[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]

SMALL BUSINESSES AND PPACA: IF THEY LIKE THEIR COVERAGE, CAN THEY KEEP
IT?

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

HEARING

before the

SUBCOMMITTEE ON HEALTHCARE AND TECHNOLOGY

of the

COMMITTEE ON SMALL BUSINESS
UNITED STATES
HOUSE OF REPRESENTATIVES

ONE HUNDRED TWELFTH CONGRESS

FIRST SESSION

__________

HEARING HELD
JULY 28, 2011

__________

[GRAPHIC] [TIFF OMITTED] TONGRESS.#13

Small Business Committee Document Number 112-029
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HOUSE COMMITTEE ON SMALL BUSINESS

SAM GRAVES, Missouri, Chairman
ROSCOE BARTLETT, Maryland
STEVE CHABOT, Ohio
STEVE KING, Iowa
MIKE COFFMAN, Colorado
MICK MULVANEY, South Carolina
SCOTT TIPTON, Colorado
CHUCK FLEISCHMANN, Tennessee
JEFF LANDRY, Louisiana
JAIME HERRERA BEUTLER, Washington
ALLEN WEST, Florida
RENEE ELLMERS, North Carolina
JOE WALSH, Illinois
LOU BARLETTA, Pennsylvania
RICHARD HANNA, New York
NYDIA VELAZQUEZ, New York, Ranking Member
KURT SCHRADER, Oregon
MARK CRITZ, Pennsylvania
JASON ALTMIRE, Pennsylvania
YVETTE CLARKE, New York
JUDY CHU, California
DAVID CICILLINE, Rhode Island
CEDRIC RICHMOND, Louisiana
GARY PETERS, Michigan
BILL OWENS, New York
BILL KEATING, Massachusetts

Lori Salley, Staff Director
Paul Sass, Deputy Staff Director
Barry Pineles, General Counsel
Michael Day, Minority Staff Director

C O N T E N T S

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OPENING STATEMENTS

Page
Hon. Renee Ellmers............................................... 1
Hon. Cedric Richmond............................................. 2

WITNESSES

Mr. Steven B. Larsen, Deputy Administrator and Director, Center
for Consumer Information and Insurance Oversight, Centers for
Medicare and Medicaid Services, Washington, DC................. 4
Dr. Douglas Holtz-Eakin, President, American Action Forum,
Washington, DC................................................. 10
Mr. Brian Vaughn, President, Nearly Famous, Inc., Douglas, GA.... 13
Mr. William Dennis, Jr., Senior Research Fellow, National
Federation of Independent Business, Washington, DC............. 15
Mr. Timothy Stoltzfus Jost, Robert Willett Family Professor of
Law, Washington and Lee, University College of Law, Lexington,
VA............................................................. 16

APPENDIX

Prepared Statements:
Mr. Steven B. Larsen, Deputy Administrator and Director,
Center for Consumer Information and Insurance Oversight,
Centers for Medicare and Medicaid Services, Washington, DC. 31
Dr. Douglas Holtz-Eakin, President, American Action Forum,
Washington, DC............................................. 40
Mr. William Dennis, Jr., Senior Research Fellow, National
Federation of Independent Business, Washington, DC......... 55
Mr. Brian Vaughn, President, Nearly Famous, Inc., Douglas, GA 57
Mr. Timothy Stoltzfus Jost, Robert Willett Family Professor
of Law, Washington and Lee, University College of Law,
Lexington, VA.............................................. 67
Questions for the Record:
Chairwoman Ellmers Questions for Larsen...................... 78
Chairwoman Ellmers Questions for Jost........................ 81
Answers for the Record:
Larsen Answers for Ellmers................................... 83
Jost Answers for Ellmers..................................... 95
Additional Materials for the Record:
``Health Reform's Grandfathering Rules Likely to Raise
Costs,'' by Judith Messina; Bloomberg News................. 102
``Small-Business Health Care Tax Credits Are Having a
Miniscule Impact,'' by Salley Pipes; Forbes................ 104
``Healthcare Law Could Leave Families with High Insurance
Costs,'' by Julian Pecquet; The Hill....................... 106
Associated Builders and Contractors, Inc. Letter for the
Record..................................................... 108
American Bankers Association Letter for the Record........... 110

SMALL BUSINESSES AND PPACA: IF THEY LIKE THEIR COVERAGE, CAN THEY KEEP
IT?

----------

THURSDAY, JULY 28, 2011

House of Representatives,
Subcommittee on Healthcare and Technology,
Committee on Small Business,
Washington, DC.
The Subcommittee met, pursuant to call, at 10:05 a.m., in
room 2360, Rayburn House Office Building, Hon. Renee Ellmers
(chairwoman of the Subcommittee) presiding.
Present: Representatives Ellmers, King, Richmond, and
Altmire.
Also Present: Representative Kingston.
Chairwoman Ellmers. All right. We are going to go ahead and
get started. Good morning to everyone, and I call the hearing
to order.
I want to thank the witnesses on both panels. We will have
two panels today who are testifying, and we certainly
appreciate their attendance and participation in this important
Subcommittee hearing.
Although the health care law won't be fully implemented
until 2014, businesses are already feeling the effects. A study
released this week by the National Federation of Independent
Business found that small firms are worried that the law could
lead to higher taxes, more administrative burdens, and bigger
budget deficits without lowering costs or making Americans
healthier.
Under the law, many small business owners will be required
to offer coverage to their employees or pay a penalty. And the
small business tax credit that has been touted to offset the
cost of health insurance is, in reality, a temporary and a
narrow one, where the full credit applies only to the smallest
of businesses.
If your firm has more than 25 employees, you are one of the
23 million self-employed, you qualify for no credit whatsoever.
We have heard small businesses are concerned that
regulatory requirements on insurers, such as the medical loss
ratio, may drive some carriers out of the market, resulting in
fewer options and premium hikes. Small firms are uncertain
about whether they will be able to continue offering coverage;
if so, at what cost; and if not, what their penalties will be
and what the coverage will cost taxpayers.
This is all while our economy is still very fragile, an
economy that is adding fewer jobs than forecast, and still has
a high unemployment rate. In this environment, it is not
surprising that small business owners continue to be hesitant
to create jobs, expand or invest. And there are more
regulations ahead.
During the health care debate, one of the most repeated
assurances was that if you like your current health care
coverage, you would be able to keep it. However, for a number
of reasons, a small business may be driven out of its current
plan.
The Department of Health and Human Services predicts that
over half of all employers and up to 80 percent of small firms
may relinquish grandfather status by 2013. This means that
small business owners and workers may be forced to switch to
higher-priced plans or drop insurance altogether.
Although the goal of the health care law may have been to
make health care insurance more accessible, its taxes,
mandates, regulations, and administrative burdens are causing
many small businesses, our best job creators, to postpone
hiring and expanding.
Again, I thank the witnesses who are here with us today for
participating. I look forward to hearing their input on how we
can help to reduce the impact of some of the health care law's
uncertainty, mandates, regulations and requirements for our
small businesses.
I now yield to Ranking Member Richmond for his opening
statement.
Mr. Richmond. Thank you, Madam Chairwoman. Thank you for
yielding.
Today's hearing will focus on the health insurance
landscape for small businesses since the passage of the health
care bill.
Currently, employers are the principal source of health
insurance in the United States, providing benefits for more
than 158 million people. Given the role of business in
providing insurance, two questions have been raised about the
Affordable Care Act. First, will small firms be able to keep
existing health plans and, equally important, how will the
Affordable Care Act affect small firms' decision to offer
coverage? These are the questions we will address today.
Small businesses face numerous challenges when choosing a
health plan. This includes making tough choices about coverage,
benefits, which physician should be part of the insurer's
network and what co-pays should apply to services.
Yet with all these challenges, cost remains the greatest
barrier to coverage. According to one report, over the last
decade health insurance premiums have increased 113 percent.
The Affordable Care Act was enacted to lower costs and
create more quality health care choices. Still, the legislation
has not been without its critics. Some have argued that small
firms will not only lose their ability to keep their plan, but
most will drop coverage altogether. We will hear from the
administration and witnesses on both of these issues.
One, on the matter of retaining current health plans, CMS
has issued regulations outlining how firms can maintain so-
called grandfather status. The regulation provides latitude for
firms to provide changes because of rising prices. It also
clarifies for firms what they need to do to keep their plan
despite ACA changes.
While protecting small businesses' ability to retain plans
is important, the reality is many firms will make changes.
Historically, small firms change plans due to rising prices or
different benefit needs. Now, small firms will be afforded
better service and choice when choosing a new plan.
The Affordable Care Act not only creates new incentives but
maintains laws that encourage employers to purchase insurance.
Most notably, the employer-provided benefits remain tax free
and employees can still pay premiums on a pretax basis. And
since 2010, small firms have been eligible for a new health
insurance tax credit.
One of my constituents, Ms. Verna Williams, owner of Nola
Health Care LLC, provides a great example of how firms are
using this successfully. She owns a private health clinic in
New Orleans and was able to avail herself of the new tax
credits. Now, all 12 of her employees have health care
coverage, and she said she was very pleased with the new health
care legislation and its benefits for her employees.
In addition to the incentives, insurance reforms are
already on the books that benefit small firms. No longer can
insurance companies discriminate based on preexisting
conditions or raise premiums without adequate justification.
Again, starting in 2014, private health insurance exchanges
will create a virtual market for buying insurance. Exchanges
will provide another option and enhance competition, something
lacking in the small-group market.
With all these changes, what will all of these changes mean
for small businesses? One study predicted that employer-
sponsored insurance could shrink by over 20 percent. However,
others, such as those by the RAND Corporation and the Robert
Wood Johnson Foundation, found that small firms would increase
coverage.
This hearing will give members of the Committee the
opportunity to discuss the Affordable Care Act and its
implementation. Ensuring that small firms can keep their plan,
while making coverage more affordable, is critical.
I want to thank Director Larsen and the witnesses that have
taken time out of their busy schedules to be here today. I look
forward to hearing from you all.
With that, I yield back, Madam Chair.
Chairwoman Ellmers. Thank you, Mr. Richmond.
Chairwoman Ellmers. As you can see, some of our other
Committee members have not arrived yet, but I will state for
the record that if they have any opening statements they can
submit that for the record.
I would like to take a moment just to explain the timing
the lights. You will have 5 minutes to deliver your testimony.
The lights will start out as green. When you have 1 minute
remaining, the light will turn yellow. Finally, it will turn
red at the end of your 5, minutes and I ask you to try to
adhere to your 5-minute time limit.
You have the button there to push to speak into the
microphone.
Our first witness is Mr. Steve Larsen, who is director of
the Center for Consumer Information and Insurance Oversight, or
the CCIIO, with the Centers for Medicare and Medicaid Services.
Prior to his current position, Mr. Larsen served as director of
the Division of Insurance Oversight at CCIIO.
Welcome, Mr. Larsen. You will have 5 minutes to present
your testimony. Thank you.

STATEMENT OF STEVEN B. LARSEN, DEPUTY ADMINISTRATOR AND
DIRECTOR, CENTER FOR CONSUMER INFORMATION AND INSURANCE
OVERSIGHT, CENTERS FOR MEDICARE AND MEDICAID SERVICES,
WASHINGTON, DC

Mr. Larsen. Good morning, Chairwoman Ellmers and Ranking
Member Richmond and members of the Subcommittee. Thank you for
the opportunity to discuss how the Affordable Care Act is
improving the affordability, the accessibility, and the quality
of health insurance available to small businesses and their
employees.
Providing and maintaining health insurance coverage for
employees has been a challenge for small businesses for many
years. States have struggled for decades, really, to improve
their small-group health insurance market, and I know this from
my many years of experience as insurance commissioner in the
State of Maryland.
Small businesses pay significantly more than large firms
for the same health insurance policies. Some estimates put that
at about 18 percent more. There are a number of reasons for
this. Small businesses lack the purchasing power that large
employers have, administrative costs for insurers in handling
small businesses are much higher than for large businesses.
Small businesses often don't have the human resources staff to
navigate through the difficult process of choosing between
health plans.
Prices for insurance for small businesses can be more
volatile, due to the smaller risk pool, compared to large
businesses, and employees in small businesses are subject to
medical underwriting in many States. So this means that the
rates that small businesses are charged can spike if just a
single employee becomes very ill. The Affordable Care Act
addresses these challenges in the market and helps close the
gap between small- and large businesses' ability to offer
health insurance to their employees.
First, starting in 2014, small businesses will be able to
reduce administrative costs and pool their buying power by
purchasing insurance through the exchanges. The exchanges are
State-based, competitive marketplaces for buying private health
insurance. Small businesses will be able to buy health
insurance through a part of the exchange called the SHOP.
SHOPs will give small businesses and their employees many
of the advantages of large employers that large employers have
today, such as more choice, more competition, and more clout in
the marketplace. These SHOP exchanges are a one-stop shop where
small businesses and their employees will be able to easily
compare health plans, get answers to questions, and then enroll
in high-quality health plans that meet their needs.
Health plans that participate in the State exchanges will
compete for business on the basis of price and quality, and
this type of market competition has the power to drive
improvement in both plan quality and affordability.
We recently issued draft regulations which will provide
States the flexibility to provide small employers with a range
of options on how the employers offer coverage to their
employees. For example, a small business participating in the
SHOP exchange may choose a level of coverage and a level of
contribution towards that coverage, and then employees will
choose among the health plans available on the exchange within
that level of coverage offered by their employer. Or, employers
may provide to their employees a broader range of options, such
as shopping for any level of coverage among competing health
plans.
Under the proposed regulations, the employer would write a
single check to the SHOP, reducing administrative burdens. The
SHOP, as a premium aggregator, would handle the administrative
functions that can burden the small business owner. SHOPs will
simplify the employee decisionmaking process by providing side-
by-side comparisons of health plans' premiums, benefits, and
cost sharing. Not only will the Affordable Care Act benefit
small employers by enabling them to pool their buying power, it
will also protect them from premium spikes caused by an
employee's illness.
Beginning in 2014, the ACA prohibits new health plans from
rating on the basis of health status or claims history. In
addition, the law limits how much insurers can increase rates
based on employees' ages. These new rating limitations will
help make small businesses' health insurance rates fairer, more
predictable, and easier to understand.
In addition, limits on health plans' medical loss ratios
will also save small businesses money, as insurers that fail to
meet the MLR standard will provide rebates.
Finally, the law established a small business tax credit
that is making health coverage more affordable for small
businesses. The tax credit is designed to encourage both small
businesses and tax-exempt organizations to offer health
insurance coverage to their employees for the first time or to
maintain coverage that they already offer.
Small businesses are already benefiting from the Affordable
Care Act and those benefits will expand dramatically as the ACA
continues to take effect.
Thank you for the opportunity to appear before you today to
discuss the Affordable Care Act's critical provisions to
support small businesses' ability to offer health insurance to
their employees.
Chairwoman Ellmers. Thank you, Mr. Larsen.
Chairwoman Ellmers. And I will begin the questioning.
Generally, grandfathering should allow you to keep the
coverage you had when the health reform law was enacted, with
some exceptions. The June 17, 2010, and November 17, 2010,
rules on grandfathering list several changes that disqualify a
plan from being grandfathered.
The rules seem to leave open whether other changes will be
disqualified, and leave open the possibility of additional
administrative guidance, to explain how plans must comply to
continue to be grandfathered, I am wondering how can small
businesses count on grandfathering if the guidance is vague and
the rules may change as we go along?
Mr. Larsen. Sure. Well, as you point out, we put out the
initial interim final rule back last summer, which laid out
kind of broad categories in which small businesses and health
insurers have flexibility to alter some provisions of their
health coverage, but not so much that it really changes the
fundamental nature of the coverage.
We received and have reviewed various comments on many
aspects of that regulation. We did, in fact, amend the interim
final rule to provide actually more flexibility to businesses
and small businesses to maintain their existing coverage by
allowing them to, for example, switch carriers. If they wanted
to switch carriers, if they thought they could get a better
deal.
So, in fact, although we have amended the initial guidance
that we put out last summer, we have done so in a way that
really provides more flexibility to small businesses and to the
health insurance issuers that provide that coverage.
Chairwoman Ellmers. I have another question for you at this
time. Small businesses are concerned about the possible
mandates in the health care law's minimal essential benefits
package. Because many new services, treatments, are likely to
be required, the cost of premium is also likely to increase.
What can you tell us about the Institute of Medicine's
forthcoming recommendations on the essential benefits package?
Mr. Larsen. Well, I can't tell you much about what they are
going to say. We haven't received their recommendation. But if
I could just summarize the process that we will follow, and I
would add that we are, I think like you, very aware and tuned
into the need to make sure that the package of essential health
benefits is an affordable package.
There is kind of a multistep process that we are following
at HHS. The first step was that the Department of Labor
performed a survey of employers to gauge what were the typical
benefits that are offered in employer-sponsored coverage today,
and we have got that survey. That has been published.
The Secretary also, as you point out, did ask the Institute
of Medicine to recommend to us methodologies or ways to think
about how we should define the package of essential health
benefits. But I do want to be clear, because I know there has
been some confusion on this. The IOM is not the body that will
be charged with defining what that list is. That is left to the
HHS, and we will do that. And I think we have announced
previously that our objective is to have that guidance out
sometime this fall. We know there is a lot of interest in that,
both in the States and among businesses and among insurers, so
we are hoping to get that guidance out this fall.
Chairwoman Ellmers. So basically you do anticipate that
there will be additional administrative guidance on the
grandfathering?
Mr. Larsen. Well, on the essential health benefits, yes. On
the grandfathering, I can't speak to that at this point. I
don't think we are anticipating anything, but we continue to
review these, and as they need to be tweaked and improved, if
that need arose, then we would look at that as an opportunity.
Chairwoman Ellmers. Okay. I now yield to Congressman
Altmire for his questions.
Mr. Altmire. Thank you, Madam Chair.
Director Larsen, thank you for being here. Economists, like
Dr. Holtz-Eakin, who we are going to hear from shortly, have
predicted that the employer mandate will lead to dramatic
declines in employer-sponsored coverage, as you well know.
In your view, will most small firms drop their coverage or
simply pay the penalty? And what do you expect they will--do
you expect that they will continue providing health care to
their workers? What do you expect the outcome will be?
Mr. Larsen. We do expect small employers to continue to
offer employer-based coverage. It is really a cornerstone of
our economic system, of our employer-based insurance system.
If you look at a number--and I know there are a number of
different studies out there, but if you look at, for example,
the RAND analysis or the Urban Institute--there are those two--
for example, I think predicted significant increases in the
offer rate, not decreases but increases.
For example, RAND predicted that you would see an increase
for very small businesses. I think, for example, less than
nine, nine or less employees, from about 50 percent today to
about 70 percent in the future under the ACA, and its numbers
were similar for The Urban Institute.
Mr. Altmire. And regarding the medical loss ratio in
particular, as you know, the ACA requires insurance companies
to spend at least 80 percent of their premiums they collect on
medical care. What will this mean for small firms and how will
it affect the cost of coverage, in your view?
Mr. Larsen. The medical loss ratio provision of the ACA is
a very important provision and helpful provision to small
businesses and individuals because it applies to individual
purchasers as well. It helps to provide value to small
businesses when they are paying their insurance premiums by
ensuring that issuers are not spending inordinate amounts on
administrative expenses. So it drives efficiency in the issuers
for the insurance company, and that creates value for the
premium dollars that small businesses are paying.
Mr. Altmire. Now the companies would argue that it doesn't
just drive efficiency, they might dispute that on its face, but
they also would say that it is going to drive small insurers
out of the health insurance market entirely.
Do you have a response for that?
Mr. Larsen. We don't think that is the case and we haven't
seen that. I guess I would also hasten to add that the
Affordable Care Act specifically provides States and the
Secretary with the flexibility to address, at least in the
individual market, the medical loss ratio provisions.
In the small-group market, in fact, many States already had
in place medical loss ratio targets. I think there were around
10 that were already at 80 percent. There were a handful that
had less than that, so that was already present in the
marketplace, and many insurers were already used to pricing to
an 80 percent level.
Mr. Altmire. Do you envision CMS playing a role in and
ensuring competition in the market? Were you given that
authority under the law and are you going to----
Mr. Larsen. Well, I mean, when we get to the exchanges in
2014, competition is kind of the cornerstone of what we are
trying to accomplish in the exchanges. And we will be working
actively with the States as they set up their State exchanges.
And to the extent that we are operating a federally facilitated
exchange, we will do everything we can to make sure that there
is competition among insurers. The exchanges are all about
competition among private carriers to the benefit of, you know,
small businesses and individuals.
Mr. Altmire. And last question, Madam Chair. Since 2010,
eligible small firms have had the ability to obtain a health
care tax credit. And according to the NFIB information provided
to this Committee, 1.1 million small businesses are eligible
for either a partial or full credit. And while I realize the
IRS administers that credit, does CMS have any estimates on
employers taking advantage of the credit and how it has lowered
their costs?
Mr. Larsen. Yes, I know that there are varying estimates
about both the eligibility rate and the uptake rate, and some
of it is survey-based. We are currently working with our
colleagues over at Treasury and IRS to get an estimate on what
that is. I apologize I don't have it for you here today, but we
hope to get that soon.
Mr. Altmire. Great. Thank you.
Chairwoman Ellmers. Thank you. I have a couple more
questions for you, Mr. Larsen.
Small business owners have told us the new law and its
regulations are vague, and we mentioned that already, and they
don't know what is required of them. For example, many aren't
sure if the employer mandate applies if they have employees who
are working 30 hours a week or less.
If they currently offer insurance to the individual
employee, they aren't certain if the new law requires them to
also cover the employee's family. How are the small business
employers, who don't have the benefit of large administrative
staffs or outside benefit counselors to advise them, to be
expected to comply with the complicated law and its numerous
regulations? Can you clarify just some of that for us?
Mr. Larsen. Yes, and that is a very important question. I
think some of the surveys that have done--and although we don't
necessarily agree with many of the points that came out in the
NFIB report or the McKinsey report, I think one thing that
comes through clearly in those is that there still remain a lot
of questions among small business owners. Either they don't
understand the law, or they don't feel they have enough
information. And I think that is an important point that we
have to take note of, that between now and 2014 we have to
continue our efforts to reach out to small businesses and
educate them.
There are some tools that will be available, for example,
in the exchanges. There is a role of these entities called
``navigators,'' which are going to help people understand the
health care law, understand how to access the exchanges. But
there is more work to be done there, and I think there has been
confusion, some misinformation, and I think it is something
that we definitely need to focus on between now and 2014.
Chairwoman Ellmers. New regulations require insurers to
spend 80 to 85 percent of premiums on direct care for patients
rather than administrative costs. These requirements may be
difficult for small insurers to meet, driving them out of the
market, limiting consumer choice, and raising the cost of
insurance and, as the market decreases, that is always that
risk.
How can small insurers compete when they don't have the
resources or economies of scale to do so?
Mr. Larsen. Well, we are certainly sensitive to the need to
maintain competition.
Ultimately, the Affordable Care Act provides some
flexibility in the individual market, but less flexibility to
modify the MLR standard in the small-group market. However,
again, I think as I mentioned earlier, there were already
existing in many States a medical loss ratio standard at or
about the standards set out in the ACA, and I think that
provided a benchmark from which carriers, you know, could
launch from.
Chairwoman Ellmers. Interestingly enough, very recently, in
fact last Friday, The Hill newspaper had a front page article
titled, ``Health Care Law Could Leave Families with Higher
Costs.''
The article describes the debate over what the story terms
a major provision of the health care reform law, which provides
that if a worker has employer-based coverage that is affordable
for the employee only, the family is expected to take the
employer coverage even if it is unaffordable.
Is this the correct interpretation and can you clarify some
of that for us?
Mr. Larsen. We are actually looking at that very issue,
which is the interpretation of the application of the tax
credit to the individual, to the family, and who qualifies at
what point? When an employer makes an offer, is that binding on
the dependence of the family members of the employee?
We are anticipating in future guidance to clarify this and
a number of issues relating to the application of the tax
credit and how it works. You know, we put out a first--kind of
a wave of guidance just a couple of weeks ago on the exchanges.
And the next phase of that, which will deal with eligibility
and enrollment and the application of the tax credit, hopefully
will clarify some of those issues.
Chairwoman Ellmers. And then I have one last question. This
also addresses one of the issues that Mr. Altmire referred to.
The tax credit may apply temporarily and narrowly if the
business has fewer than 25 full-time or equivalent employees
making an average annual wage of $50,000 or less. But what
about every other small business? What advantages do they have
as far as a tax credit?
Mr. Larsen. Well, you are correct in that the tax credit
was targeted towards the smallest of the small businesses with,
you know, under nine getting the maximum credit, and you can
get up to 25, depending on what the wages are that you pay your
small business.
You know, one of the reasons why it was targeted, because
those were the small businesses that had the lowest offer
rates. As you move up to, say, employers with 50 employees, you
have offer rates, offer rates of insurance coverage that can be
in the 80 to 90 percent rate.
So the tax credits were targeted towards that segment of
the market that was most in need of help in terms of getting
the offer.
There are still many benefits, as I mentioned, in the
Affordable Care Act for businesses that are larger than 25, the
rating restrictions are very important. Small businesses, and I
know this from my own experience, in many States small
businesses get rated up if they have sicker members. And so
that practice is going to go away. It is going to create a lot
of fairness and benefit.
And then the general benefits of the exchange, much lower
administrative costs. The CBO found that as well for--and that
applies to all small businesses, not only just those under 25
employees.
Chairwoman Ellmers. So you do see some possible changes or
flexibility in the whole----
Mr. Larsen. Well, there are benefits to small businesses.
But you are right, the tax credit is targeted to the smaller
small businesses because, again, it was concluded those are the
ones that have the lowest rates of insurance coverage for their
employees.
Chairwoman Ellmers. Thank you, Mr. Larsen. I just would
like to ask if Mr. Altmire has any additional questions. Okay.
Well, Mr. Larsen, I thank you for joining us today to
answer our questions and providing your insight on these
issues. We will continue to closely follow them and want to
work with you and help ensure that small businesses have
flexibility and choices in their health care coverage
decisions.
I want to suggest that Mr. Larsen ask a member of his staff
to remain here during the testimony of the second panel. And
would you please identify--and I believe we have already
spoken, so, thank you, perfect, wonderful.
And, thank you again, Mr. Larsen, for your time.
Mr. Larsen. Great, thank you.
Chairwoman Ellmers. I truly appreciate it.
Chairwoman Ellmers. And now I would like the second panel
to come forward.
Wonderful. Let's go ahead and get started. Thank you so
much for coming today to be with us for this Subcommittee
hearing.
Our first witness is Dr. Douglas Holtz-Eakin. Dr. Holtz-
Eakin is president of the American Action Forum. He served as a
commissioner of the congressionally chartered Financial Crisis
Inquiry Commission from 2009 to 2011, and director of the
Congressional Budget Office from 2003 to 2005. Dr. Holtz-Eakin
received his B.A. in mathematics and economics from Denison
University and his Ph.D. in economics from Princeton. Welcome,
Dr. Holtz-Eakin, and you have 5 minutes to present your
testimony.

STATEMENTS OF DOUGLAS HOLTZ-EAKIN, PRESIDENT, AMERICAN ACTION
FORUM, WASHINGTON, DC; WILLIAM DENNIS, JR., SENIOR RESEARCH
FELLOW, NATIONAL FEDERATION OF INDEPENDENT BUSINESS,
WASHINGTON, DC; BRIAN VAUGHN, PRESIDENT, NEARLY FAMOUS, INC.,
DOUGLAS, GA, TESTIFYING ON BEHALF OF THE UNITED STATES CHAMBER
OF COMMERCE; AND TIMOTHY STOLTZFUS JOST, ROBERT WILLETT FAMILY
PROFESSOR OF LAW, WASHINGTON AND LEE UNIVERSITY COLLEGE OF LAW,
LEXINGTON, KY

STATEMENT OF DOUGLAS HOLTZ-EAKIN

Mr. Holtz-Eakin. Well, thank you, Chairwoman Ellmers and
Acting Ranking Member Altmire. I appreciate the chance to be
here to talk about the Affordable Care Act's small businesses
and employer-sponsored insurance. And you have my written
testimony which I submit for the record.
Let me just make a couple of points. The first point, and I
think the overriding one, is that ultimately the ability of
small businesses to offer insurance is contingent on the health
of those businesses and their ability to grow. And the
Affordable Care Act contains many provisions that I think are
detrimental to the abilities of small businesses to prosper and
grow.
There are taxes, the 3.8 percent investment tax that is
going to be a direct hit on small businesses.
There are a large number of mandates and penalties, and the
regulatory implementation I think is daunting to any small
business. We are in an environment where in 2010 we had a
record number of Federal Register pages. That was prior to the
implementation of the Affordable Care Act and Dodd-Frank and a
whole bunch of other things. So this adds to the regulatory
burden.
And even some of the so-called help, the tax credit in
particular, is structured in a way that penalizes growth. If
you had workers, if you pay higher wages, even this temporary
tax credit gets scaled back and it is ultimately a penalty
against those who succeed. And so the structure of the ACA is
not one that I would call good economic policy to promote
growth, especially on small businesses.
The second is that the Affordable Care Act is actually
going to raise insurance costs. There is now consensus that it
fails to bend the health care cost curve, which is the
fundamental driving force underneath the premiums, and small
businesses will suffer from that.
It has $500 billion in new taxes. Many of them are taxes
that are going to go directly to the premium bottom line. My
testimony outlines the impact of the so-called premium tax on
health insurers. There is medical device taxes. All of these
are higher costs in the food chain that lead to higher premiums
that is going to hurt the ability of a small business to
continue to offer insurance and lead many of them to elect to
drop their coverage and/or never offer it to begin with.
The third point, I guess, is this issue that Mr. Altmire
mentioned with the previous witness, and that is the question
of the incentives for employers to drop coverage and send their
employees to the exchanges.
And there have now been a number of studies, as was
mentioned, one that I did with Cameron Smith, my colleague,
that looked at the pure financial incentives for employers and
employees to mutually agree that it would be in their financial
interest to provide the insurance through the exchanges. And we
concluded that up to 35 million American workers would benefit
from this arrangement, and that their employers would agree
that they should go off the exchanges. The only loser in that
is the taxpayer who has to pick up an enormous tab.
A recent paper by Cornell Professor Richard Burkhauser and
colleagues comes to roughly the same conclusion. I am aware
there are other studies that say that, no, that won't happen.
Their leading argument appears to be that, well, it won't
happen because we have always offered insurance. But in the
face of a dramatic policy change, I don't see why that is a
compelling argument.
We are now seeing the leading edge of evidence. We have
survey evidence from McKinsey, from PriceWaterhouseCoopers, and
I will let Mr. Dennis speak for the National Federation of
Independent Business, suggesting that in fact this financial
impact is not only real, it will be pursued by businesses.
And so I think this is a serious concern because the
subsidies are enormously generous. We are talking about $7,000
for someone making $59,000 in income in 2014. This is well over
10 percent of their income. It would be financially irrational
for employees and employers to ignore that kind of money.
And if it is true that many pursue this, budgetary cost of
the insurance subsidies through the exchange is going to
explode. It could easily be double what was in the original
bill. We are all well aware of the financial problems that face
the United States Government. And to have this come in much
more expensive than was budgeted, I think, is an extreme
danger.
Which brings me back to my first point which is, in the
end, it is going to be the environment for small businesses to
grow and prosper that is crucial. There is nothing about
sailing directly toward a debt crisis that is good economic
policy or beneficial for the small business community at the
heart of our debt problems, our explosive entitlements.
And my view is that the Affordable Care Act has a whole
series of upward risks on the budgetary side that make the
possibility of that crisis much higher, and, as a result, have
to be viewed as a threat not just to the economy, but to small
businesses in particular, and certainly to their ability to
continue to offer insurance to their employees.
And I understand the sentiments behind the Affordable Care
Act, but I think on balance its structure is one that hurts the
small business community and doesn't aid it in the end. Thank
you.
Chairwoman Ellmers. Thank you for your comments. And we do
have your testimony, as we do all of our panelists.
I now yield to Representative Kingston from Georgia for the
purpose of introducing his constituent as a witness.
Mr. Kingston. Thank you, Madam Chair. It is a great honor
to be with you on this dais, you and Mr. Altmire, a good friend
of mine from Pennsylvania. And I appreciate all the hard work
that you do on this Subcommittee to try to promote jobs in this
tough economic environment. I appreciate the panel for being
here.
I have a hard deadline at 11 o'clock with another Committee
on which I serve, so I am going to be leaving shortly before
then. But I wanted to say hello and introduce my constituent,
Brian Vaughn. He is no stranger to the struggles of an
entrepreneur. He has been with the Burger King franchise
operation since 1980 and kind of came up through the corporate
structure, working in Florida and in Georgia, and then in the
1990s took the plunge to become a franchisee himself; and,
since that period of time, has bought out his partner and been
on his own with his wife--I am not sure if Cindy is here--but
knows the importance of keeping employees happy by offering a
good compensation package, including a good benefit package,
worker safety, a good environment to work in, and has many
employees who have been with him on the management side for
over 10 years, which is remarkable.
He has four stores in three different cities and also knows
what it is like to compete in this environment and to get the
customers back in when it is very hard on their pocketbooks in
today's economy, but knows all the challenges that small
business people face, really: labor, environmental regulations,
safety regulations, franchise regulations. I think he has been
through it all, but has done it successfully.
So I am very proud to have him as a constituent and as an
example of an entrepreneur. And I wanted to point out also, one
of his jobs before he became an entrepreneur was to recruit
entrepreneurs. So he looked at it, and did not have to take
that plunge, yet he made it anyhow.
So I am proud to have Brian Vaughn here today and I look
forward to his testimony.
Mr. Vaughn. Thank you.
Chairwoman Ellmers. Go ahead.

STATEMENT OF BRIAN VAUGHN

Mr. Vaughn. Chairwoman Ellmers, Congressman Altmire, and
distinguished members of the Subcommittee, thank you for
inviting me to testify before you today on how the new health
care law will impact my business and my employees.
As the Congressman stated, by name is Brian Vaughn and I
own Nearly Famous, Incorporated, which consists of four Burger
King restaurants in Georgia, and I am happy to be here today on
behalf of the U.S. Chamber of Commerce. I am also a proud
member of the National Franchisee Association and have served
on their board of directors for 3 years.
Nothing I say here today reflects the position or opinions
of my franchise or Burger King Corporation. You know, when
people think of Burger King, they think of a big international
corporation. Even though the sign on the door says Burger King,
my four restaurants are small family-owned and -run businesses.
I began working as a Burger King assistant manager in 1980,
as the Congressman said, earning $14,000 a year. After working
my way up, I partnered in 1993 with Francis Lott to open our
own four Burger King restaurants in Georgia. In 2001 I bought
out my partner's interests and today I operate these four
restaurants with my wife, Cindy.
At our four restaurants, we are proud to have created 182
jobs. We have 59 full-time employees and 123 part-time
employees; 14 of our full-time employees are managers, for we
currently pay 100 percent of their health care premiums at an
annual cost of nearly $56,000. We also pay for term life,
short-term disability, vision, and dental insurance. My wife
and I participate in this very same plan.
For our other employees, we offer a value mini-med plan at
a cost of between $106 and $165 per month. Currently only 19 of
the more than 100 part-time employees have elected to
participate. Many employees choose to keep the wages they earn
to help pay for their day-to-day living expenses rather than
use a portion of their wages to pay for the coverage.
As the president of my company, I also have to decide how
much of the company's income can be used to pay for wages and
benefits and how much has to be used to cover the expensive
daily operations. There is only so much money, and, first and
foremost, we all have to cover our daily expenses.
Washington, it seems, really doesn't understand this. A lot
of noise was made last fall about the types of plans that I
offer my employees. Under the health reform law, Washington has
decreed that these so-called limited benefit plans are not
acceptable. Despite repeated promises that if you like your
plan you can keep it, the law has outlawed these plans,
beginning in 2014.
I understand that for many, a more comprehensive plan seems
critical; and, by comparison, these limited benefit plans are
slim. However, it is important to acknowledge reality. These
plans are less expensive and allow my team members to choose to
take more of their wages home and use a smaller amount of their
wages to pay for some coverage.
Prior to health care reform, I had the flexibility to hire
more workers, pay them a wage and offer them access to this
moderate coverage. Now I am being told by Washington that I
have to offer all my full-time employees Washington-defined
health coverage or pay a penalty. Because of the cost of
offering this prescribed coverage and the size of the penalty,
I will have no choice but to restructure my workforce in a way
that protects me from losing everything I have worked for.
What does this mean? Well, given the law and the unfinished
regulations, and I mean unfinished regulations, it is hard to
say. I have no idea. Prior to the law's enactment, my goal had
been to hire fewer people for more hours. It is easier to
retain employees that work full time.
However, now that the law is passed, I have to consider
options other than what makes practical business sense. Now,
because of what Washington has mandated, it may make more sense
for me to hire more people for fewer hours at a time when
millions of Americans are out of work. Is this really the right
incentive?
This is not what I want to do, and it is not what is best
for my employees, but in order to survive and be able to pay
the employees that I have to, it is what we will have to do.
While I have not read the entire law, and I am not able to
follow the regulations--which are being issued at record speed,
mind you--I am trying to figure out how to protect the company
that I have spent my entire life building. It is ironic that
the law touted as the Patient Protection and Affordable Care
Act neither protects patients nor makes health care affordable.
Instead it is a law of broken promises under which no one will
be able to keep the health care they have. Even if they like
it, it is a law which incents companies to scale back their
workforces and reduce the benefits offered to their valued
employees.
In conclusion, I understand that given the existing
political realities, Washington, D.C., a total repeal of the
health care law by Congress is an unlikely proposition, at
least for now.
However, I am hopeful that Congress will repair or
eliminate the more onerous burden, such as the employer
mandate. These provisions saddle businesses with new
requirements that actually encourage us not to expand our
business and, astoundingly, discourage us from creating jobs.
The bottom line is that your decisions can help or hinder
this. The laws you create can either give small businesses
greater confidence and certainty to grow and generate new jobs
or just do the opposite. Regrettably, this new health care law
is already doing the latter, and Congress must take the action
to rectify it.
Again, thank you again for this opportunity, and I look
forward to your questions.
Chairwoman Ellmers. Thank you, Mr. Vaughn. I will just tell
you that my very first job at age 16 was with Burger King back
in Madison Heights, Michigan, back in 1980.
Mr. Vaughn. Thank you.
Chairwoman Ellmers. Thank you again for your testimony.
Chairwoman Ellmers. I would like to introduce Mr. William
Dennis. Mr. Dennis is senior research fellow at the National
Federation of Independent Business. He has directed the NFIB's
research foundation since 1976.
Welcome. And you have 5 minutes to present your testimony.
Thank you.

STATEMENT OF WILLIAM DENNIS

Mr. Dennis. Thank you, Madam Chairman, Mr. Altmire, and
Representative King.
Last week NFIB released a study called ``Small Business and
Health Insurance: One Year After Enactment of PPACA.''
I would like to focus my remarks on the results of that
study, since it is quite current and relevant to what we are
talking about today.
First of all, we surveyed only people, small employers that
had 50 or fewer employees. It was a nationally random sample,
not just the NFIB members. There will be probably some randomly
in there, but this was a national random sample. The survey was
conducted in late April and in May of this year. So, while it
wasn't done yesterday, it is current enough so that I think we
can say it is the state of what we know today.
The findings are really quite simple. The first is that we
are in this period of declining offer rates by this group of
firms. There are 42 percent that now offer, which continues the
down trend over the last 10 years at least. MEPS just produced
a 39 percent estimate, which is lower, and so the NFIB survey
really does capture the trend.
Something else that you should understand is that nothing
has happened in the last year and nothing is projected to
happen in the next year. People who had offered before tend to
offer now and expect to offer in the future. And, those who do
not or have not offered didn't pick it up this year, and they
don't plan to in the future. So we expect this down trend to
continue.
Twenty percent with insurance do expect major changes in
that insurance. Virtually all those changes are not to the
benefit of the employee. Since enactment of PPACA, one in 8, 12
percent, of small employers have either lost their specific
plan or been told they will lose their specific plan.
Of those who claim to be familiar with the law or have some
familiarity with its contents--by very large margins,
overwhelming margins, particularly those who insure--think it
will not reduce the cost of health insurance. It will not
reduce administrative burdens, will increase taxes, and will
add to the deficit. They do agree more people will be covered,
although they are not quite sure whether that is going to yield
better benefit or yield greater health outcomes.
Let's just look at the tax credit. We estimate using some
new data that we recently collected that out of the 5,228,000
small employers with under 25 employees, an estimated 245,000
will be able to take advantage of the full credit, and 1.165
million will be able to take advantage of the partial credit.
That is not how many will. Fewer will probably take advantage
of that in part because of awareness. Those numbers are the
maximum that will take part.
Now, beyond that, there is the whole incentive effect. How
many will the credit incent? One of the ideas behind this is
just not to provide a windfall, to have people do what they are
already doing, but to provide an incentive for people to
purchase it.
We calculate that only about 2 percent have an incentive
based on the full credit, though more than that have an
incentive based on the partial credit.
The survey also explored the reaction of these small
business owners, if low-income people start to leave for the
exchanges. About 21 percent said they would seriously explore
looking at whether or not they are going to drop their health
insurance for everybody. Another 26 percent said that they also
would do that, but were less certain.
So there clearly are pressures that would lead folks in
that direction. Once competition actually sets in, firms
continue to churn, new firms enter without health insurance, we
are going to see real market pressures, not to--not only not to
add for those who don't have it, but to drop it for those who
do.
Thank you.
Chairwoman Ellmers. Thank you, Mr. Dennis.
Chairwoman Ellmers. I now would like to yield to Mr.
Altmire to introduce your witness.
Mr. Altmire. Thank you, Madam Chair. And it is my pleasure
to introduce Professor Timothy Jost. Professor Jost teaches at
the Washington and Lee University College of Law. He is co-
author of a casebook health law used widely throughout the
United States in teaching health law.
Professor Jost is the author of numerous articles on health
care regulations and comparative health care law and policy. He
is also consumer representative to the National Association of
Insurance Commissioners. Professor Jost earned his J.D. from
the University of Chicago School of Law, cum laude. Welcome,
Professor Jost.

STATEMENT OF TIMOTHY STOLTZFUS JOST

Mr. Jost. Thank you very much and thank you, Ranking Member
Ellmers and Congressman Altmire and Congressman King.
The title of today's hearing is: ``Small Business and
PPACA: If They Like Their Coverage, Can They Keep It?''
This is a variation of one of the commitments made by the
Affordable Care Act, realized in section 1251, that if you like
your plan you can keep it. But, notice, the ACA's commitment is
to individuals, not to employers.
It is not if you currently have insurance through your job,
you are stuck with that insurance, no matter how it changes. It
is if you the employee, or individual enrollee, like your
coverage, you can keep it. In fact, most privately insured
Americans do have insurance through their jobs and regulations
adopted last summer by Labor, Treasury, and Health and Human
Services, give employers considerable flexibility to change
their plans without losing grandfather status.
Employers can change their formularies, providers,
networks, and even insurers or plan administrators. They can
increase deductibles, out-of-pocket limits, and copayments not
only to keep up with medical inflation, but also up to 15
percent more. They can also reduce their own contributions to
premiums by as much as 5 percent. They can add new employees
and new dependents.
Of course, if the plan changes too much, it ceases to be
the plan it was. It is probably no longer the plan the enrollee
liked, and grandfather status is lost. The Department has
projected that 15 to 33 percent of plans would lose
grandfathered status in 2011.
Private surveys cited by Mercer and Hewlett in submitted
testimony predict higher levels, although they also noted that
many employers do not really view loss of grandfathered status
as a major problem, and some said they wanted to comply with
the new law as soon as possible.
The NFIB survey released last week surprisingly did not
reflect widespread loss of grandfathered status. The NFIB
reports that 90 percent of small businesses intending to make
significant changes in their plan have not lost their plan.
It does report that 12 percent of employers have had their
plan terminated or been told that it will be not available in
the near future. This number is consistent with churn in
insurance coverage observed in earlier years, and I believe I
cited a 2008 NBER report which showed this kind of turnover in
the early 2000s. Plans are always coming and going in the
small-group market.
NFIB also reported that 20 percent of employers anticipated
significant changes in their plans over the next 12 months, but
last year and the year before changes in benefits, cost
sharing, and premiums, as reported in the annual Kaiser HRET
report, were at even greater levels. This is a bad time in the
economy, as we all know, and things are changing.
Another and very important question is whether employers
will continue to offer coverage after the ACA is fully
implemented. A number of studies have addressed this question.
Their predictions range at the extreme, from those of Dr.
Holtz-Eakin, who predicted that ESI would shrink by 22 percent,
and the McKinsey survey, which claims that 9 percent of
employers will definitely drop coverage, to those of the RAND
Corporation which estimated that coverage would, in fact, grow
by 8.7 percent.
But most studies, including studies by Booz, Lewin, Urban,
Mercer, Towers-Watson, and most importantly the CBO, predict
that coverage will not change dramatically once the ACA is
implemented. In fact, all of the reasons employers offer
insurance now will continue to exist after health care reform
goes into effect.
Most importantly, employee benefits are exempt from Federal
and State income taxes and payroll taxes. In Virginia, where I
live, employees taxed at the alternative minimum tax marginal
rate of 28 percent receive a subsidy of over $0.49 on every
dollar for the coverage that they receive through their
employer.
The average American covered by ESI has an income of 423
percent of the Federal poverty level and would not be eligible
for any of the premium subsidies under the Affordable Care Act.
Employers who drop health insurance would have to
dramatically increase after-tax cash compensation for their
higher-income employees to cover this loss of tax subsidy, and
the law prohibits them from dropping benefits from their lower-
wage employees but keeping them for their higher-wage
employees.
Health benefits also continue to be one of the most highly
valued forms of compensation and also help insure a healthy and
productive workforce. After 2014, employees are even more
likely to demand health insurance at work because of the
individual mandate; and large employers--not small employers--
but large employers, will face a penalty if they don't offer
insurance.
In Massachusetts, which adopted similar reforms in 2006,
employer offer rates grew from 70 to 76 percent. There is every
reason to believe the ACA will not dramatically change the
scope of employer coverage in the United States.
Thank you.
Chairwoman Ellmers. Thank you, Mr. Jost.
I will begin the questioning, and my questions are directed
to each member of the panel.
Health care reform was supposed to make health care more
accessible and affordable. Do you think the new law does
anything to help reduce the cost of health care? And I will
start with Mr. Jost.
Mr. Jost. Yes, and one example of that is the medical loss
ratios, which has already been discussed. I follow the medical
loss ratios very closely. I was very much involved in their
drafting through the National Association of Insurance
Commissioners.
One of the things that people are beginning to notice is
that growth in health care costs has been dropping in the last
couple of years. There is another report on that out this
morning.
At the same time, in the very recent past, insurance
profits have been growing very, very rapidly; and people who
follow the insurance industry closely are saying that, if
insurers have to spend 80 percent of their premiums on health
care costs and costs are dropping, premiums can't continue to
rise. They are going to come down.
And we already saw that in Connecticut, where one insurer
dropped its rates by 10 percent. We are starting to see it in
other States.
I think, in fact, that the MLR is going to have a dramatic
affect in reducing the cost of health insurance for employers
and individuals over the next couple of years.
And if I could just add quickly, one question that was
asked earlier was, will it drive small insurers out of the
market? I have read all of the State adjustment requests that
have gone final. In only one State have any insurers left since
the law went into affect. As Mr. Larsen said, people are
talking about it. It isn't happening.
Thank you.
Chairwoman Ellmers. Mr. Vaughn.
Mr. Vaughn. Well, I certainly would have no way of knowing,
a nonacademic. I am a business person. But let me just give you
a few numbers so you can understand my situation.
If you take 2010 and my small business--I am a Subchapter S
Corporation. So, at the end of the year, the bottom line of my
company was $319,000. The way this plan exists now, if I took
this plan and I insured all of my employees the way it is
designed, it would cost me $307,000, which leaves me $12,000.
Now, understand I am taxed personally on the net income of
my company. But do I take that money? Absolutely not. What I
do, I have to turn that money around and reinvest in the
building, buy new equipment, and those sort of things. $12,000
does not even leave me enough to pay my taxes, let alone
reinvest in my business.
The other piece of this is I am not likely to pay a
penalty. Why would I do that? Because I am not really helping
anyone. The penalty would cost as much as the insurance I am
providing now. So if this thing continues on the path it is, I
can tell you right now that I will do everything I can to avoid
paying the penalty. I will probably more than likely drop
coverage, and what it will do to the cost of insurance I have
no idea.
Thank you.
Chairwoman Ellmers. Mr. Dennis.
Mr. Dennis. It is really important to remember is when we
started this thing, small businesses were very much in the
forefront of calling for reform of health care. The reason was
cost. Cost increases drove us. This morning, I believe I opened
the Journal--the Wall Street Journal--and saw a study from the
Social Security Administration which projected that, under
PPACA, costs would rise faster than they would otherwise. It
wasn't a great deal, but it was indeed faster. That is the
first point.
The second is we have had some lower rates recently than we
have seen over the past several years. It has been attributed
in some quarters to the new law. What we see, is that this
recovery is very different from the last five recoveries.
Relative demand for various services has been much slower than
average; and health care has been one of them. Whether it is
people not having money or being more parsimonious with the
money they have, I don't know. But, still, the whole thing is
that this is a very abnormal period.
And then we start to look at everything that is inherent in
PPACA. You are going to have minimum benefits. While we don't
know what is going to be in the minimum benefit package,
clearly, as Mr. Vaughn's example shows, there is going to be a
whole series of folks who are either going to have to add a lot
more benefits or do something else.
Then we have all types of expensive things that we haven't
even talked about which don't necessarily directly affect
smaller firms. Things like the CLASS Act for example. Then we
have, of course, a whole lot of new folks coming on. So all
this together is going to drive costs higher, I am afraid.
Chairwoman Ellmers. Thank you, Mr. Dennis.
Dr. Holtz-Eakin.
Mr. Holtz-Eakin. I would largely concur. In analyzing the
bill as it passed and became the law, the CMS actuary, the
administration's own actuary, concluded that it would raise,
not lower, national health expenditure. If the national health
expenditure bill is larger, the insurance that covers that bill
has to be larger. There is no way around that. When the CBO put
out its new long-term budget projections, it found that, after
passage of the law, things went up, not down.
The law contains two new entitlement spending programs. The
CBO estimates they grow at 8 percent a year as far as the eye
can see. There is no evidence of bending the cost curve
anywhere to be found in those kinds of numbers.
And so if you dial the clock back to the beginning of the
debate, there were two criteria by which any health care reform
should be judged: the ability to cover more Americans with
affordable and quality insurance, and the capacity to deliver
those services with lower costs and higher quality. And the
Affordable Care Act flunks the latter, which is ultimately the
fundamental driver of the insurance costs in the United States.
And so things like the MLR are mere fiddles at the edges of a
tidal wave of health care spending. Unless we get the tidal
wave under control, the premiums go up.
Chairwoman Ellmers. Thank you.
I have one more question for you. Do you think the health
care law's mandates and taxes, along with the numerous
regulations that are being issued, make it less likely that
small businesses will hire more workers and expand their
companies?
And again I will start with Mr. Jost.
Mr. Jost. Well, the small businesses, there is some
incentives and disincentives. There are benefits under the law
that small businesses get and that large businesses don't get,
and there are some benefits that large businesses get that are
not available to small businesses.
For example, small businesses need to cover the essential
benefits package. It is not clear to me that that is going to
be a major expense. Because in fact what happens is that State
mandates are going to go away. It is not at all clear the
Federal essential package is going to cost more than State
mandates, but that is something that small businesses need to
cover that large businesses do not need to.
On the other hand, large businesses need to pay the penalty
if they do not cover their employees; and small businesses
don't.
I come from a family that started a small business about 20
years ago, that my brother-in-law started by borrowing money
from the rest of us in the family, and it is today a $300
million publicly traded company, and its product is a household
name. They didn't worry about am I going get this benefit or
lose this benefit if I grow a little bigger. They tried to help
out their employees, they tried to help out their customers and
sell a good product.
I think that is the way American businesses work, and I
think that under this law it is going to continue to work that
way. It is just that employees and individuals are going to
have better health care coverage.
Chairwoman Ellmers. Mr. Vaughn.
Mr. Vaughn. Well, I can start out by saying that
overregulation is killing small business.
Let's go back to minimum wage. I have already scaled down
my staff, and I am running as, frankly, as lean as I can
possibly run right now and make a living. The reality is there
are going to be virtually no full-time jobs in this industry. I
can tell you the way it will work in my company is only my
management staff will be full time. Everyone else will work 29
hours a week or less. And it is just that simple. We cannot
afford this thing.
Chairwoman Ellmers. Thank you, Mr. Vaughn.
Mr. Dennis.
Mr. Dennis. Well, right now, immediately, the overwhelming
issue is uncertainty. We have absolutely no idea what is going
on, and I think everybody would agree on that. I don't think
that is a very controversial statement. Nonetheless, that has
an enormous impact on what you are willing to do in terms of
hire and invest; and we are seeing that very clearly within the
small business population.
We do this monthly survey, as we have been doing since
1973, and it is constantly showing that small businesses are
much more pessimistic and feel much less--how can I say--
favorable towards the economy than do larger folks. That is
borne out by--their sentiment is borne out by a whole series of
measures, including some that are contained in a recent Federal
Reserve of New York paper that is just out. But that is the
immediate thing.
Longer term, you have the whole issue of cost and taxes;
and they go together. And what does that have to do? All that
means is, if the government has it, then you don't have it, and
you have less available to do that. And so the question is you
can't invest if you don't have it.
And then we have the interesting issue of growth and does
the 50 divide mean anything. And for some firms it clearly
will. It won't just mean do I go over 50 or not, whether I hold
back a little bit from 50 for fear that I am going to be hung
up on that whole thing. There will be a lot of firms who are
growth firms that, as Mr. Jost used as an example of his
brother-in-law, that will just go blowing right on by. They are
going to be high-growth firms, and they are not going to pay
attention to anything. But it is going to have an impact on a
whole lot of small firms.
Chairwoman Ellmers. Dr. Holtz-Eakin.
Mr. Holtz-Eakin. Well, I guess I would echo the firm level
recognition of the regulatory costs that Mr. Vaughn mentioned.
I think I would echo the uncertainty in the firm level growth
incentives that Mr. Dennis highlighted.
But if you step back and take a look at the basic
architecture of the Affordable Care Act, it says let us spend a
trillion dollars over the next 10 years and finance that by
raising $500 billion on new taxes and much of it on inputs into
what will be paid for by insurance, and thus make insurance
more expensive, and let's finance the rest by cutting $500
billion roughly out of Medicare, something the CMS actuary said
is simply economically unrealistic and would mean the closure
of a large number of hospitals and failure to serve those
beneficiaries.
So I would probably take that with a grain of salt.
What you have in the end then is higher taxes, much larger
deficits, in a recovery that is utterly unsatisfying. And I
cannot conclude that that will be beneficial for the hiring
practices of small businesses.
Chairwoman Ellmers. Thank you, Dr. Holtz-Eakin.
I yield to Mr. Altmire for questions.
Mr. Altmire. Thank you, and I am glad that our panel
brought up the subject of taxes and the burden that it places
on small business.
I wanted to ask Mr. Dennis and Mr. Vaughn, as you are
aware, currently health benefits for employees is non-taxable;
and some proposals have recommended requiring employees for the
first time ever to pay taxes on health care benefits. And I was
wondering from Mr. Dennis, how would a fundamental change like
that impact a small business' decision to offer health care to
its workers?
Mr. Dennis. Well, the question is really equity. Right now,
we have a system where if I am an employer and I contribute
$1,000 or $5,000 to help my employee buy their own insurance on
the market, whether it is through the exchange or whatever,
there is no tax exclusion for the employee. If an employer pays
for it, there is an exclusion. That clearly is inequitable. In
the long term that is going to hurt smaller firms, and their
ability to contribute.
You are not asking about the inequity, though. You are
asking about whether or not the exclusion itself is important.
The exclusion does lower the amount that you have to pay up
front. Long term, it encourages more people to use more
services. And more services means higher costs, and long term
we just can't have that. We have to start being more
parsimonious on many of these things.
Mr. Altmire. So you are in support of that policy change to
tax----
Mr. Dennis. We would be in support of making it equitable.
I am not sure that our organization has taken a position on
whether or not they would be in favor of eliminating or curbing
the tax exclusion.
Mr. Altmire. Thank you.
Mr. Vaughn, as a business owner, how would your employees
react if they had to pay taxes on the health care benefits that
you provide?
Mr. Vaughn. Well, that is a hypothetical; and I apologize
for really not having an answer to that. I can't predict how
they would react.
But there is something really important here that I don't
want to get lost. Let's define what is a small employer and
what is a large employer? The method that is being used right
now--and, frankly, I can't understand it--and what is a full-
time employee and what is a part-time employee, I can't
understand that either.
There was a study done recently by the University of
Tennessee funded by the likes of Burger King, McDonald's, and
different ones to determine what would be the best way to
determine what a small business is and what can they afford.
Have you heard about profit per employee? As opposed to
this very drawn out, sort of complicated formula for figuring
these things out, it is a real simple formula. It is how much
money do I make net, divided by number of employees. Guess what
it is in my industry? $1,300. If I paid the penalty, the
penalty is $2,000. Is that equitable? Does that make sense?
I have got to tell you, there are other industries, whether
it is financial or insurance industries, they are $10,000 plus
per employee, profit per employee.
So my position is this. This thing has to be repealed. I
mean, it has to be repealed. If it is not repealed, at the very
least the regulatory aspect of it should be changed to a system
like profit per employee.
Again, I apologize for not answering directly. I really
don't know how they would react.
Mr. Altmire. Are you concerned to hear that that is a
proposal? If your representative came and sat down before you
and said, hey, here is something I am thinking about
supporting, taxing your employees' health care benefits, you
wouldn't----
Mr. Vaughn. Of course, I would be concerned about that. I
am for lower taxes for anyone. Yes, absolutely.
Mr. Altmire. Mr. Jost, do you want to comment on what type
of fundamental change like that, what the impact would be on
the health market?
Mr. Jost. I think it would destroy our employment-based
health insurance system in this country. We have a long
tradition in the United States that actually has been very
successful in providing health insurance to people through
their jobs. We are now trying to get beyond that to reach those
people who are not covered through that, and that is what the
Affordable Care Act is going to do. But to pull the rug out
from under employment-sponsored health insurance by removing
the tax deductions and exclusions would destroy it and would
throw our health care system into chaos.
Mr. Altmire. Dr. Holtz-Eakin, do you want to comment on
that? I am going to move on to a different question, but you
look like you might have something to say.
Mr. Holtz-Eakin. There are really two aspects that I think
bear mentioning. One is, it figures prominently in this
discussion about how many employers will drop coverage under
the Affordable Care Act. Because the basic horse race is
between the pile of cash being put out in the exchanges for
low-wage workers, where there is a clear net advantage for the
employer to drop coverage, pay the penalty, give the employee a
raise, let them go use their after-tax wages, plus a subsidy,
and get insurance.
And another Federal subsidy, which is nontaxation of
employer-sponsored insurance which benefits high-wage workers.
And those who conclude that there will not be a big employer
drop are counting on the fact that that tax subsidy for high-
wage workers will dominate. Employers will continue to use it
to pay the high-wage workers, and nondiscrimination rules will
keep everyone in.
I think that is an optimistic fantasy, quite frankly. Be
quite aware that, in the end, all you are doing is a horse race
between two Federal bribes; and one of them is going to win. We
will see how it plays out, but it is costing the Treasury
either way.
The second thing is, most people who talk about changing
the tax treatment of employer-sponsored insurance are looking
at revenue-neutral tax reforms that broaden the base and thus
bring in subsidized consumption like health insurance in
exchange for lower tax rates. And I think that is a very
different question than simply saying do you want to go tax
health insurance. It is about having a tax system that is fair
across low- and high-wage workers and provides greater growth
incentives because marginal rates are lower.
Mr. Altmire. Last question. I wanted to give you the chance
to answer that because I thought I knew what you were going to
say.
Mr. Holtz-Eakin. It was a shocking question.
Mr. Altmire. The question I wanted to ask you--and you are
not here to pontificate about politics or to speculate about
what the Congress is going to do or should do certainly, but
you bring great credibility to the debate based upon your
background and your involvement in the past. So I ask just out
of interest, given where we are. This is the law. The bill has
passed. It is the law. The Supreme Court may or may not rule,
absent knowing what is going to happen there. Repeal has failed
in the current political environment. We don't know what the
future holds there.
To the degree you are comfortable assessing it, what would
you suggest the Congress do as far as tweaking the current law,
assuming this is a fact, this is going to continue, or continue
to push repeal even though it doesn't look like it is a viable
option?
Mr. Holtz-Eakin. Wow, can I have 5 hours instead of 5
minutes?
Briefly, I think you can point to a couple of things. There
are some provisions of the law that I think have universally
garnered some suspicion--I will use that word. And I think the
CLASS Act is the first among those and probably should go away
as something that is ill-designed and dangerous to the American
taxpayer.
The second would be, in the array of coverage expansions,
the heavy reliance on an unreformed Medicaid program I think
many people find problematic. We know Medicaid beneficiaries
have much more difficulty finding primary care physicians and
seeing specialists. To simply put more Americans into a
substandard health care system is problematic, and I have a
concern that there is just too much money on the table in
exchanges. I won't relitigate that. So in terms of the coverage
expansion pieces, I think you have to look at all that.
I won't say a lot about the regulatory initiatives. I think
making them cleaner and getting the rulemaking done in a
fashion that doesn't leave the business community so perplexed
can be entirely beneficial.
On the delivery system reforms I think there are two very
big concerns. One would be the role of the Independent Payment
Advisory Board, which, as structured, appears inevitably to be
led to near-term provider reductions as opposed to quality
improvements or other things that everyone thinks would be
desirable. Just can't get there. It is given 1-year targets. It
is going to go slash reimbursements probably on the most
innovative and, thus, the most expensive new therapies. That is
detrimental for health care. I would worry a lot about that,
quite frankly.
And the ACOs appear to be a recipe for industry
concentration, not better care.
So, you know, across all of these things I think there is
work to be done in improving the delivery system, improving the
financing of the coverage expansions, and making sure that this
thing hangs together budgetarily, about which I have deep
concerns.
Mr. Altmire. This is really the last question. Are there
things in the bill that you think are worthwhile in isolation
that should be kept?
Mr. Holtz-Eakin. I have always been a proponent of
exchange-like entities--forget the label attached to them.
Better ability to shop, compare, and pursue health insurance
has always been--I think every economist would like that, and I
certainly do. So the design of those and exchange rulemaking I
think is a critical moment in the life of this law.
Mr. Altmire. Thank you all for being here.
Chairwoman Ellmers. I now would like to recognize Mr. King
for his questions.
Mr. King. Thank you, Madam Chair.
I thank all the witnesses for being here to testify and
regret my schedule did not allow me to hear it all in depth. So
I hope I don't duplicate anything that has been raised here
before this panel.
First, I think I need to make a statement as to anybody who
wonders where I stand on this issue. I look at it from a whole
number of different perspectives.
I just don't think it is arguable whether this is
sustainable economically or whether it will improve our health
care or whether it will avoid eventually rationing or whether
it will reduce research and development. I think those things
all we understand--at least I think I do--thoroughly, that we
are not going to see better health care at a cheaper price that
is more accessible or more available. You will see different
people who have access perhaps, but it is perhaps a shift
within the population. I don't think it changes anything beyond
that.
So I have spent my life--my working life as a small
businessman. I started a construction business out in 1975, and
we provided--not on the first day, because I didn't have any
employees the first day--but over a period of time as we began
to accumulate employees, I took on a responsibility to
voluntarily provide them health insurance.
And I have watched this debate be shifted here in this
country so that the word health care and health insurance,
those two words, have been conflated into the same meaning in
the minds of many people that are advocates of this policy that
is before us today. I think it was dishonest, I think it was
disingenuous, and I think it was willful, a strategic effort to
try to blur the definitions.
I remember our then-Governor of Iowa, Governor Culver,
coming to this Capitol and our delegation meeting and saying
40,000 kids in Iowa don't have health care. I don't know how
many times I had to ask him what that meant before I could get
through to him that health care and health insurance were two
different things.
I will make the point that I don't believe an employer
has--if they choose to accept a responsibility to provide
health insurance for their employees, that is a competitive
position in the marketplace, but it is not a moral obligation
for the employer. To hire good people and keep good people is
the motive.
When the Federal Government decides to impose an employer
mandate, then that sets another standard; and in the minds of
people now they think it is an entitlement that goes with a
job. I think that is a mistake. I think it saps some of our
vitality.
I wanted to take this down to the constitutional aspect of
it, just noticing we had a law professor here, Mr. Jost. That
is the part that grates on me the worst. We can talk about
policy all day long. I have drawn my conclusions on that. And I
have also drawn them on the constitutional side of this.
But I just take it down to the individual mandate rather
than the employer mandate side of this and ask this question,
if the Federal Government can constitutionally commandeer a
portion of a person's paycheck or a portion of the revenue of
an employer, for that matter, if they can commandeer that and
assign it to a government-produced or a government-approved
product, which is premiums for health insurance that is
approved by the Federal Government, then what limitation would
there be on the commandeering of that revenue stream beyond
health care? Is there a constitutional line here I don't
understand? Or could it also be for a car, an appliance, buying
certain types of health food, or a membership in a health
clinic--excuse me, perhaps a gymnasium? Is there a
constitutional line beyond that?
If the Supreme Court rules in favor and upholds this bill,
this Act, this law of the land, as Mr. Altmire referred I
believe, if they do that, what then can the rest of the workers
and the employers in America look forward to being
commandeered? Where is the line?
Mr. Jost. Again, I only have 5 minutes, rather than 5
hours, probably less than that. I would refer you to the
excellent opinion on this topic written by Judge Sutton of the
Sixth District, a very well-known, conservative judge, who has
in fact been prominently mentioned as a Supreme Court potential
nominee. And what Judge Sutton said and what the other Federal
judges, several Federal judges, the majority of the Federal
judges who have considered this question have said in favor of
the constitutionality of the statute, and where I believe the
Supreme Court will come down, is under that Article 1 of the
Constitution, Congress has the authority to regulate commerce.
Under earlier decisions, Congress must regulate economic
decisions. It cannot regulate noneconomic conduct. But what
Judge Sutton and what the other judges have found is that the
health care marketplace and the health insurance marketplace
are interstate commerce. In fact, it is the largest sector of
our economy.
Mr. King. Excuse me, Mr. Jost. If an individual doesn't
engage in purchasing health insurance, then they are not
engaging in interstate commerce with the purchase of health
insurance. And if you expand the argument to utilizing health
care services, if an individual is born and dies in a State and
doesn't cross a State line and doesn't use medical of any
kind--and that happens; it has always happened, every
generation--how is it that they are engaging de facto in
interstate commerce?
Mr. Jost. Well, what Judge Sutton said is, on its face, the
statute is constitutional. As applied, there may be some
situation where somebody may come forward and said, I never
used health care in my life. I will never use health care in my
life. I can prove it. The law should not apply to me. He said,
that might be a different case. We will cross that bridge when
we come to it.
Mr. King. We have come to it, actually. Because the
Constitution has got to apply to everybody.
Mr. Jost. Right, but a statute--the first question is, has
Congress written a statute that is facially constitutional?
Could it be constitutional as applied to some people? And as
applied to 99.99999 percent of the population, people use
health care.
Mr. King. The statute presumes that everyone does use
health care, and it presumes that health insurance is an
obligation that is a component of health care. And if it
presumes that everyone is utilizing, then the constitutional
rights of those who do not are directly then incorporated into
that. So they don't have their constitutional rights unless
they assert them. We have to pass legislation that
constitutionally protects everyone. That is the point I would
make.
I went way past my time. I am sorry, but I appreciate the
indulgence, and I yield back the balance of my time.
Chairwoman Ellmers. Thank you. That was a very interesting
exchange, so I appreciate the line of questioning. Those are
definitely some of those issues as we move forward that really
does need to be discussed. So even though we went over, that
was--I can say it is all right.
Do you have any other questions at this time?
And, Mr. Altmire, do you have any?
I have a couple of more questions I would like to ask,
starting with Dr. Holtz-Eakin.
You have said in the health care law it is a threat to the
health care of--excuse me, the health of small businesses, and
the mandates and penalties are a financial burden. Do you think
small firms disproportionately affected by the various
mandates, penalties, and taxes in the law, will this affect
their ability to increase employee wages, purchase new
equipment, and hire new workers?
Mr. Holtz-Eakin. Absolutely. If you think of the smallest
of the small businesses, the proponents of the law like to say,
well, look they get the credit, and they are exempt from the
mandate, and so it is all going to be good.
But the reality is they will face the upward premium
pressures that inevitably come from the benefit mandates that
have already begun to be implemented and which are driving
premiums up. The taxes that will be imposed on insurers,
medical device companies, and others will which inevitably
drive--in my written testimony, I walk through the arithmetic
of this. This is $5,000 for a family over the next 10 years,
real big impacts on the cost of health insurance.
Every time those premiums go up, they come up at the
expense of wages. There is no way around that. So even for
those who are ostensibly spared the greatest regulatory burden,
the greatest compliance cost burden, and even where temporarily
helped, although I am not a fan of the structure of that
credit, it is available. I think it is, on balance, a bad deal.
Chairwoman Ellmers. Thank you.
Mr. Vaughn, I have a question for you. You currently have
30 full-time employees; is that correct? And a number of part-
time employees. So 30 full time and a number of part time. With
the employer mandate in the health care law, is it likely that
you will create any additional full-time positions?
Mr. Vaughn. As I mentioned earlier, it is not likely. It is
likely that I will cut to fewer full-time positions.
It is interesting about what Mr. Larsen said earlier, the
tax credit--look, I am not going to participate in this
certainly without tax-preferred dollars. He talked about--what
was it--nine employees or less or some ridiculous number, and
those are the only people who are going to get a tax credit. So
this thing is extreme.
Mr. Jost said earlier that the large firms, they are not
worried about it. It is probably not even on their radar
screen. That is just the cost of doing business for them. But,
again, it is clearly in my case going to create more part-time
jobs and, frankly, people more dependent on the government, and
I will be cutting even more jobs.
Chairwoman Ellmers. Do you feel you may have to cut wages
also, especially now, of course, with--you know, we have
minimum wage. But as far as potential increases in wages, do
you think you may have to draw back on that as well?
Mr. Vaughn. I think so.
Someone mentioned earlier wages should be--absolutely
should be a function of competition in the market. And I think
that those of us that are in this business, we are all pretty
much in the same situation. We are in a pennies business, and
our margins--literally, we said this thing about Burger King,
and people look at us as very wealthy and very rich. Out of a
dollar, we keep less than a dime at the end of the day. And so
there is just no way we can afford this. Absolutely not.
Chairwoman Ellmers. Thank you, Mr. Vaughn.
And my last question--I have two questions, actually, for
Professor Jost. If the forthcoming mandated minimum essential
benefit package requires employers to offer a base amount of
coverage, the package will undoubtedly exceed the coverage that
small the businesses currently offer. Aren't the premiums
likely to increase for the employer or the individual or both?
Mr. Jost. I would like to refer to a study that was
published last month by the Urban Institute in which they
projected that the firms for small employers, average employer
contribution per person covered would in fact decrease by 7.4
percent after the Affordable Care Act was fully implemented.
The reason for that is the exchanges. Right now, small
employers have to deal with individual insurance companies, and
they don't have the economies of scale large employers do. They
often have risk pools that are less favorable than large
employers, and they are on their own. Even if they get a good
rate this year, they could be cancelled next year or they could
get a higher rate next year.
In the exchanges, their business is going to be pooled with
the business of all of the other small employers, and there is
going to be lots of competition in the exchanges. There are
going to be national insurers as well as the domestic insurers,
maybe some of these new cooperatives that they are going to be
talking about today. And so the projection is that, in fact,
costs will go down.
Now with respect to the essential benefits package in
particular, I had always assumed that small businesses provide
less rich benefits than large businesses. I tried to check on
that the other day and found out if you look at the national
compensation survey the benefits are pretty much comparable and
cover the same things. The reason again is because of the State
mandates that require in many States employers to cover a lot
of the same benefits of shared employers.
Also the essential benefits package only covers benefits.
It doesn't prescribe cost sharing. Right now, a lot of the gain
is in trying to increase cost sharing in various ways. That is
probably one of the reasons why health care costs are going
down, because employees have more skin in the game. And I think
that under the essential benefits package, number one, it isn't
going to change that much what benefits employers are going to
have to offer; and, number two, they will still have the
ability to do considerable adjustment in the cost sharing to
try to save costs.
Chairwoman Ellmers. Can you just describe to me the
difference--you mentioned national insurers and domestic
insurers. Can you identify for us what you mean by that?
Mr. Jost. Yes. Under the Affordable Care Act, the Office of
Personnel Management is supposed to come up with two national--
at least two, maybe more--national multi-State insurance plans
that will be available in every State. It will be like the
insurance you have, Congresswoman, through the Federal
employees health benefit package where you have a choice of
national insurers as well as local HMOs or other small carriers
at the State level. And that is going to introduce more
competition into the insurance market.
Again, I have been looking at all of these adjustment
requests as they come through, and what you see is that in many
States you have what you see in my market, where you have one
insurer with 85 percent of the market. Well, they set the
price. Nobody else really can compete with them. But we are
doing to see a number of insurers competing, and competition
brings down prices.
Chairwoman Ellmers. And so can you describe to me then the
domestic insurer?
Mr. Jost. Well, by that, I meant insurers that are already
there, that are licensed in the State.
Chairwoman Ellmers. And when you describe the national, are
those private insurance companies or would that be the
government plan?
Mr. Jost. No, they have to be private insurance companies.
They have to be a company licensed in the State.
Chairwoman Ellmers. Okay. Well, thank you all so much for
your participation.
I had asked--if you did have another question, I am more
than willing--we will definitely approach that.
This Subcommittee will continue to closely follow the
issues related to this implementation of the health care laws.
It is very, very important that we stay on top of this as it
moves forward, especially since things seem to be evolving as
we go along.
I ask unanimous consent that three articles be submitted
for the hearing record: an article from Crain's New York
business dated June 23rd, 2011, entitled Health Reforms:
Grandfathering Rules Likely to Raise Costs; an article from
Forbes dated July 4th, 2011, entitled Health Care Tax Credits
are Having a Minuscule Impact; and an article from The Hill,
which I had mentioned earlier, dated July 21st, 2011, entitled
Health Care Law Could Leave Families with High Health Care
Costs.
Without objection, so ordered.
All those in favor, signify by saying aye. All those
opposing, signify by saying nay. The ayes have it. The request
is agreed to.
Chairwoman Ellmers. And I ask unanimous consent that
members have 5 legislative days to submit statements and
supporting materials for the record.
Without objection, so ordered.
This hearing is now adjourned. Thank you so much.
[Whereupon, at 11:40 a.m., the Subcommittee was adjourned.]

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