressional Democrats
are committed to fighting for working families, and we have
made significant strides through recent legislative
achievements to do just that, including passing the Affordable
Care Act, the American Plan Rescue Act, and fighting the
attempts by our Republican colleagues to overturn the
Affordable Care Act, multiple attempts, including protections
for consumers for pre-existing conditions.
The Inflation Reduction Act, these historic pieces of
legislation, all of them, have increased coverage, protected
consumers from nefarious practices, and lowered costs for
millions of working families and seniors. Notably, the
Inflation Reduction Act capped out--of-pocket drug costs at
$2,000.00 a year for Medicare.
Capped insulin cost at $35.00 a month for seniors and
secured significant price reductions through drug price
negotiations. The negotiations alone will save an estimated 1
and one-half billion dollars for nearly 9 million seniors. We
must remain vigilant against proposals like those in the
Republican's 2025 that seek to roll back these critical reforms
and eliminate the protections in the Affordable Care Act.
Our work is far from finished. We must continue to build on
these successes, and focus on creating a fair, more efficient
system, that benefits all workers, families, and businesses.
Thank you, and I yield back.
Chairman Good. Thank you. I now recognize myself for a
closing statement. It was interesting to hear the minority
members reaction to the video we saw today, with the unedited
words of Vice President Harris, without commentary, presented
by none other than CNN and the Washington Post. I guess this is
because she has been trying to express different positions over
the past few weeks, than she has expressed over her entire
career prior to that time.
As noted last week by none other than Bernie Sanders, whose
Medicare for All bill she cosponsored. Democrats seem to know
that Americans do not support their actual positions, whether
it is open borders, non-citizens voting, electric vehicle
mandates, appliance prohibitions, anti-police policies, pro-
criminal policies, higher taxes, more spending, and controlled
by government, and yes, government mandated, government
provided healthcare.
This is a policy discussion, and the video revealed the
Vice President's policy statements, relative to the topic at
hand. The American healthcare system is far from perfect, but
most Americans prefer their private health insurance offered by
their employer. Naturally, Democrats do not want Americans to
know that they want to eliminate that.
On behalf of the 153 million Americans whose healthcare
benefits rely on ERISA, I think we have learned a lot today.
Government, especially the Biden Harris administration,
continues to burden employer sponsored health insurance through
over regulation. Meanwhile, they prop up the expensive
Obamacare plans, and daydream about single payer Medicare for
All.
Government should actually though decrease intervention in
healthcare markets, not increase it. Americans want flexible,
innovative healthcare, not one size fits all. Employers have a
strong incentive to keep healthcare costs low, to help their
own bottom line, and they have an incentive to offer good
benefits to keep their workers.
Democrats never seem to understand that. For 50 years,
ERISA has provided the guardrails to protect individuals, while
allowing employers to develop robust benefit plans. We can
amend ERISA while protecting it, because in doing so we defend
private insurance and shield Americans from devolving into a
single-payer system.
We thank the witnesses today for your time and testimony,
and without objection, there being no further business, this
Subcommittee stands adjourned.
[Whereupon, at 12:10 p.m., the Subcommittee was adjourned.]
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