[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]
HEALTH CARE CHALLENGES FACING NORTH CAROLINA'S WORKERS AND JOB CREATORS
=======================================================================
FIELD HEARING
before the
SUBCOMMITTEE ON HEALTH,
EMPLOYMENT, LABOR, AND PENSIONS
COMMITTEE ON EDUCATION
AND THE WORKFORCE
U.S. House of Representatives
ONE HUNDRED THIRTEENTH CONGRESS
FIRST SESSION
__________
HEARING HELD IN CONDORD, NC, APRIL 30, 2013
__________
Serial No. 113-16
__________
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COMMITTEE ON EDUCATION AND THE WORKFORCE
JOHN KLINE, Minnesota, Chairman
Thomas E. Petri, Wisconsin George Miller, California,
Howard P. ``Buck'' McKeon, Senior Democratic Member
California Robert E. Andrews, New Jersey
Joe Wilson, South Carolina Robert C. ``Bobby'' Scott,
Virginia Foxx, North Carolina Virginia
Tom Price, Georgia Ruben Hinojosa, Texas
Kenny Marchant, Texas Carolyn McCarthy, New York
Duncan Hunter, California John F. Tierney, Massachusetts
David P. Roe, Tennessee Rush Holt, New Jersey
Glenn Thompson, Pennsylvania Susan A. Davis, California
Tim Walberg, Michigan Raul M. Grijalva, Arizona
Matt Salmon, Arizona Timothy H. Bishop, New York
Brett Guthrie, Kentucky David Loebsack, Iowa
Scott DesJarlais, Tennessee Joe Courtney, Connecticut
Todd Rokita, Indiana Marcia L. Fudge, Ohio
Larry Bucshon, Indiana Jared Polis, Colorado
Trey Gowdy, South Carolina Gregorio Kilili Camacho Sablan,
Lou Barletta, Pennsylvania Northern Mariana Islands
Martha Roby, Alabama John A. Yarmuth, Kentucky
Joseph J. Heck, Nevada Frederica S. Wilson, Florida
Susan W. Brooks, Indiana Suzanne Bonamici, Oregon
Richard Hudson, North Carolina
Luke Messer, Indiana
Juliane Sullivan, Staff Director
Jody Calemine, Minority Staff Director
------
SUBCOMMITTEE ON HEALTH, EMPLOYMENT, LABOR, AND PENSIONS
DAVID P. ROE, Tennessee, Chairman
Joe Wilson, South Carolina Robert E. Andrews, New Jersey,
Tom Price, Georgia Ranking Member
Kenny Marchant, Texas Rush Holt, New Jersey
Matt Salmon, Arizona David Loebsack, Iowa
Brett Guthrie, Kentucky Robert C. ``Bobby'' Scott,
Scott DesJarlais, Tennessee Virginia
Larry Bucshon, Indiana Ruben Hinojosa, Texas
Trey Gowdy, South Carolina John F. Tierney, Massachusetts
Lou Barletta, Pennsylvania Raul M. Grijalva, Arizona
Martha Roby, Alabama Joe Courtney, Connecticut
Joseph J. Heck, Nevada Jared Polis, Colorado
Susan W. Brooks, Indiana John A. Yarmuth, Kentucky
Luke Messer, Indiana Frederica S. Wilson, Florida
C O N T E N T S
----------
Page
Hearing held on April 30, 2013................................... 1
Statement of Members:
Hudson, Hon. Richard, a Representative in Congress from the
State of North Carolina.................................... 4
Prepared statement of.................................... 6
Roe, Hon. David P., Chairman, Subcommittee on Health,
Employment, Labor and Pensions............................. 1
Prepared statement of.................................... 3
Statement of Witnesses:
Bass, Dave, vice president, compensation and associate
wellness, Delhaize America Shared Services Group, LLC...... 31
Prepared statement of.................................... 34
Conrad, Marshall ``Ken,'' Libby Hill Seafood Restaurants,
Inc., on behalf of the National Restaurant Association..... 15
Prepared statement of.................................... 16
Haynes, Tina M., MS, SPHR, chief human resources officer,
Rowan-Cabarrus Community College........................... 9
Prepared statement of.................................... 11
Horne, Chuck, president, Hornwood, Inc....................... 7
Prepared statement of.................................... 8
Huff, Olson, M.D., FAAP...................................... 39
Prepared statement of.................................... 40
Searing, Adam, J.D., MPH, health director, North Carolina
Justice Center............................................. 12
Prepared statement of.................................... 14
Silver, Bruce, president, Electronics Industries Corp.--TIA
Racing Electronics......................................... 41
Prepared statement of.................................... 42
Tubel, Edmund, CEO, Tricor Inc., licensed franchisee, Sonny's
Real Pit Bar B Q Restaurants............................... 36
Prepared statement of.................................... 38
HEALTH CARE CHALLENGES FACING NORTH CAROLINA'S WORKERS AND JOB CREATORS
----------
Tuesday, April 30, 2013
U.S. House of Representatives
Subcommittee on Health, Employment, Labor, and Pensions
Committee on Education and the Workforce
Washington, DC
----------
The subcommittee met, pursuant to call, at 9:00 a.m., in
room 106, Building 1000, Rowan Cabarrus Community College, 1531
Trinity Church Rd., Concord, NC, Hon. David P. Roe, [chairman
of the subcommittee] presiding.
Present: Representatives Roe and Hudson.
Staff Present: Casey Buboltz, Coalitions and Member
Services Coordinator; Benjamin Hoog, Legislative Assistant;
Brian Newell, Deputy Communications Director; Todd Spangler,
Senior Health Policy Advisor; John D'Elia, Minority Labor
Policy Associate
Chairman Roe. A quorum being present, the Subcommittee on
Health, Employment, Labor and Pensions will come to order.
Good morning, everyone. First, let me take a moment to
thank our witnesses for joining us. We know you all are very
busy, and we appreciate the opportunity to hear your thoughts
on the very important issue of health care. Second, I would
like to thank the people of Concord, North Carolina and the
community college staff for their hospitality.
The Herald-Sun recently reported on a job fair organized by
the North Carolina Technology Association. Dozens of local
companies attended the job fair, which was visited by people
like Bernita Nichols. For the first time in 28 years, Ms.
Nichols is looking for work after her employer went out of
business. She described the labor market as ``tight merely
because of the number of people who are looking.'' Richard
Corridore also attended the job fair and noted, ``The job
market is not recovered; it's still very difficult.''
These remarks underscore the job crisis we continue to
face. Nearly 12 million Americans are unemployed. Approximately
4.6 million have been out of work for six months or longer. The
number of men and women in the labor force is at its lowest
level in 35 years, indicating more people are giving up their
search for work in this dismal job market.
Though officials claim the recession ended almost four
years ago, countless families and small business owners find
that hard to believe. No doubt, many in the Tar Heel State feel
the same way when roughly 1 out of every 10 workers in the
state is unemployed.
As policymakers, we have an obligation to make job creation
our number one priority. Ending wasteful government spending,
opposing unnecessary regulations, preserving the safety net for
seniors and vulnerable families, and moving toward a balanced
Federal budget are all part of an effort to get this economy
moving and help put people back to work. Today's hearing is a
small but important part of that effort.
We can't talk about jobs and the workforce without
discussing health care. Approximately 160 million Americans
receive health care coverage through an employer. They and
their families know all too well the challenge of rising health
care costs, which can result in more than loss of coverage; it
can also lead to lower wages and fewer jobs. That is why it is
absolutely vital we put in place reforms that will bring down
costs and expand access to affordable care.
However, President Obama and his allies in Congress took
our nation in an entirely different direction. Despite
significant opposition from the American people, the President
signed into law a government takeover of health care that is
wreaking havoc on our workplaces. Instead of responsible
solutions to strengthen our health care system, we have empty
promises that have made a broken system even worse.
For example, we were promised if we liked our current
health care plan, we could keep it. But according to the Obama
Administration's own estimates, millions of individuals will
experience significant changes to their health care plan.
We were promised the law would create 4 million jobs. Yet
barely a week goes by that we don't learn of employers who
might be forced to reduce their work hours or cut the size of
their workforce due to the law's punitive mandates and tax
increases.
The President also promised his plan would reduce insurance
premiums by $2,500. Instead, the premiums for the average
family increased 4 percent last year and 11 percent the year
before. Estimates suggest they will continue to rise in the
years to come.
Over the next decade, the law is expected to hit certain
employers with $117 billion in higher taxes for failing to
provide government-approved health insurance; levy $55 billion
in new taxes on individuals who don't purchase government-
approved health insurance; and cost taxpayers close to $2
trillion in new spending. It is no wonder proponents of the law
are beginning to question whether this law is sustainable.
This flawed law is simply not in the best interest of
workers, employers, and families. However, Obamacare is the law
of the land and we have to examine how it is affecting our
families and workplaces. I want to thank our witnesses again
for sharing their perspectives and their ideas for responsible
reforms that will better address our health care challenges.
Just to let you know, as Chairman of the Health,
Employment, Labor Subcommittee, I am your next-door neighbor
over in Tennessee, in the mountains of East Tennessee, and my
district goes from Mountain City to Gatlinburg. So I border a
lot of North Carolina, and I feel like as many times as I fly
through Charlotte, I should have a zip code or an address here.
I spent 31 years practicing medicine. I was an Ob/Gyn
doctor in a group there. They started with four doctors, and we
have grown that to 100 doctors, and now with 450 employees. So
I spent my entire life as a physician practicing medicine. The
problem with the American health care system is it costs too
much, it is too expensive. Two, we had groups of people who
didn't have access to affordable coverage. That was the
problem. Thirdly, we had a liability crisis. And basically this
health care plan did increase access by increasing the number
of Medicaid patients, which is already a system that hasn't
worked very well, and taking a lot of money out of Medicare, a
system that is already in financial crisis.
So that is why I am here. I have only been in Congress four
years, and Richard, my friend here, Richard Hudson, has only
been there for less than a year. So we are not career
politicians. We are people that are trying to help solve
problems of this country.
I will now, without objection, I would like to yield to my
good friend, Richard Hudson, for any opening remarks he would
like to make.
[The statement of Chairman Roe follows:]
Prepared Statement of Hon. David P. Roe, Chairman,
Subcommittee on Health, Employment, Labor and Pensions
Good morning everyone. First, allow me to take a moment to thank
our witnesses for joining us. We know you all are very busy, and we
appreciate the opportunity to hear your thoughts on the very important
issue of health care. Second, I would like to thank the people of
Concord, North Carolina and the community college staff for their
hospitality.
The Herald-Sun recently reported on a job fair organized by the
North Carolina Technology Association. Dozens of local companies
attended the job fair, which was visited by people like Bernita
Nichols. For the first time in 28 years, Ms. Nichols is looking for
work after her employer went out of business. She described the labor
market as ``tight merely because of the number of people who are
looking.'' Richard Corridore also attended the job fair and noted,
``The job market is not recovered; it's still very difficult.''
These remarks underscore the jobs crisis we continue to face.
Nearly 12 million Americans are unemployed. Approximately 4.6 million
have been out of work for six months or longer. The number of men and
women in the labor force is at the lowest level in 35 years, indicating
more people are giving up their search for work in this dismal job
market.
Though officials claim the recession ended almost four years ago,
countless families and small business owners find that hard to believe.
No doubt many in the Tar Heel State feel the same way. Roughly 1 out of
every 10 workers in the state is unemployed.
As policymakers, we have an obligation to make job creation our
number one priority. Ending wasteful government spending, opposing
unnecessary regulations, preserving the safety net for seniors and
vulnerable families, and moving toward a balanced federal budget are
all part of an effort to get this economy moving and help put people
back to work. Today's hearing is a small but important part of that
effort.
We can't talk about jobs and the workforce without discussing
health care. Approximately 160 million Americans receive health care
coverage through an employer. They and their employees know all too
well the challenge of rising health care costs, which can result in
more than loss of coverage; it can also lead to lower wages and fewer
jobs. That is why it's absolutely vital we put in place reforms that
will bring down costs and expand access to affordable care.
However, President Obama and his allies in Congress took our nation
in an entirely different direction. Despite significant opposition from
the American people, the president signed into law a government
takeover of health care that is wreaking havoc on our workplaces.
Instead of responsible solutions to strengthen our health care system,
we have empty promises that have made a broken system worse.
For example, we were promised if we liked our current health care
plan we could keep it. But according to the Obama administration's own
estimates, millions of individuals will experience ``significant
changes'' to their health care plan.
We were promised the law would create four million jobs. Yet barely
a week goes by that we don't learn of employers who might be forced to
reduce their workers' hours or cut the size of their workforce due to
the law's punitive mandates and tax increases.
The president also promised his plan would reduce insurance
premiums by $2,500. Instead, premiums for the average family increased
4 percent last year and 11 percent the year before. Estimates suggest
they will continue to rise in the years to come.
Over the next decade, the law is expected to hit certain employers
with $117 billion in higher taxes for failing to provide government-
approved health insurance; levy $55 billion in new taxes on individuals
who don't purchase government-approved insurance; and cost taxpayers
close to $2 trillion in new spending. It's no wonder proponents of the
law are beginning to question whether this law is sustainable.
This flawed law is simply not in the best interest of workers,
employers, and families. However, ObamaCare is the law of the land and
we have to examine how it is affecting our families and workplaces. I
want to thank our witnesses again for sharing their perspectives and
their ideas for responsible reforms that will better address our health
care challenges.
______
Mr. Hudson. Thank you, Chairman Roe. On behalf of the
people of Concord and of this district, please allow me to
extend a warm welcome and offer my sincere appreciation to you
for holding this hearing here today. I am particularly thankful
also for Rowan Cabarrus Community College. The president, Dr.
Carol Spalding, is here with us. Thank you for allowing us to
host this hearing here on our campus. It says ``their campus,''
but I am saying ``our campus'' because I served on the Board of
Trustees here from 2002 to 2005 and I understand how important
this community college is to our local community and how
critical this college is and the colleges across North Carolina
are to creating jobs and growing the businesses that we have
here.
To our witnesses, thank you for taking your time from your
very busy schedules to be here with us today. It is important
that this committee understand the real implications that the
Affordable Care Act will have on jobs and on the industries you
represent.
North Carolinians are hard-working individuals who are
extremely concerned with the ever-increasing role government
plays in our daily lives. North Carolina currently has the
fifth highest unemployment in the country. Some counties in my
district have between 12 and 16 percent unemployment, and that
is the reported unemployment. I tell folks all the time when
they ask what are my top three priorities, they are jobs, jobs,
and jobs. And so that continues to be my focus. Our priority as
a state and a nation should not be implementing more mandates
handed down by Washington, but doing all we can to roll back
the regulations that are crushing small businesses and enable
our employers to get back to creating jobs and hiring people.
The problems facing America's economy and workforce are
immense, and the current regulatory environment simply creates
confusion, anxiety, and a culture of uncertainty among small
businesses. The extremely detailed and complex regulations that
make up the Affordable Care Act only add to the hesitation
businesses have with hiring people in a climate that is already
clouded with regulations. The U.S. Chamber of Commerce recently
conducted a survey of small business owners in which 71 percent
of the participants in the survey said that it will be harder
to hire new people under the current health care law.
I was recently talking to a business owner who owns a few
oil change franchises, Quick Lube kind of places, and he told
me that he bought land to build three new businesses, but he
wasn't going to do it. When I asked him why, he said because it
will add about 15 new employees, and that will put him over 50
employees total, which would make the Affordable Care Act apply
to him. While 15 jobs isn't enough to turn this whole economy
around, I sincerely believe that we are going to turn this
economy around 15 jobs at a time, or 5 jobs at a time, or a
couple of jobs here and a couple of jobs there as business
people take risks and hire and expand their business.
Some of the original leading proponents of the Affordable
Care Act are starting to vocalize just how detrimental the
effects of this law will be. Democratic Senator Jay Rockefeller
recently stated, ``I am of the belief that the Affordable Care
Act is probably the most complex piece of legislation ever
passed by the United States Congress,'' and he has been there a
while, so he has seen a lot of legislation. ``It's just beyond
comprehension,'' he concluded. Senate Democrat Max Baucus, who
helped write the legislation, just a couple of weeks ago said,
addressing the implementation of the law, said, ``I just see a
huge train wreck coming down.'' Well, business people across
this district have been telling me for a year now about this
train wreck, but even the folks who wrote the law are starting
to see it.
I was not a member of Congress when the Affordable Care Act
was passed into law. However, from the beginning, I joined the
public debate in opposition to this government takeover of
health care. Since being sworn in, I have taken numerous steps
to stop or at least try and fix this dangerous health care law
that will harm our job creators and workers if left in place. I
recently co-sponsored legislation to repeal and defund the law
entirely and have introduced legislation that takes an
incremental approach to chip away at harmful provisions within
the law.
I know that good ideas don't originate in Washington, D.C.
Therefore, it is important that we hear from real people out
here in the real world. That is why I live in Concord and
commute to Washington every week to vote, but I come home every
weekend. That is also why I was grateful to learn that the
subcommittee was willing to convene this field hearing here
today. The way I talk about it, I fly to Washington every week
and take common sense with me. But this is an opportunity to
bring Washington to the common sense. And so we are very
thankful to have this today.
Today's hearing serves as an opportunity to examine the
real-life effects of the Affordable Care Act's implementation
and I am looking forward to an open discussion about how we can
work toward common-sense solutions that help expand access to
affordable care for the American people.
I would yield back, Mr. Chairman.
[The statement of Mr. Hudson follows:]
Prepared Statement of Hon. Richard Hudson, a Representative in
Congress From the State of North Carolina
Thank you, Chairman Roe. On behalf of the people of Concord, please
allow me to extend a warm welcome and offer my sincere appreciation for
convening this hearing today. I am particularly thankful for Rowan
Cabarrus Community College allowing us to host this hearing on their
campus. I served on the Board of Trustees at this college from 2002-
2005 and I know what an integral part of the community it is.
To our witnesses, thank you for taking the time out of your busy
schedules to be here today. It is important that this committee
understand the real implications that the Affordable Care Act will have
on job creators like you.
North Carolinians are hardworking individuals who are extremely
concerned with the ever-increasing role government plays in our daily
lives. North Carolina currently has the fifth highest unemployment rate
in the country--some counties in my district have between 12 percent
and 16 percent unemployment. I tell folks all the time my top three
priorities are JOBS, JOBS, and JOBS. Our priority as a state and nation
should not be implementing more mandates handed down from Washington,
but doing all we can to roll back the regulations that are crushing
small business and enable our employers to get back to creating jobs.
The problems facing America's economy and workforce are immense,
and the current regulatory environment simply creates confusion,
anxiety, and a culture of uncertainty among small businesses. The
extremely detailed and complex regulations that make up the Affordable
Care Act only add to the hesitation businesses have with hiring people
in a climate clouded with regulations. The U.S. Chamber of Commerce
recently conducted a survey of small business owners in which 71
percent of the participants in the survey said that it will be harder
to hire new employees under this health care law.
I was recently talking to a business owner who owns a few oil
change franchises and he told me that he bought land to build 3 more
shops, but isn't going to build them now. I asked why and he said
because it will add about 15 new employees, which will put him over the
50 employee threshold. While we may not be able to turn the economy
around with 15 jobs, we can turn it around 15 jobs at a time. Our
government shouldn't be penalizing businesses who want to expand, they
should be encouraging it. Unfortunately, this is the reality under the
President's health care law.
Some of the original leading proponents of the Affordable Care Act
are starting to vocalize just how detrimental the effects of the law
will be. Democratic Senator Jay Rockefeller recently stated, ``I am of
the belief that the Affordable Care Act is probably the most complex
piece of legislation ever passed by the United States Congress. * * *
It's just beyond comprehension.'' Senate Democrat Max Baucus, who
helped write the legislation, recently addressed the implementation of
the law saying, ``I just see a huge train wreck coming down.''
I was not a member of Congress when the Affordable Care Act was
passed into law. However, from the beginning, I joined the public
debate in opposition to a government takeover of health care. Since
being sworn in, I have taken numerous steps to stop or at least fix
this dangerous health care law that will harm our job creators and
workers if left untouched. I recently co-sponsored legislation to
repeal and defund the law entirely and have introduced legislation that
takes an incremental approach to repealing certain harmful provisions
in the law.
I know that good ideas don't originate in Washington, D.C.
Therefore, it is important that we hear from real people out here in
the real world. That's why I live here in Concord and commute to
Washington to vote. That's also why I was grateful to learn the
subcommittee was going to convene this field hearing here today.
Today's hearing serves as opportunity to examine the real life effects
of the Affordable Care Act's implementation and I'm looking forward to
an open discussion about how we can work toward commonsense solutions
that help expand access to affordable health care for the American
people.
______
Chairman Roe. I thank the gentleman for yielding.
Pursuant to committee Rule 7(c), all members will be
permitted to submit written statements to be included in the
permanent hearing record. Without objection, the hearing record
will remain open for 14 days to allow such statements and other
extraneous material referenced during the hearing to be
submitted for the official hearing record.
We have two distinguished panels of witnesses today, and I
would like to recognize Mr. Hudson to introduce our first
panel.
Mr. Hudson. Thank you, Mr. Chairman. It is my pleasure to
introduce our first panel.
First we have Mr. Chuck Horne, who is the President of
Hornwood, Inc. in Lilesville, North Carolina. Hornwood, Inc.
manufactures various textiles, including the fabric used in our
infantry's combat boots. Mr. Horne holds a Bachelor's of
Science in Textile Technology and has been named a
distinguished alumnus of NC State University.
Ms. Tina Haynes is the Chief Human Resource Officer at
Rowan Cabarrus Community College in Salisbury. Before her
current position at Rowan Cabarrus, Ms. Haynes was an
Operations Manager at Humana Health Plans and Senior Vice
President of Wachovia Financial's Human Resources Division.
Mr. Adam Searing is the Director of the Health Access
Coalition in Raleigh. He has been named by President Obama as a
Champion of Change. He holds a Juris Doctorate from UNC Chapel
Hill.
And Mr. Ken Conrad is Chairman of Libby Hill Seafood
Restaurants in Greensboro. Mr. Conrad began as a cook in his
parents' restaurant, eventually becoming company president in
1983. He is Vice Chair of the National Restaurant Association
in Washington, D.C.
Thank you all for being here.
Chairman Roe. Before I recognize your testimony, let me
briefly explain our lighting system. We talked about this
before. You have five minutes to present your testimony. When
you begin, the light in front of you will turn green. When one
minute is left, the light will turn yellow. When your time has
expired, the light will turn red, at which point I will ask you
to wrap up your remarks as best you can. After you have
testified, members will each have five minutes to ask
questions, and as I mentioned previously, we probably will have
two rounds of questioning.
Mr. Horne, we will begin with you.
STATEMENT OF CHUCK HORNE, PRESIDENT,
HORNWOOD, INC., LILESVILLE, NC
Mr. Horne. Thank you, and good morning.
Chairman Roe. Did you push the ``On'' button?
Mr. Horne. Yes, I did.
Chairman Roe. Pull the mic a little bit closer.
Mr. Horne. A little closer?
My name is Chuck Horne, and I am a resident of Anson
County, North Carolina. I am President of Hornwood,
Incorporated, a family-owned textile business that has been in
operation since 1946. I am second generation in the business
and proud to say I have a son working with me that will be able
to carry the business forward for another generation. We are
the largest private employer in Anson County, with 350
employees which we call partners. Our business has managed to
grow and prosper over the last 66 years because of the
dedication of our partners. We are proud of our
accomplishments, particularly in view of the devastating impact
imports have had on the textile industry in the last 12 years.
Our company is self-insured and provides one of the best
medical, dental and vision plans in the area. Hornwood pays 80
percent of the cost, and our partners pay the other 20 percent
through weekly premiums. In 2012 the company's expense for
health care, above the premiums collected, was in excess of
$2.5 million, approximately 5 percent of our revenue. We have a
company nurse that works with our partners to promote healthy
lifestyles in terms of diet and exercise, and she also works
with them to get preventive services such as colonoscopies and
mammograms which are provided at no cost to the partner. We
have an on-site exercise facility and provide a free annual
health screening in partnership with our local hospital.
We don't do this because we are forced to by any agency,
but because it is the right thing to do. The health and well-
being of our partners is an important part of controlling our
costs and remaining competitive. When the Affordable Care Act
was passed, I did not express much concern because I knew we
offered a plan that far exceeded the mandates imposed on an
employer our size. As time went by, we began to learn that we
were going to have to pay more, but not for the benefit of our
partners. For example, in 2014, we will have to pay $63 per
covered individual to help pay for the adverse selection that
will hit the insurance exchanges. The amount we pay will exceed
$32,000. This provision continues through 2016.
Like many private employers, we are a Subchapter S
corporation, and as such the income of the company flows
through me, which results in an income in excess of $250,000.
As a result of the Affordable Care Act, I will have to pay an
additional nine-tenths of a percent in Medicare taxes and an
additional 3.8 percent tax on investment income starting this
year. This will result in more money being taken from the
company, money that could have been invested in new equipment
or training for our partners to help keep us competitive.
One of our frustrations with the Affordable Care Act is the
lack of knowledge we and our health care advisors have with the
law. Aside from the additional expense, it places an
administrative burden on us to try and comply with the
provisions. It is difficult to get definitive answers to our
questions. Our human resources department has spent countless
hours trying to understand the law.
I thank you for your time and your service and will do my
best to answer any questions.
[The statement of Mr. Horne follows:]
Prepared Statement of Chuck Horne, President, Hornwood, Inc.
Good morning. My name is Chuck Horne and I am a resident of Anson
County, NC. I am the president of Hornwood, Inc.,a family owned textile
business that has been in operation since 1946. I am second generation
in the business and proud to say I have a son working with me that will
be able to carry the business forward for another generation. We are
the largest private employer in Anson County with 350 employees which
we call partners. Our business has managed to grow and prosper over the
last 66 years because of the dedication of our partners. We are proud
of our accomplishments, particularly in view of the devastating impact
imports have had on the textile industry over the last 12 years.
Our company is self-insured and provides one of the best medical,
dental and vision plans in the area. Hornwood pays 80% of the cost and
our partners pay the other 20% through weekly premiums. In 2012 the
company's expense for health care, above the premiums collected, was in
excess of 2.5 million dollars, approximately 5% of our revenue. We have
a company nurse that works with our partners to promote a healthy
lifestyle in terms of diet and exercise and she also works with them to
get preventive services such as colonoscopies and mammograms which are
provided at no charge to the partner. We have an on- site exercise
facility and provide a free annual health screening in partnership with
our local hospital.
We don't do this because we are forced to by any agency, but
because it is the right thing to do. The health and well-being of our
partners is an important part of controlling our cost and remaining
competitive. When the Affordable Care Act was passed, I did not express
much concern because I knew we offered a plan that far exceeded the
mandates imposed on an employer our size. As time went by, we began to
learn that we were going to have pay more, but not for the benefit of
our partners. For example, in 2014 we will have to pay $63 per covered
individual to help pay for the adverse selection that will hit the
insurance exchanges. The amount we pay will exceed $32,000. This
provision continues through 2016.
Like many private employers, we are a subchapter S corporation and
as such the income of the company flows through me which results in an
income in excess of $250,000. As a result of the Affordable Care Act, I
will have to pay an additional .9% in Medicare taxes and an additional
3.8% tax on investment income starting this year. This will result in
more money being taken from the company, money that could have been
invested in new equipment or training for our partners to help keep us
competitive.
One of our frustrations with the Affordable Care Act is the lack of
knowledge we and our health care advisors have with the law. Aside from
the additional expense, it places an administrative burden on us to try
and comply with the provisions. It is difficult to get definitive
answers to our questions. Our human resources department has spent
countless hours trying to understand the law.
I thank you for your time and your service and will try my best to
answer any questions.
______
Chairman Roe. Thank you, Mr. Horne.
Ms. Haynes?
STATEMENT OF TINA HAYNES, CHIEF HUMAN RESOURCE OFFICER, ROWAN-
CABARRUS COMMUNITY COLLEGE, SALISBURY, NC
Ms. Haynes. Thank you. I would like to thank you for the
opportunity to testify today about the Affordable Health Care
Act and its impact on the Rowan Cabarrus Community College.
Considered a large employer under the definition of the
Affordable Care Act, Rowan Cabarrus College has focused on
emerging regulations, and we are alarmed at the extent to which
regulations will affect our college. As currently published,
the supporting regulatory framework has far-reaching and
significant negative consequences. The regulations defining how
benefits eligibility works will force us to reduce the number
of courses we currently allow adjunct faculty members to teach,
produce a costly and significant administrative burden, and
potentially result in penalties.
Further, it effectively reduces the income that dedicated
adjunct faculty will be able to earn at Rowan Cabarrus, and it
may slow our students' ability to get degrees if we drop
courses from the schedule.
As a strategy for responding to the variability in course
demand and controlling costs while maintaining high-quality
instruction, Rowan Cabarrus relies on adjunct faculty. Like our
sister institutions, we operate with a lean budget, remaining
responsive to unexpected funding cuts and variability in demand
that is driven by external forces such as high unemployment.
The use of adjunct faculty is the best approach to augment
full-time faculty without introducing an unsustainable cost for
more full-time employees.
In December of 2012, the IRS stated specifically that it is
unreasonable to only consider the time spent in instruction
toward benefits eligibility. Because of this change, our
institution will have to reduce the hours that adjunct faculty
can teach. A ratio of 3 hours of service time for every 1
credit hour of instruction was suggested by the IRS. While the
Internal Revenue Service is still taking comments, it is
unclear whether anything less than the 3-to-1 ratio will be
acceptable.
Underlying the IRS regulation is an inconsistent approach
between the Department of Labor and the IRS. According to
Department of Labor standards, faculty are exempt employees,
and they are paid on the basis of instructional hours. They may
work more hours at their discretion, like others who are
classified professionals. Now the IRS has explicitly stated the
hours outside of instruction time should be counted toward
benefits eligibility, which is fundamentally different than the
Department of Labor's instruction on exempt employees.
While it is true that the Department of Labor is defining
compensable hours, and the IRS is defining benefits eligibility
hours, it seems plausible that the basis for both would be the
same.
Further, the regulations that should result in greater
access to affordable health care ultimately work against
adjunct faculty. Dedicated adjunct faculty who have had steady,
multi-course workloads for years will lose income and have less
money to purchase coverage through those health care exchanges.
This impact ultimately reaches our students. Rowan Cabarrus
must consider reducing courses offered, and if students can't
get the courses they need, they can't complete their degrees
and can't become employable. It is a financial impact to them,
and it is a burden on the economic engine of our community
since these students can't contribute to the tax base, and they
can't become consumers of goods either.
To administer the new regulations, our institution will
incur one-time and recurring costs to determine eligibility,
notification, enrollment, and there will be new billing,
remittance and collections processes for health care coverage
for former employees. When applying all the rules, the
variation in employee populations and different measurement
periods are complex, and as a population adjunct faculty may
work one semester and then may skip the next. Employees who
don't work for us currently but worked for us during the prior
measurement period are still qualified to participate in our
health plan during the next stability period, but we can't
deduct for insurance premiums because they are no longer on our
payroll. So that sets us up for collections and expenses if it
is uncollected.
In addition to complex rules and measurement, the
regulations assess penalties for excluding employees from
eligibility. Even with the 5 percent margin of error that is
provided by the regulations, a single systematic error could
inadvertently exclude individuals from coverage and result in
disastrous and crippling penalties.
Like our sister institutions, we must reevaluate course
schedules, and we are acutely aware that our students will be
affected when courses are eliminated from the schedule. We ask
for your support for us and for other public institutions that
can't shut down registration, and we can't limit the number of
freshmen coming in for the next semester as a means to control
our benefits costs. We need the flexibility to develop and
apply rules that, while consistent in approach to providing
health care eligibility, provide the flexibility that respects
the unique and varied nature of courses being taught.
Again, I thank you for the opportunity to present the
impact of the Affordable Care regulations on our institution.
We are hopeful that our remarks today highlight the very real
impact of these regulations on our institution, our employees,
our community, and our sister institutions across the nation.
Thank you.
[The statement of Ms. Haynes follows:]
Prepared Statement of Tina M. Haynes, MS, SPHR,
Chief Human Resources Officer, Rowan-Cabarrus Community College
I would like to thank you for the opportunity to testify about the
impact of the Affordable Health Care Act on Rowan-Cabarrus Community
College. Considered a large employer under the definition of the
Affordable Health Care Act, Rowan-Cabarrus Community College has
focused on emerging regulations and guidance, and we are alarmed at the
extent to which this act will affect the college and its workforce. As
currently published, the supporting regulatory framework has far-
reaching and significant negative consequences for the college and our
employees, our students, and our community. The regulations defining
how health care coverage eligibility works will force us to reduce the
number of courses we currently allow adjunct faculty members to teach,
produce a significant and costly administrative burden and could
further harm the institution through egregious penalties if errors are
made in identification of those who qualify for health care coverage.
Further, it effectively reduces the income that our long-time,
dedicated adjunct faculty will be able to earn, and it may slow our
students' ability to get degrees if we must eliminate courses from the
academic schedule.
IRS guidelines will force the reduction in courses adjunct faculty can
teach
As a strategy for responding to the variability in course demand
and controlling costs while maintaining high quality instruction,
Rowan-Cabarrus has relied on adjunct faculty since its origin in the
1960's. Employment of adjunct faculty is the best approach for
providing high quality, experienced instructors with current, real-
world experience to supplement our full-time faculty without
introducing an unsustainable expense of additional full- time faculty.
Like our sister institutions, we operate with a lean budget; we must
remain responsive to unexpected funding cuts and variability in demand
that is driven from external forces such as high unemployment.
Rowan-Cabarrus Community College is certain that we will have to
reduce the total hours that adjunct faculty can teach because of IRS
regulatory changes related to the Affordable Health Care Act. In
December of 2012, the IRS published guidance that requires us to
consider more than instructional time when calculating benefits
eligibility, stating specifically that it is ``unreasonable to only
consider the time spent in instruction''. A ratio of 3 hours of service
time for every one credit hour of instruction was suggested by the IRS
since faculty are exempt employees by Department of Labor standards and
don't require tracking for actual hours worked. Effectively, this means
that an instructor cannot teach more than three, 3-credit hour courses
without exceeding the 30-hour threshold for health care coverage
eligibility. While the IRS is taking comments on this point, it is
unclear whether anything other than the 3:1 ratio will be acceptable.
The regulations that should result in greater access to affordable
health care ultimately work against the adjunct faculty. Reducing the
course load for adjunct faculty is the only way that Rowan-Cabarrus can
avoid the unfunded liability of additional health care cost. This
further compounds the problem for adjuncts who still aren't covered by
health insurance, and now, have a reduction in income because we
reduced the number of hours they will be working for us.
The impact ultimately reaches our students. Rowan-Cabarrus must
consider reducing courses offered if we don't have an adequate number
of faculty to teach. Students can't get jobs if they can't get the
courses they need to complete degrees. This is a tremendous economic
impact for them, but it is also a drag on the economic engine of our
community since they can't be contributors to the tax base or consumers
of goods without an income.
The administrative burden of affordable health care
Not only does the Affordable Health Care Act negatively affect
adjunct faculty income and slow student progress toward employability,
it introduces a massive administrative burden that comes with
unanticipated costs. Rowan- Cabarrus will incur one-time costs to
establish processes needed and will have recurring costs related to
managing the workforce, determining eligibility, notification, and
enrollment. There will be new billing, remittance and collections
processes for health coverage for former employees who no longer work
for us.
As a population, adjunct faculty may work one semester and not the
next or teach multiple courses one semester and teach only one course
in the next semester. Measurement periods have to address the
intermittent and varied nature of their work. When applying safe harbor
rules, the multiplicity of periods and the variations in employee
populations are complex. Employees who don't even work for us
currently, but worked for us during the measurement period, are still
qualified to participate in our health plan during the next stability
period but insurance premiums can't be payroll deducted since they
aren't working for us. Since by state regulations we can't debit a
checking account, we face collection issues and expense for premiums if
not reimbursed.
Penalties
The Affordable Health Care Act brings a set of complex regulations
and associated penalties, which if unintentionally breached, could have
catastrophic results. Even with the 5% margin of error provided by
regulations, a single, systematic error that inadvertently excludes
individuals from coverage could result disastrous and crippling
penalties.
Summary
Like our sister institutions, Rowan-Cabarrus must reduce the number
of hours that adjunct faculty can teach. As we evaluate course
schedules for the fall semester, we are acutely aware that our students
will be affected when courses are eliminated from the schedule. Their
employability is slowed, which in turns affects our local economic
engine since they won't be earning and contributing. Dedicated, adjunct
faculty who have had steady, multi- course workloads for years will
lose income as their course loads are reduced. Consequently, these
employees will have less disposable income to put back into our economy
and less money to buy health care through health care exchanges.
Thank you again for the opportunity to present the impact of
Affordable Health Care regulations on our institution. We are hopeful
that our remarks today highlight the very real impact of the Affordable
Health Care Act on our institution, our employees and on our community.
______
Chairman Roe. Thank you, Ms. Haynes.
Mr. Searing?
STATEMENT OF ADAM SEARING, DIRECTOR,
HEALTH ACCESS COALITION, RALEIGH, NC
Mr. Searing. Okay. Thank you very much, Mr. Chairman,
Representative Hudson. I appreciate the opportunity to come and
speak today. I run our healthcare work at the Health Access
Coalition of the North Carolina Justice Center. We are an anti-
poverty organization. We have been working to reduce poverty
and expand opportunity for all North Carolinians since 1994.
Ms. Haynes, one thing that was just running through my mind
when you were talking about the problems you are having with
having part-time faculty, I was just looking at Governor Pat
McCrory's budget and saw that he is cutting the amount of money
that is coming to the community colleges, and I sure wish that
he would reconsider that and give more money to our community
colleges so they all can hire full-time faculty, because I
think that would be better for everybody.
Anyway, as I said, I have had the privilege to work on this
issue for a long time, and as sort of the designated hitter
this morning, saying why the Affordable Care Act isn't the end
of civilization, let me just go ahead and start by giving a few
of the benefits that have been coming to North Carolinians
since the passage of the Act in 2010. I have been hearing so
much about how the sky is falling this morning that I was
looking outside to see if it was actually coming down, but it
is still up there.
So, for instance, I bet many folks in this room know
somebody or actually have a child who is under 26 who is able
to stay on their parents' health care plan now. That is a huge
benefit. I have met many people in my travels around the state
who have been able to keep their kids on the plan whether they
are in college or not, whether they take a job, Chairman Roe,
like you were talking about when the students are working in
that theme park in your district and they are able to stay on
their parents' plan, a great opportunity.
The other things that are happening, there is no more co-
insurance co-payments for preventive services. This just makes
sense. I mean, come on. If you are going to get people to come
in to the doctor to get a checkup and get screened for diseases
that we can treat early, it just makes sense to make that is
easy as possible.
Another change. We're moving towards the situation where
you can't charge women more for exactly the same health
coverage that men buy. It doesn't seem right that we charge
women more money for exactly the same health coverage. I am not
talking about maternity care. I am talking about exactly the
same health coverage. That doesn't make any sense. That is
another thing that is going away with this law.
There are tax credits for small businesses that are in this
law, and those are going to be expanded come 2014.
So, for over 1 million of us, however, really the biggest
changes are about to come. Now, if you have health insurance
already through your job, you are going to be doing all right,
what these gentlemen provide here, Mr. Horne, Mr. Conrad, in
their large businesses. But if you are working in a small
business or you are out on your own, you are not getting your
coverage through your job, you are going to be able to go to
this health exchange, get a tax credit--that is the key to what
Chairman Roe was talking about. You can just look on your iPad.
Well, you are not going to get the tax credit to buy health
insurance if you are just looking on your iPad. You have to go
through this health exchange. You go through this health
exchange, buy coverage if you are a business owner or working
in a small business.
The other part of the change is that no longer will health
insurance companies be able to charge people more because
someone has a pre-existing health condition. Now, I am sure
that everybody sitting up at that table up there and back here,
and myself included, who has talked to anybody in the last 10
years knows somebody who has not been able to go and buy health
insurance on their own, has been quoted a price of $1,000,
$2,000 a month from North Carolina Blue Cross-Blue Shield
because they had a pre-existing health condition. Well, Blue
Cross and other insurance companies are no longer going to be
able to do that.
Let me tell you a story how the Affordable Care Act could
make a huge difference for a business owner that I know. In
Raleigh, there is a fellow who was a restaurant owner and he
was a chef. His full name was Hamid Mohajer. Everybody called
him Mo. He came to this country as an immigrant. He went to
Campbell College when it was a college, before it became
university. He had to drop out because of financial issues. He
worked on a tobacco farm, Chairman Roe, and he ended up working
at Darrell's in Raleigh bussing tables. He was such a good
chef, though, he eventually got to go and open his own
restaurant.
Well, he had a pre-existing condition, like I was talking
about. He couldn't go buy health insurance. His wife went out
and took a job in a chain restaurant, got some coverage.
Unfortunately, he got bone cancer, ended up in the hospital.
This was just devastating. What was even more devastating was
that health plan was so weak and had so many limits on it that
he ended up dying with hundreds and hundreds of thousands of
dollars in bills. So Mo left his wife not only with a
restaurant to run but also having to do fundraiser after
fundraiser to pay off these medical bills that they had
incurred.
Under the Affordable Care Act, it came too late for him,
but he would have been able to buy coverage that took care of
that. He probably would have gotten sick and, unfortunately,
would have passed away anyway, but the Affordable Care Act
would have made sure that he would have been able to buy a
health plan for him and his business.
I hope we can go forward and think about the positive
effects. Thank you very much.
[The statement of Mr. Searing follows:]
Prepared Statement of Adam Searing, J.D., MPH,
Health Director, North Carolina Justice Center
Mr. Chairman, Representative Hudson, and committee members--thank
you very much for the opportunity to speak today. The North Carolina
Justice Center is a statewide organization created in 1994 committed to
reducing poverty and expanding opportunity for all North Carolinians.
I have had the privilege to direct our health care work at the
Center for the past fifteen years, and I am very excited to be a part
of implementing the Affordable Care Act here in North Carolina.
Millions of North Carolinians are already seeing some benefits from
the Act--like kids under 26 able to stay on their parents' health plans
to freedom from copayments and coinsurance for basic preventive health
services for people both on Medicare and on private coverage to a
fairer marketplace where women can no longer be charged more money than
men for exactly the same health coverage.
For over one million North Carolinians however--many of us owning
or working in small businesses--the best is yet to come. Starting later
this year, employees in businesses that choose not to provide health
coverage will be able to sign up for new health plans in the health
exchange. If their family income is under about $88,000 a year, they
will qualify for tax credits--and the lower your income, the higher the
tax credit--that will be worth thousands of dollars and will make that
insurance affordable. And business owners will be able to buy coverage
in the exchange too.
In addition, business owners and employees will no longer have to
worry that a pre-existing health condition will mean insurance
companies will quote them unattainable monthly premiums. I cannot tell
you how many people over the years I have met around our state who,
because of a pre-existing health condition, have been quoted premiums
of $1,000, even $2,000 a month! In just a few months, that will be a
thing of the past.
Yes--employees will now have a place to go for coverage no matter
what.
Let me tell you a story about how the Affordable Care Act will
change lives.
In Raleigh the restaurant owner and influential chef Hamid Mohajer
could not get health insurance due to a preexisting condition after he
started his restaurant. (he attended Campbell College and worked on a
tobacco farm before his successful restaurant career--Mo's Diner) His
wife had to take a part-time job at a chain restaurant to get some form
of coverage. In 2010 Hamid got bone cancer and needed extensive
treatment. The flimsy policy offered by his wife's employer capped
benefits and didn't cover everything Hamid needed. After he died his
wife not only had to worry about sustaining the family's business, she
had to host regular fundraisers to pay off the medical bills. That's no
way to run a business or a health care system.
The changes for our business owners and employees come too late for
Hamid, but will be most welcome by many of the people I meet every day
across North Carolina.
Finally, let's get some things straight about the Affordable Care
Act and North Carolina:
1. Any business with less than 50 full time employees--95% of the
businesses in NC--has no penalties and has no requirements to meet
under the ACA. None. Owners and employees of this vast majority of
businesses in our state do get access to the health care exchange
however along with tax credits to buy affordable coverage for many
families.
2. Governor Pat McCrory's decision to follow the General Assembly
and reject over a billion dollars a year from the federal government
under the ACA to provide Medicaid health coverage to families earning
under $29,000 a year was a real mistake. There are many employees who
would gain coverage under this provision and it is not right that they
will be left out. Business benefits when workers come to work healthy
and having health coverage--no matter how low income you are--is a part
of that. Medicaid coverage also can help some businesses who have more
than 50 full time low income employees avoid paying penalties since
their workers can be covered by Medicaid.
3. Finally--we are doing some really innovative things aimed at
small businesses in NC with our Medicaid Community Care program and NC
Blue Cross--we are starting to test letting Blue Cross- insured
businesses use our excellent health care networks under Community Care.
This can save money, lower premiums and improve health care at the same
time by coordinating our health care better, while using evidence to
drive the kind of health care we deliver. This is the kind of
innovation we need to see more of.
Thank you.
______
Chairman Roe. Thank you, Mr. Searing.
Mr. Conrad?
STATEMENT OF KEN CONRAD, CHAIRMAN, LIBBY HILL SEAFOOD
RESTAURANTS, GREENSBORO, NC
Mr. Conrad. Thank you, gentlemen, for the opportunity to
testify before you today on behalf of the National Restaurant
Association. My name is Ken Conrad, and I am Chairman of the
Board of Libby Hill Seafood Restaurants. I currently serve as
the Vice Chair of the National Restaurant Association. On any
given day, 13 million Americans go to work in 980,000
restaurants in the United States. Our industry faces a number
of challenges in implementing the law due to the unique
characteristics of our workforce. I wish to highlight three of
those for you today: one, the definition of a full-time
employee; the complexity of a large employer determination; and
potential harm that automatic enrollment provision could cause
for some employees.
Libby Hill is a seafood distribution and restaurant company
begun in 1953 when my father, Luke Conrad, first opened our
doors. I am proud to say that my son, Justin, is the third
generation of Conrads in this business. Our first restaurant is
still located within the city limits of Greensboro, North
Carolina. We have eight additional units in the state and
Southern Virginia. We operate our sales for those units, and we
lease the remaining to the management team on location.
Libby Hill Restaurants employs 141 team members, of which
32, by the full-time definition as defined in the healthcare
law, 32 are considered full-time. We have always used a 40-hour
work week to determine who is full-time and part-time. So we
will have to make changes on the new definition.
Today we offer a full medical plan and pay 80 percent of
the premium for our corporate employees. That includes office
staff, warehouse employees, truck drivers, et cetera. We try to
drill down deeper in this carve-out program, but we could not
get enough of the restaurant employees to come forward to have
75 percent covered under the plan. So we continue to pay all
but one of our corporate employees to take this plan.
What employees will choose to do in 2014 when they are
required to obtain coverage or pay a tax penalty remains an
unanswered question that will impact our cost of offering
coverage. The statute lays out a very specific and complicated
calculation that must be used by employers to determine if they
are applicable to be a large employer. As you might imagine,
operators on the bubble of 50 full-time equivalent employees,
which we are, are especially concerned in trying to understand
what we must do to complete this complicated calculation. It is
creating a lot of concern as these businesses, who have always
considered themselves to be small, are now considered to be
large.
At first brush, our company, we are on the verge of
becoming a large employer. We must offer healthcare or face a
substantial penalty, knowing from past experience that we are
unlikely to get to the 75 percent participation level. We must
do this calculation every year, and if we remain on the
threshold of becoming a large employer, then we will not open
any additional units because this insurance provision would be
a game changer for our company.
The automatic enrollment requirement is a concern to many
in the industry or that 200 full-time employees are
automatically enrolled in healthcare. We think it is redundant
and we think it is already covered. I want to thank Congressman
Hudson and Congressman Robert Pittinger for proposing H.R. 1254
to repeal this part of it, and we appreciate your work on that.
In conclusion, since the enactment of the law, the National
Restaurant Association has worked to constructively shape
implementing the regulations of the healthcare law.
Nevertheless, there are limits to what can be achieved through
the regulatory process alone. At the end of the day, if this
law remains in effect as it is currently written, restaurants
and food service operators will face serious challenges.
Thank you again for this opportunity.
[The statement of Mr. Conrad follows:]
Prepared Statement of Marshall ``Ken'' Conrad, Libby Hill Seafood
Restaurants, Inc., on Behalf of the National Restaurant Association
Chairman Roe, Ranking Member Andrews, and members of the
Subcommittee on Health, Employment, Labor and Pensions, of the House
Committee on Education and the Workforce, thank you for this
opportunity to testify before you today on behalf of the National
Restaurant Association. It is an honor to be able to share with you the
impact the 2010 health care law is having on businesses like mine, and
the restaurant industry as a whole, particularly on our ability to
create and grow jobs.
My name is Ken Conrad, and I am Chairman of the Board of Libby Hill
Seafood Restaurants, Inc., a seafood restaurant first opened by my
father Luke Conrad back in 1953. I am very involved in the seafood and
restaurant industry here in the state and am the former Chairman of the
North Carolina Restaurant Association. I currently serve as Vice
Chairman of the National Restaurant Association.
The National Restaurant Association is the leading trade
association for the restaurant and foodservice industry. Its mission is
to help its members, such as myself, establish customer loyalty, build
rewarding careers, and achieve financial success. The industry is
comprised of 980,000 restaurant and foodservice outlets employing 13.1
million people who serve 130 million guests daily. Restaurants are job
creators. Despite being an industry of predominately small businesses,
the restaurant industry is the nation's second-largest private-sector
employer, employing about ten percent of the U.S. workforce.\1\
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\1\ 2013 Restaurant Industry Forecast.
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The Libby Hill Seafood Restaurants story
My family continues to own and operate Libby Hill Restaurants and
I'm proud to say that my son Justin is the third generation of Conrad's
in the business. Our first restaurant is still located within the city
limits of Greensboro, North Carolina with locations scattered across
North Carolina and Virginia. Four of the restaurants are part of Libby
Hill Restaurants, Inc., with the remaining 5 separately owned and
operated by others. My company also includes a seafood distribution
company. We cook some of the best seafood in the area, and you know
that every Libby Hill Restaurant is a family-friendly kind of place.
Libby Hill Restaurants, Inc. employs 32 full time employees and 109
part-time employees based on the new definition of full-time employment
within the health care law. We have always used a 40 hour work week to
define who is full-time and part-time within our company, and so we
will have to makes changes based on this law's new definition of full-
time at 30 hours a week on average in any given month.
Today, we offer a full medical benefits plan and pay 80 percent of
the premium, but only 10 employees take the plan. As a result we have a
carve-out plan for our corporate office staff, our warehouse employees
and our truck drivers. We have tried to offer coverage to our
restaurant employees in the past, but not enough employees opted in for
the company to even be able to purchase a plan. To offer coverage, we
needed a minimum participation of 75 percent of the eligible employees
to take our offer of coverage, but that was not the case when all of
our staff was included. As a result, we had to limit the eligibility
pool to a smaller group of employees to be able to offer coverage to
anyone. Level of participation in restaurateurs' plans has been a long-
standing challenge in our industry. I am concerned that even with the
new law's requirements for individuals, employees who are eligible for
our offer of coverage will not accept it and choose to pay individual
mandate tax penalty instead.
Business owners crave certainty and one of the most difficult
things to predict about the impact of this law is the choice employees
will make. Will they accept our offer of minimum essential coverage?
Will exchange coverage be less expensive than what we can afford to
offer under the law? Will our young workforce choose to pay the
individual mandate tax penalty instead of accepting our offer of
coverage in 2014, 2015 and beyond? Future take-up rate of coverage is
very hard to predict given many new factors, but could mean increased
costs for employers when offering coverage.
Complying with the health care law is challenging for restaurant and
foodservice operators given the unique characteristics of the
industry
Since the law was enacted in 2010, me and my staff have educated
ourselves about the requirements of the law, the details of the Federal
agencies' guidance and regulations, and to understand how to implement
the necessary changes within our organization. Understanding our
compliance requirements has been time consuming and burdensome.
Currently we do not have human resources personnel on staff responsible
for administering the health benefits program as part of their duties.
Instead, we are relying on our lawyers and outside vendors to help us
determine our options and implement the law within our business. This
is typical of restaurants of similar size to our operations. Our Chief
Financial Officer has primary responsibility for developing our
strategy and plan to comply with the law. Both he and I have spent a
significant amount of time trying to understand the impact so that
educated business decisions can be made.
Until the January 2, 2013 Federal Register publication of the
Treasury Department's Proposed Rule regarding the Shared Responsibility
for Employers provision, employers did not have any firm rules on which
they could plan and make business decisions. Up until this time,
proposals and guidance had been issued with numerous opportunities for
public comment, but nothing had the weight of regulation. This proposed
rule, while not finalized, does provide employers assurances that the
rules proposed can be relied upon until further rules are issued.
Our Association has been educating the industry since enactment and
doing everything we can so that operators know that now is the time to
take action to comply. While many rules and guidance have been
proposed, questions still remain regarding exact implementation of many
of the employer requirements.
The unique characteristic of our workforce creates compliance
challenges for restaurant and foodservice operators. As a result, many
of the determinations employers must make to figure out how the law
impacts them--for example the applicable large employer calculation--
are much more complicated for restaurants than for other businesses who
have more stable workforces with less turnover.
Restaurants are employers of choice for many looking for flexible
work hours and so we employ a high proportion of part-time and seasonal
employees. We are also an industry of small businesses with more than
seven out of ten eating and drinking establishments being single-unit
operators. Much of our workforce could be considered ``young
invincibles,'' as 43 percent of employees are under age 26 in the
industry.\2\ In addition, the business model of the restaurant industry
produces relatively low profit margins of only four to six percent
before taxes, with labor costs being one of the most significant line
items for a restaurant.\3\
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\2\ Bureau of Labor Statistics, U.S. Department of Labor.
\3\ 2013 Restaurant Industry Forecast.
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All of these factors combine to complicate what a restaurant and
foodservice operator must consider when implementing the necessary
changes in their business to comply with the law. My company is a great
example as we have spent a large amount of time trying to understand
the law and what we must do to comply, but still do not know the
answers to many questions.
Applicable large employer determination
The statute lays out a very specific calculation that must be used
by employers to determine if they are an applicable large employer and
hence subject to the Shared Responsibility for Employers and Employer
Reporting provisions. Because of the structure of many restaurant
companies, determining who the employer is may not be as easy as it
would seem.
Aggregation rules in the law require employers to apply the long
standing Common Control Clause\4\ in the Tax Code to determine if they
are considered one or multiple employers for the purposes of the health
care law. While these rules have been part of the Code for many years,
this is the first time many restaurateurs, especially smaller
operators, have had to understand how these complicated regulations
apply to their businesses. The Treasury Department has not issued, nor
to our knowledge, plans to issue, guidance to help smaller operators
understand how these rules apply to them. Restaurant and food service
operators must hire a tax advisor to determine how the complicated
rules and regulations associated with this section of the Code apply to
their particular situation. It is common that business partners of one
restaurant company own multiple restaurant companies with other
partners. These restaurateurs consider themselves to be separate
businesses, but because there is common ownership, under the rules many
are discovering that all the businesses can be considered as one
employer for purposes of the health care law.
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\4\ Internal Revenue Code, Sec. 414 (b),(c),(m),(o).
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Once a restaurant or foodservice operator determines what entities
are considered one employer, they must determine their applicable large
employer status annually. This is not an easy calculation. My business
is on the bubble of being an applicable large employer defined as
employing 50 full-time equivalent employees on business days in a
calendar year. We must consider the number of full-time employees now
based on 30 hours a week, as well as the hours worked by all our other
employees. Given we are an industry of small businesses and that
restaurants are labor intensive and require many employees to operate
successfully, many small businesses will have to complete this
calculation annually to determine their responsibilities under the law.
I may be one of them.
As you might imagine, operators like myself who are on the bubble
of 50 full-time equivalent employees are trying to understand what they
must do to complete this complicated calculation each year. Generally,
an employer must consider the hours of service of each of their
employees in all 12 calendar months each year. However, the Treasury
Department has allowed for transition relief in 2013 for businesses to
use as short as 6 months to do this calculation. The Treasury
Department recognized the fact that small businesses, who may not
currently offer health coverage, will need time to determine their
status and then negotiate a plan with an insurance carrier. However,
there remain questions about the process in later years when January
through December must be considered for status beginning the following
January 1st. Will small employers just reaching the applicable large
employer threshold find that they determine they are large on December
31, 2014, for example, and must offer coverage a day later on January
1, 2015? Rules are needed to clarify when such employers must offer
coverage in future years.
The applicable large employer determination is complicated. For
compliance beginning in 2014, employers must determine all employees'
hours of service each calendar month, calculate the number of FTEs per
month, and finally average each month over a full calendar year to
determine the employer's status for the following year. The calculation
is as follows:
1. An employer must first look at the number of full-time employees
employed each calendar month, defined as 30 hours a week on average or
130 hours of service per calendar month.
2. The employer must then consider the hours of service for all
other employees, including part-time and seasonal, counting no more
than 120 hours of service per person. The hours of service for all
others are aggregated for that calendar month and divided by 120.
3. This second step is added to the number of full-time employees
for a total full-time equivalent employee calculation for one calendar
month.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
4. An employer must complete the same calculation for the remaining
11 calendar months and average the number over 12 calendar months to
determine their status for the following calendar year.
This annual determination is administratively burdensome and
costly, especially for those just above or below the 50 FTE threshold
who must most closely monitor their status--most likely small
businesses. Many restaurant operators rely on third-party vendors to
develop technology or solutions to help them comply with these types of
requirements but vendors are backlogged and solutions are not widely
available today.
Offering coverage to full-time employees
The 2010 health care law requires employers subject to the Shared
Responsibility for Employers provision to offer a certain level of
coverage to their full-time employees and their dependents, or face
potential penalties. The statute arbitrarily defines full-time as an
average of 30 hours a week in any given month. This 30-hour threshold
is not based on existing laws or traditional business practices. In
fact, the Fair Labor Standards Act does not even define full- time
employment. It simply requires employers to pay overtime when nonexempt
employees work more than a 40-hour workweek. As a result, 40 hours a
week is generally considered full- time in many U.S. industries.
Certainly in the restaurant and foodservice industry, operators have
traditionally used a 40-hour definition of full-time. Adopting such a
definition in this law would also provide employers the flexibility to
comply with the law in a way that best fits their workforce and
business models.
This is complicated by the fact that sometimes it is difficult to
know who the full-time employees will be in a restaurant. For
restaurant and foodservice operators who are applicable large
employers, it is not easy to predict which hourly staff might work 30
hours a week on average and which will not. Many employees' hours can
be unpredictable week to week.
During periods of high customer traffic during the year, employees
are scheduled to work more hours to maintain the customer's expected
level of service, but then hours are reduced as business slows. Some
weeks an employee might pick up extra shifts to earn a little extra in
their paycheck that month, and others they prefer a few less hours
because of commitments outside the restaurant. This is one of the
attractive benefits of our industry--the flexibility to change your
hours to suit your own personal needs. However, for the first time
under this law, the federal government has drawn a bright line as to
who is full-time and who is part-time. As a result, employers with
variable workforces and flexible scheduling must be deliberate about
scheduling hours because there is now potential liability for employer
penalties if employees who work full-time hours are not offered
coverage.
The industry appreciates that the Treasury Department has
recognized that it may be difficult for applicable large employers to
determine employee's status as full-time or part-time on a monthly
basis, causing churn between employer coverage and the exchange or
other programs. Such coverage instability is not in the employee's best
interest and so the restaurant and foodservice industry is pleased that
the Lookback Measurement Method is an option that applicable large
employers may use.
The Lookback Measurement Method's implementing rules are complex
but it could be helpful for both employers and employees. Employers
will be better able to predict costs and offer coverage to employees
they are required to offer to, and employees whose hours fluctuate have
the peace of mind of knowing that if their hours do drop, coverage will
not be cut short before the end of their stability period. The Lookback
Measurement Method can only be applied to variable hour or seasonal
employees. Employers cannot consider the length of time of service of
these employees, only that their hours are unpredictable and that they
fluctuate.
Automatic enrollment requirement
Applicable large employers who employ 200 or more full-time
employees are also subject to the Automatic Enrollment provision of the
law. This duplicative mandate requires the employer to enroll our new
and current full-time employees in our lowest cost plan if they have
not opted-out of the coverage. This provision also interacts with the
prohibition on waiting periods longer than days and effectively means
that on 91 day, we must enroll a new full-time hire in our lowest cost
plan if they do not tell us that they do not want to be enrolled.
Employee premium contributions will begin to be collected and the
industry is concerned that it could cause financial hardship and
greater confusion about the law, especially amongst our young
employees. Since 43 percent of restaurant employees are under age 26
and more likely to be moving from job to job or eligible for enrollment
in parents' plans, many are likely to inadvertently miss opt- out
deadlines and will be automatically enrolled in their employer's health
plan causing significant, unexpected financial hardship.
Automatically enrolling an employee and then shortly thereafter
removing them from the plan when the employee opts-out only increases
costs unnecessarily without increasing our employee's access to
coverage as the law intended. Since the health care law's employer
mandate already subjects large employers to potential penalties if they
fail to offer affordable health care coverage to full-time employees
and their dependents, the auto-enrollment mandate is redundant. It adds
a layer of bureaucracy and burdens businesses without increasing
employees' access to coverage.
Some compare automatically enrolling employees in health benefit
plans to automatically enrolling them in a 401(k) plan, but this isn't
a good parallel. The financial contribution associated with health
benefits can be much larger, for example: 9.5 percent of household
income toward the cost of the premium for employees of large employers
versus an average 3 percent automatic 401(k) contribution. The
financial burden on employees of automatic enrollment in health benefit
plans would be much greater than that of 401(k) plans. Additionally,
401(k) rules allow employees to access their contributions when they
opt-out of automatic enrollment; however health benefit premium
contributions cannot be retrieved.
Restaurateurs will educate their employees about how this provision
impacts them, but if an employee misses the 90-day opt-out deadline, a
premium contribution is a significant amount of money, which can be a
financial burden. Since the same full-time employees must be offered
coverage by the same employers subject to the Automatic Enrollment
provision and the Shared Responsibility for Employer provisions, we
believe the automatic provision is unnecessary and should be
eliminated.
I want to acknowledge and thank Congressman Richard Hudson for his
leadership in introducing H.R. 1254, the Auto Enroll Repeal Act
recently, together with Congressman Robert Pittenger. Enactment of this
measure would eliminate this requirement that could hurt both employees
and employers. The National Restaurant Association supports of passage
of H.R. 1254 and looks forward to working with Congressmen Hudson and
Pittenger and this Subcommittee to move the bill forward in Congress.
Challenges for applicable large employers offering coverage to their
full-time employees and their dependents
Once an applicable large employer has determined to whom coverage
must be offered, he must make sure that the coverage is of 60 percent
minimum value and considered affordable to the employee, or he may face
potential employer penalties.
Minimum value is generally understood to be a 60 percent actuarial
test; a measure of the richness of the plan's offered benefits. This is
a critical test for employers especially as it relates to what an
employer's group health plan covers and hence what the premium cost
will be in 2014. Business owners like certainty and that means the
ability to plan for their future costs.
Employers are eager to know what their premium costs will be under
the new law. Minimum value is key to determining that information.
On February 25, 2013 the Health and Human Services Department did
include the Minimum Value Calculator, one of the acceptable methods to
determine a plan's value, in its Final Rule, Standards Related to
Essential Health Benefits, Actuarial Value, and Accreditation. Minimum
value can now be determined using this calculator but still it is
difficult to know premium costs so far in advance. For our January 1st
plan year start date, we do not anticipate being able to obtain premium
pricing for several more months. With a potential increase in cost,
this gives us a short timeframe within which to make business decisions
in advance of the new plan year. Any plan design or other changes to
help control our costs will be part of our budgeting process going
forward.
Employers must also ensure at least one of their plans is
affordable to their full-time employees or face potential penalties. A
full-time employee's contribution toward the cost of the premium for
single-only coverage cannot be more than 9.5 percent of their household
income, or else the coverage is considered unaffordable. Employers do
not know household income, nor do they want to know this information
for privacy reasons. However, employers needed a way to be able to
estimate before a plan is offered if it will be affordable to
employees. What employers do know are the wages they pay their
employees. Almost always, employees' wages will be a stricter test than
household income. Employers are willing to accept a stricter test in
the form of wages so that they know they are complying with the law and
are provided protection from penalty under a safe harbor. The Treasury
Department will allow employers to use one of three Affordability Safe
Harbors based on Form W-2 wages, Rate of Pay or Federal Poverty Line.
We believe that the option of utilizing these methods will be helpful
to employers as they determine at what level to set contribution rates
and their ability to continue to offer coverage to their employees.
Our company has looked at this particular issue within the law, but
we do not believe we will have to worry about the affordability of our
plan for our employees, at least in the first year. As I previously
mentioned, our company pays 80 percent of the total premium cost for
the plan we offer. The remaining 20 percent of the premium, that we
currently ask our employees to contribute, is less than 9.5 percent of
our employees' wages. Hence, if premiums do not increase we believe
that our current practice will satisfy the affordability test and
changes to employee contributions are not necessary for our next plan
year.
The law speaks to affordability for employees but is silent
regarding whether the coverage required to comply with the Shared
Responsibility for Employers section of the law is affordable to
employers. We anticipate added costs as a result of this law, either
through required changes impacting plan design or additional fees--such
as the PCORI Funding Fee, the Exchange Reinsurance Program Fee, the
Health Insurance Provider Fee--that will continue to drive up premiums
for employers and employees as others pass along these increased costs.
In addition, new taxes such as the ``Cadillac'' tax on certain
employer-sponsored coverage, will also squeeze restaurateurs when it
begins in 2018.
As restaurant and foodservice operators implement this law,
considering all of the interlocking provisions that impact employers,
some will be faced with difficult business decisions between offering
coverage which they cannot afford and paying a penalty for not offering
coverage that they equally cannot afford nor want to do. We encourage
all policymakers to address the cost of coverage so that the employer-
sponsored system of health care coverage will be maintained.
New nondiscrimination rules applied to fully-insured plans
The health care law applies the nondiscrimination rule, that self-
funded plans cannot offer benefits in favor of their highly-compensated
individuals, now to fully-insured plans. This rule is not in effect as
the Treasury Department has put implementation on hold until further
guidance has been issued in this complex area. Under the new law, these
rules apply to all insured plans, regardless of where they are offered
by an applicable large employer or a small business. The restaurant and
foodservice industry is watching this rule closely as it may impact
what plans may continue to be offered to employees.
Current group health plan participation often forces operators to
carve out the group of employees who will participate in the plan. In
our members' experience, these are almost always a group that would be
considered in the top 25 percent based on compensation.
However, management carve-outs are not just for upper level
executives who may receive richer benefit plans than the rest of the
employees. In the restaurant and foodservice industry, management-only
plans are sometimes the only option that operators have to provide
health care coverage to those employees who want to buy it and pass
participation requirements at the same time. As a result, these plans
are quite common in the industry. This was the situation I encountered
when we tried to offer coverage to more employees several years ago.
The rules the Treasury Department writes to apply non-
discrimination testing to fully- insured plans will have an impact on
our industry. Regardless of how they are written, restaurant and
foodservice operators will need sufficient transition time to apply
these rules as it could create upheaval for plans and employers alike.
Applicable large employer reporting requirements
A key area of implementation that employers have not received
guidance on are the employer notice and reporting requirements: the
Fair Labor Standards Act Notice to Employees from the Department of
Labor, the notices and appeals processes with Exchanges from the
Department of Health and Human Services, and the required information
reporting under Tax Code Sec. 6055 and Sec. 6056 from the Treasury
Department. These employer notice and reporting requirements are a key
link in the chain of the law's implementation. They represent a
significant employer administrative burden as well as rules that will
help employers ensure that their employees are well informed about
their options under the law. Operators are aware of this requirement
and ask often when guidance and a template for this notice will be
available from the Labor Department.
Of particular concern to the industry, is the flow of information
and the timing of reporting employers must make to multiple levels and
layers of government. Streamlining employer reporting will help ease
employer administrative burden and simplify the process. The
information provided by employers under Tax Code Sec. 6055 and
Sec. 6056 is critical in this process and can be used by the Treasury
Department to verify if an individual had an offer of affordable
minimum essential coverage of minimum value from an applicable large
employer. The information provided by employers must be compared by the
Internal Revenue Service to verify eligibility determinations made by
the Exchanges for premium tax credits or cost-sharing reductions. The
information can also be used to determine employer penalty liability.
The restaurant and foodservice industry, along with other employer
groups, have advocated for a single, annual reporting process by
employers to the Treasury Department each January 31st that would
provide prospective general plan information and wage information for
the affordability safe harbors, as well as retrospective reporting as
required by Sec. 6056 on individual full-time employees and their
dependents.
We are anxious for guidance to be issued on all of these
interrelated issues, as employers cannot just flip a switch and produce
the detailed information reports required by the law. It will take time
for employers to set up systems, or contract with vendors, to track and
maintain the date needed to comply with the law. When I think of our
own company and the detailed information we will have to track and
report on all full-time employees and dependents, it is a large amount
of data. The reporting will include not only the employees who remain
with the restaurant for the entire year, but even our seasonal staff
and others who may only stay for a couple of months. Health plan
benefit information as well as individualized payroll-sourced
information must be merged to produce the report needed under the law.
Transition relief
Within the Proposed Rule for Shared Responsibility for Employers,
the Treasury Department provided targeted transition relief. While
appreciated, we believe that further transition relief is critical. The
timeframe for compliance is short and getting shorter and safe harbor
protections for good-faith compliance by employers in the law's early
phases is necessary. Employers are still missing essential pieces of
guidance and regulation necessary to construct their systems, make plan
design changes and communicate with their employees with 8 months until
the first of the year. Under the threat of heavy penalties for not
getting this exactly right the first time, some employers may opt-out
of offering coverage to their employees and choose to pay the penalties
instead. This is not what the restaurant and foodservice industry
wants, but it may be a likely result of employers having to make
difficult decisions under extremely uncertain conditions. The process
should not discourage employers and employees from participating in the
new system and the application of a good-faith compliance standard is
appropriate. As with implementation of any law this size, it will take
some time for the hiccups in the processes to be worked out and
employers should be allowed adequate time to come into compliance.
Conclusion
Since enactment of the law, the National Restaurant Association has
worked to constructively shape the implementing regulations of the
health care law. Nevertheless, there are limits to what can be achieved
through the regulatory process alone. Ultimately, the law cannot stand
as it is today given the challenges employers such as restaurant and
foodservice operators face in implementing it.
Broader transition relief is needed for employers attempting to
comply with the law in good-faith as time is short to make the
significant changes required by the law. The duplicative automatic
enrollment provision should be eliminated as it could unnecessarily
confuse and financially harm employees. Key definitions in the law must
be changed: The law should more accurately reflect the general business
practice of 40 hours a week as full-time employment. The applicable
large employer determination is too complicated, and over-reaches to
include more small businesses than it should.
The National Restaurant Association looks forward to working with
this Committee and all of Congress on these and other important issues
to improve health care for our employees without sacrificing their jobs
in the process. We also continue to actively participate in the
regulatory process to ensure the implementing rules consider our
industry's perspective.
Thank you again for this opportunity to testify today regarding the
impact of the health care on the restaurant and foodservice industry,
and the challenging environment it will cause for job creation and
growth.
______
Chairman Roe. Mr. Conrad, thank you, and thank you to the
panel for your very, very good testimony. I read every bit of
it last night.
I would like to start by just saying a few things about how
I share the vision and goal of providing health insurance
coverage for everybody in this country. I live in rural East
Tennessee, in Appalachia, and I have seen many, many people who
don't have health insurance, and as an OB/GYN doctor, I have
delivered almost 5,000 babies, and I did find out that when you
run for Congress, delivering your own voters worked out pretty
well for me. [Laughter.]
So I would recommend, if you are a doctor, deliver a lot of
babies. They grow up and vote, and I saw some yesterday.
Obviously, we have made this incredibly complicated. As I
stated, I am on the Veterans Affairs Committee, and I spent two
hours and 15 minutes this week just looking at the effect of
the Affordable Care Act on veterans. After two hours of
testimony, we couldn't figure it out. Nobody walked out of the
room--and these were smart people, IRS, Treasury, the chief
medical officer of the VA.
Mr. Searing, to your comment, there are many parts or parts
of this bill that I agree with, the under 26. I had three kids
of my own. The problem with it is that we took something that
was very affordable, and what we did for young people was,
actuarially, someone my age would pay six times--that is the
risk I have--six times more than a young person. What we did
was, by this law, you can now only charge at 3-to-1. So a young
person who had very inexpensive, affordable coverage, we just
doubled or tripled the cost of their coverage. I have had
insurance agents already tell me in the small group market, the
individual market, those rates are up 25 percent, 35 percent.
Bill Gates is not going to be able to afford healthcare if we
don't do something.
The OMB, the Office of Management and Budget, estimated
that in 2016 the average family of four's health insurance
coverage will be $20,000 a year. I mean, that is not
sustainable.
We took a bill, this bill, which I read every word of it,
which doesn't say much about my intelligence but I read all
2,700 pages of it, there are now over 13,000 pages of rules and
regulations that these business people right here have got to
go over. Let me give you an example.
Mr. Horne--and I am going to let him answer this--we had
the self-insured market. When I was the mayor of Johnson City,
I practiced full-time and I was mayor of Johnson City. It is
not a big town, about 60,000 people, so I did both. We were
self-insured. Well, now we find out that when you are self-
insured--and one company that came to me, I won't mention it
but it is a national company, is totally insured. They don't
have any reinsurance or anything. They pay every nickel that
they pay. They derive no benefit from the Affordable Care Act
whatsoever. But guess what they get? They get $63, not per
family, per person covered. It is a $25 million hit for them
this year.
And you know what that money does? It indemnifies the
private health insurance companies so that they won't have a
risk in the exchange of more than a $60,000 loss. So here is a
company doing exactly the right thing. I couldn't think of
anybody, Mr. Horne, doing more right for your employees than
you are, providing preventive services, totally free for them,
a nurse on site to take care of problems, and what do you do?
You get penalized for that.
So how much--would you go through what the cost is for your
business again in your small business of 350 employees?
Mr. Horne. We have 350 employees, and there are 515 covered
individuals. So that $63 will be times 515 people in our case,
a little over $32,000.
One of the issues also is that we keep learning things.
Just yesterday, I learned that we will now pay $2 per covered
individual to pay for the Patient Centered Outcome Research
Institute, whatever that is. We just keep learning these things
as time goes by.
Chairman Roe. Well, another point on the thing that we use
and would recommend is our high-risk pools for people with pre-
existing conditions. We explained to the administration you did
not put in--we have a high-risk pool in Tennessee. You did not
put enough money into the high-risk pools. So they didn't. They
ran out of money, and right now they are not enrolling anybody
else in high-risk pools. So if I had patients that came to me
that developed breast cancer, that is the most common cancer
that I saw, and the cure rates now for early breast cancer is
95 percent. It is phenomenal. And yet, these patients now have
a pre-existing condition. So they go back into the workforce
after their treatment and they couldn't find coverage. So we
have a high-risk pool to help cover that.
The Obama Administration is now taking money out of
preventive services, which we tried to prevent, to pay for
advertising for the Affordable Care Act. So money is being
taken out of a service that you, Mr. Searing, mentioned, to
help people, and we knew that the high-risk pools were
underfunded, greatly underfunded. They need to be funded where
someone who has that can go to that pool and buy insurance at
the same rate that I can or someone else who is healthy can.
Ms. Haynes, I thought your testimony was really very, very
good. We have two community colleges in my district, and I say
this tongue-in-cheek. I sort of overdosed on education. I went
for 23 years, and my dad kept saying when is that boy ever
going to get out of school. I was raised on a farm, and my dad
was a factory worker. So I used education, public education,
not private. I never went to a private school in my life, all
to public schools, how important that is to be able to make
sure that these young people, with the cost of education being
what it is today--would you elaborate on that a little bit for
me?
Ms. Haynes. Certainly. I think the important point here is
that it costs us about $450 a month per employee to provide
health care coverage. Any coverage that we provide, obviously,
at some point in time the student is going to incur the cost
because we are funded through taxpayer dollars, obviously, and
anything that costs the college ultimately costs the students.
So in order to provide that coverage, it is a path through to
the students.
The difficulty I think becomes, with this too, is that the
adjunct faculty have an impact that was unintended. We have no
way to fund insurance. We believed that the healthcare
exchanges would be the appropriate way for them to be able to
purchase that coverage that they need. And yet, now they will
have less income because we cannot provide them the number of
courses that they would have had to have taught before in order
to be able to purchase that as well.
So it is an impact across the board. You have students now
who won't get classes that they potentially would have had in
the sequence that they would have been able to do, so it slows
their progress. They don't become taxpayers and contributors as
quickly. So there is a tremendous impact there.
Chairman Roe. I thank you, and I now yield to Mr. Hudson.
Mr. Hudson. Thank you, Mr. Chairman.
I thank the witnesses for your excellent testimony.
Mr. Conrad, I was listening to your testimony, and you said
that you do not employ any outside HR folks to help you deal
with those issues. Now with the new law, are you going to need
to probably bring in some HR folks? What kind of cost are you
looking at for trying to comply with this law?
Mr. Conrad. To begin with, we have been scratching the
surface. I have gone to accountants, I have gone to lawyers. I
haven't brought the certified HR people in. But on first brush,
the low number was $160,000 a year to over $200,000 a year,
just to expand on what we are presently doing, the 80 percent
for corporate people. So we know it is going to be quite
expensive, but we just don't know how expensive.
I don't think all those numbers, Congressman, are going to
come out until November. I think we are all, the experts, just
sort of playing a guessing game until then, because until they
get into the fourth quarter, they are not going to give us any
rates for 1 January 2014.
Mr. Hudson. So what is the impact of this uncertainty on
you? What are you doing to prepare for whatever the eventuality
might be?
Mr. Conrad. Well, let me back up and say that the
restaurant business in itself is one of the very lowest profit-
per-employee industries in the United States. With 10 percent
of the workforce employed in a restaurant or a food service
operation today, and that is directly, not all the indirect
people that depend on that, we are in dangerous territory. The
mortality rate for a restaurant today on the average is they
are not going to last 36 months. So if you stop and look, it is
a changing industry. It is one, when you look at the profit per
employee, why did we ever go into the business to begin with?
But we were just born into it and we love it.
Mr. Hudson. I appreciate that, and I love eating the fried
fish that you serve up. [Laughter.]
So you talk very specifically about a couple of different
items in the law that are having an impact on you, and we are
working on one of those together, on the auto enrollment. But
which of these do you think is the most critical, or could you
talk a little more about it?
Mr. Conrad. I think right now the defining deal with 30
hours a week, a lot of employers right now are trimming their
workforce back to 29, 29 hours, and people are having to find
multiple jobs. I think if you were to go to a more realistic
number of 35 to 40, that may give an umbrella to some of those
people that are going to be impacted.
I think the definition of large employer/small employer is
very critical because the equivalency of--somebody mentioned
talking about the three people working in--I think it was you,
Chairman--that were working in the summer to relieve their
college deals, and then you add their hours up, and that
equates to one full-time employee. And so I think that could be
relaxed somewhat, the equivalency part of it.
Mr. Hudson. Thank you for that.
I have a little bit of time left. Mr. Horne, I would like
to go back to you. I introduced you to the Chairman earlier as
an endangered species because you are a textile person who has
been very successful, and you have a reputation in your
community of being an outstanding corporate citizen, and I hope
folks noted that you didn't call your employees ``employees.''
You call them partners, and I was very impressed the more I
learned about the things you do preventive care-wise and others
to provide benefits to your employees.
But with the costs coming down the pike, $63 per individual
and so forth, what kind of impact is that going to have on your
ability to continue to provide these benefits to your workers,
your partners?
Mr. Horne. Well, I am sure we will continue to provide the
benefits. There is no question about that. The conversations
that we are having right now are what are we going to do to
help control our costs, and oftentimes that comes down to not
replacing people, using attrition to reduce the numbers. So I
think that is going to be the likely outcome of all this.
Certainly, we are going to pay quite a bit more.
There is another issue, too, and that is that we think
there is going to be a morale issue here. We have some young
employees who choose not to take our health insurance. It may
not be the best decision, but we have that, and, of course, we
are going to have to automatically enroll them. They have no
choice in that. And I feel like the response is going to be to
be angry at us about that as opposed to the law, and it is
going to be difficult to explain that.
Of course, our premiums for single individuals is $23 a
week. So it is going to cost them a little over $1,000 when we
enroll them. They can easily withdraw and pay the penalty, and
they would be much better off.
Mr. Hudson. Thank you.
My time has expired. Mr. Chairman, I will yield back to
you.
Chairman Roe. I thank the gentleman for yielding.
We will have a second round of questions. Let me start off
by saying there is a large fast food chain in Tennessee that
has 70 percent full-time employees and 30 percent part-time.
Instead of growing their business this year, their model is
going to be to flip that number to 70 percent part-time and 30
percent full-time.
Let me give you an example in my own--I asked Secretary
Sibelius, and she will be in front of our committee on the 15th
of May. But I asked Secretary Sibelius last year, I said, look,
I am in a medical practice, and we pay about $6,000 per
employee for health insurance coverage. We have covered our
employees and have been proud to do it since 1967 when we
opened our practice. So I said we have 400 employees. We are
paying $6,000 each. If I pay a penalty of $2,000 each, that
costs me $800,000, and I can save myself $1.6 million. Why
won't I do that? And she had no answer.
Mr. Horne had the answer, is because we want to do the
right thing by our employees. We think we get better employees.
So, therefore, you want to do that.
We had testimony from a guy, an HR firm last year, who came
in and said one of his clients said I am not going to be the
first one to drop my health insurance coverage, but I am not
going to be third either. And what he meant was that he will be
at a competitive disadvantage if some of his competitors drop
that and they can put that money to their bottom line. I can
tell you, I know of one large company, a Fortune 500 company
that is in Tennessee that can put $40 million to their bottom
line by simply putting their employees into the exchange, and
let me tell you why that is a bad idea for the employees,
because the subsidy that they get through the exchange is not
as much as their employer is currently paying, and the
difference between those numbers that the employee will have to
pay is not tax-deductible.
So once again, I will go back to the first premise I made.
The biggest problem with healthcare in this country is the cost
of it, how much it costs people. If it were all cheap, we would
all have it. I absolutely believe that there is enough money in
our system to cover all of our citizens.
Let me just give you a brief example of Tennessee when we
reformed our Medicaid program. We are going to get to that in
our second panel. The problem in Tennessee in the early 1990s,
we had a lot of people--we are not a wealthy state. Our per
capita income is less than the national average. We wanted to
provide health insurance coverage for as many people in
Tennessee as we could. So we reformed in a managed care plan
called TennCare.
We found out we were spending $2.5 billion in 1993. In
2003, we were spending $8.5 billion. Our costs had over tripled
in 10 years, and half the people who had health insurance
coverage, half the people who got on TennCare dropped their
private health insurance and got on the public, and the reason
they got on that was it was a better plan than I could afford
in my office.
So the state, what it did was, our Democratic governor, to
his credit, in 2005, basically how he rationed care was he just
cut the rolls. That is what he did.
So I have seen this health care reform done before. I had
written an article about it three years ago about how I see it
going down. Look, healthcare decisions ought to be made between
a patient and the doctor and that patient's family. It
shouldn't be made between an insurance company telling you what
you can have done or the Federal Government telling you what
you can have done. That is the most personal decision you can
possibly make, and that is who should be making it.
I admire all of you. Every bit of testimony here has been
spot-on correct.
Mr. Conrad, I want to go back to the auto enrollment. My
kids are all above 26 now, but when they were less than 26, I
think they would have made a decision, instead of paying $300 a
month, to pay $95 a year, opt out, and the whole premise of
this Affordable Care Act is that you are basically going to
extract healthy people. Look, the healthiest people in the
world are people under 26 years of age. The only thing you are
insuring a less than 26-year-old boy for is just stupidity.
They are going to do dumb stuff. [Laughter.]
I have two boys. I understand what they do. You are
insuring stupid. You are not insuring disease.
So what you are doing at that point is you are taking
people who don't have much risk and forcing their costs up.
When they figure that out, and they will in about 10 minutes,
they are going to opt out of the auto enroll.
Mr. Conrad, what you mentioned about how you can dual
enroll people, I don't think most people understand that a
husband and wife can be working, both get auto-enrolled at
different jobs and both be on an insurance plan when only one
of them needs to be.
Mr. Conrad. And then the children also are covered under
mom and dad's plan, and they are not needing to be there. We
just think the redundancy of the 200 employee limit, it is
already in the large employer. It is already there. You have to
offer that health insurance. Just like the gentleman said, he
is offering it to all of his employees. Not all will take it.
The auto enrollment is going to create ill will for those
people who really didn't want health insurance and all of a
sudden they get that check on the 91st day and it has them
enrolled in health insurance and they didn't sign up for. All
of a sudden, you have another problem with the morale of your
employees. We just feel like H.R. 1250, whatever it is, is the
right bill to come out of Congress to get rid of this.
Chairman Roe. Well, I thank you.
One last comment, and then I will yield to Mr. Hudson.
The only people I know of who define a 30-hour work week as
a full work week would be the French. [Laughter.]
I yield to Mr. Hudson.
Mr. Conrad. And see where it got them.
Mr. Hudson. Mr. Chairman, I don't know how to follow that.
Ms. Haynes, I would like to talk some about the issue you
raised with adjunct professors. You discussed calculating the
hours worked both inside and outside the classroom for the
purpose of the 30-hour part-time calculation and the healthcare
law. By your math, an adjunct faculty member would not be able
to teach more than three 3-hour credit courses at one time. How
much of a departure is this from current practice, and what is
going to be the real impact? Have you calculated how many
courses we may lose at the college with this?
Ms. Haynes. Well, it varies by college, and it varies by
subject matter. So it would be difficult to say exactly what
the impact is going to be. But I can tell you that it can be
substantial. I mean, at a point in time we can use adjunct
faculty to teach four, five, or even six classes. And it
depends on the type of class. All classes and all courses are
not created equal. You have those that are purely lecture. They
require an intense amount of preparation ahead of time. And
then there are classes, like welding or some cosmetology, for
example, where the instruction and the lab take place
simultaneously. So most of the preparation and the instruction,
everything, happens within the content and the context of that
classroom.
So there is not a lot of preparation that happens outside,
nor supporting or needful activity outside of the classroom. It
all happens within. So defining that and giving us a one-size-
fits-all rule really just doesn't work for the type of
instruction that we deliver.
Mr. Hudson. Well, I appreciate that. You also mentioned the
massive administrative burden on the college. Can you elaborate
on that a little bit?
Ms. Haynes. Well, let's see. I was thinking just before we
came, there is the look-back period, the measurement period,
the stability period, and then there is the initial measurement
period for new employees, and administrative period, and all of
that is followed by additional enrollment. So you just keep
this going on and on and on.
We also have employees who work for us, and faculty, for
example, adjunct faculty, they will teach for us for a year and
then, for whatever reason, they drop out a year, either by our
demand or because they are going back to school. Whatever the
reason, they may be with us a year, they leave a year. So
during that measurement period, they are entitled under the
eligibility rules to participate in our health plan, but they
are no longer with us. So you have payroll deduction that would
have occurred had they still been employed, but they are not
there.
So now we have to set up collections. You have to figure
out how to get that money, and we believe that in most cases
people are honorable and they follow up on their debts. But
sometimes, let's face it, it is just difficult to collect, and
that is part of what we are going to have to look at.
In addition to that, you have to look at all of these
different employee populations, and the penalties, I might
mention, are tremendous. We couldn't afford the penalty if we
hit that penalty bracket. So we have to be extra careful. It is
a massive undertaking to set up the administration to do the
eligibility, to look at eligibility, to make sure that always
you are defining every population for every measurement period
and every stability period and every enrollment correctly.
Mr. Hudson. Wow. I heard you say in your testimony before
what is going to happen to the added cost. Would you repeat
that and highlight what you said?
Ms. Haynes. Well, if you consider that we have $5,400
roughly in employer costs when we cover someone, that cost has
to go somewhere. Frankly, you and I both know as taxpayers,
there is not a whole lot more in the taxpayer base, in our
taxes, that we can apply towards that. And so ultimately, I
think it will become a student expense. It has got to trickle
through. That is really not where we want to put that cost.
Students need to be able to kind of get that education, and
frankly, that slows down our entire economy. We are looking to
help that student along. We don't want to be the impediment. We
want to help them get their education and get in that
workforce.
Mr. Hudson. Absolutely. And this college's ability to
respond to the needs of employers and the needs of students
that need certain skills is why this college is so critical,
and other colleges like South Piedmont that, Mr. Horne, you
deal with. They supply the type of skilled workers you need in
your business, and the ability to adapt to that, to get
students who need those skills matched up with those skills. It
really concerns me to hear that we may see increased costs to
try and comply with this law that could then limit the access
students have to those skills. So I appreciate you raising that
issue.
Mr. Chairman, I yield back.
Chairman Roe. I thank the gentleman for yielding, and I
want to thank the panel.
Just to show you, Ms. Haynes, how I share in your
confusion, I am supposed to be an expert in this healthcare
law, and I can't even tell you, I can't even tell my employees
in Washington and in my district office what their health
insurance is going to be in September or October, when we have
the opt-in period. I don't know. I don't know what I am going
to do. So if you are confused, I am confused.
And one last comment about I think the future of our
country rests in the education system that we have, and today
education debt, student debt exceeds credit card debt in this
country. It is a humongous problem. The affordability of an
education for kids--when I went to school, it was amazingly
affordable. Today it is not. You all do a great job here in
North Carolina. I asked about your fees. It is less than $1,000
per semester. That is still affordable in today's dollars.
So, thank you all, all the panel. Great job, and I will now
excuse you all and we will have our second panel come up.
I would like to call the committee back to order. I would
like to again thank the witnesses for taking the time to
testify before the committee today, and I will now ask that the
second panel come forward, which they have done.
It is again my pleasure to yield to Mr. Hudson to introduce
our second panel of witnesses.
Mr. Hudson. Thank you, Mr. Chairman.
First we have Mr. Dave Bass, who is the Vice President of
Compensation and Associate Wellness at Delhaize America,
headquartered in Salisbury. They employ many area residents in
their Food Line grocery stores, which are very popular with me
and a lot of folks around here.
Also, Mr. Ed Tubel is the Founder and CEO of Tricor, Inc.,
in Charlotte. Mr. Tubel operates a number of Sonny's Bar-B-Q
Restaurant franchises--we frequent the one here at Exit 49 in
this area--and he is a recipient of the North Carolina Small
Business Administration Entrepreneur of the Year Award.
Dr. Olson Huff is a retired pediatrician from Asheville. He
is a veteran of the United States Air Force.
We thank you for your service, sir.
He served as a flight surgeon in Vietnam. He received his
medical degree from the University of Louisville.
Finally, Mr. Bruce Silver is the President and CEO of
Racing Electronics in Concord. Racing Electronics is the
worldwide leader in providing radio communication products to
the motor sports industry, and you can rent those, I believe,
at the track. I have done that myself. He was named the 2011
Small Business of the Year by the Cabarrus Regional Chamber of
Commerce.
So, thank you all for being here.
Mr. Chairman, I yield back.
Chairman Roe. I thank the gentleman for yielding.
Before recognizing you, we will go through again the
lighting system. You will each have five minutes to present
your testimony. When you begin, the light in front of you will
turn green. With one minute left, it will turn amber. Then when
your time has expired, the light will turn red, at which point
we will ask you to wrap up your remarks as best as you can.
After everyone has testified, each member will have five
minutes, and we probably again will have a second round of
questioning.
I will now recognize Mr. Bass for your testimony.
STATEMENT OF DAVE BASS, VICE PRESIDENT, COMPENSATION AND
ASSOCIATE WELLNESS, DELHAIZE AMERICA, CONCORD, NC
Mr. Bass. Thank you. Chairman Roe and Congressman Hudson,
my name is Dave Bass, and I am the Vice President of
Compensation and Associate Wellness for Delhaize America Shared
Services Group, LLC. Perhaps as important, I am also a resident
of Concord. In my role, I work on behalf of the companies of
Delhaize America, including Bottom Dollar Food, Food Lion,
Hannaford, Harvey's, Sweetbay Supermarket and Reid's, to
understand and apply health and wellness best practices as it
pertains to our associates and our company. Thank you for the
opportunity to appear here today to provide feedback on the
implications of the Patient Protection and Affordable Care Act
for Delhaize America's business.
Delhaize America is a leading supermarket operator in the
United States, with over 105,000 associates working in 18
states throughout our network of 1,500 store locations, 10
distribution centers, and four corporate support centers.
Despite the economic climate during the Great Recession and the
narrow 1 percent profit margins traditionally associated with
the grocery industry, in recent years our company has expanded
into new markets and grown its Bottom Dollar Food banner in New
Jersey, Ohio and Pennsylvania.
In North Carolina, Delhaize America employs over 30,000
associates and operates more than 500 store locations. As you
may know, Food Lion was founded in Salisbury, North Carolina in
1957, and we are proud of our long history in this great state.
In all of our operating states, our company is dedicated to
supporting programs and organizations that make a difference in
the lives of our shoppers and neighbors. Last year alone,
Delhaize America companies donated over 41 million pounds of
food. Through corporate and foundation giving, local programs
and individual associate involvement, millions of dollars and
countless volunteer hours are devoted to helping our
communities and our associates grow and prosper.
Delhaize America's vision is to enrich the lives of our
customers, associates, and communities we serve in a
sustainable way. Along with a culture of respect, Delhaize
believes a primary way of supporting our associates in a
sustainable way is through the provision of benefits to a large
number of our associates. To meet the needs of our associates
and support their overall health and wellness, Delhaize America
provides comprehensive health care coverage, one of the most
expensive benefit options, for its associates. Delhaize is
proud to offer all our full-time associates the opportunity to
enroll in healthcare, and has done so for many, many years.
The Patient Protection and Affordable Care Act creates
complex challenges for food retailers seeking to provide health
care coverage to associates while maintaining a viable business
in an exceedingly competitive consumer environment. Food
retailers and their associates operate under fluctuating and
unpredictable work schedules in order to meet varying consumer
demand. Health coverage and compliance costs must remain
affordable to Delhaize America in order for the company to
maintain employee benefits and provide competitive consumer
prices.
Under the Patient Protection and Affordable Care Act,
beginning in 2014, large employers, those larger than 50 full-
time equivalents, must offer coverage to full-time employees,
which the law defines as averaging 30 hours or more per week,
and that employer-offered coverage must be affordable, which is
defined as not costing the employee more than 9.5 percent of
his or her household income, and provide a minimum value of at
least 60 percent of the average benefit costs covered or face a
tax penalty, a mouthful. While on the surface this may seem
straightforward, there are many complications that could impact
the health coverage that Delhaize provides.
As we look ahead to the implementation of the primary
provisions of the Patient Protection and Affordable Care Act,
our company foresees a number of challenges, and I would like
to draw your attention to a few key issues for our business
including: the definition of a full-time employee;
affordability criteria; mandatory auto-enrollment; the
temporary reinsurance fee; and Flexible Spending Account
purchases.
Under the Patient Protection and Affordable Care Act, as a
large employer, Delhaize America must offer coverage to full-
time associates who average 30 hours per week beginning in
2014. The companies of Delhaize America employ a significant
number of both full-time and part-time associates. Currently,
45 percent of our associates are in full-time hourly and
salaried roles. Both full-time and part-time associates who
meet eligibility criteria are able to receive coverage under
our medical plan. Full-time hourly, salaried, and part-time
associates working at least an average of 35 hours per week are
eligible for coverage after two months of continuous
employment.
I will skip ahead here a little bit.
Mandatory auto-enrollment. Delhaize America also is
concerned about the Affordable Care Act's mandatory auto-
enrollment provision. Open enrollment for Delhaize America's
medical plan is held annually in October and November to give
associates an opportunity to select coverage options for the
next plan year. Associates with existing coverage under the
company's medical plan that do not actively engage in the
enrollment process for benefits have their benefits rolled over
to their existing selections.
The Affordable Care Act's mandatory associate enrollment
provision under Section 1511 could inadvertently cost
associates wages and create duplicative coverage if a parent or
spouse already covers the insurance.
To wrap up here today, as an employer and retailer who is
trying to do the right thing by continuing to offer coverage to
our full-time employees, I am concerned that even if I were to
have the perfect playbook to try to make sure I have all of my
full-time equivalents identified and I have offered the right
coverage, my company may still get penalized because one of our
employees is mistakenly awarded an ACA credit. I am either
going to be in a position of demonstrating that we did offer
affordable coverage and have that person, that associate,
penalized, or Delhaize America is going to get penalized.
Any steps that can be taken by the committee to mitigate
the burdens employers are facing is greatly appreciated.
Specifically, we need Congress' help in addressing some of
these burdens that puts at risk our company's ability to offer
health coverage that is affordable and of value to as many of
our employees as possible.
Representative Roe and Representative Hudson, thank you for
your time.
[The statement of Mr. Bass follows:]
Prepared Statement of Dave Bass, Vice President, Compensation and
Associate Wellness, Delhaize America Shared Services Group, LLC
Chairman Roe and Congressman Hudson, my name is Dave Bass, and I am
the Vice President of Compensation and Associate Wellness for Delhaize
America Shared Services Group, LLC. Perhaps as important, I also am a
resident of Concord, North Carolina. In my role, I work on behalf of
the companies of Delhaize America, LLC, including Bottom Dollar Food,
Food Lion, Hannaford, Harveys, Sweetbay Supermarket and Reid's, to
understand and apply health and wellness best practices as it pertains
to our associates and our company. Thank you for the opportunity to
appear here today to provide feedback on the implications of the
Patient Protection and Affordable Care Act for Delhaize America's
business.
Delhaize America is a leading supermarket operator in the United
States, with over 105,000 associates working in 18 states throughout
our network of 1,553 store locations, 10 distribution centers and four
corporate support centers. Despite the economic climate during the
Great Recession and the narrow one percent profit margins traditionally
associated with the grocery industry, in recent years our company has
expanded into new markets and grown its Bottom Dollar Food banner in
New Jersey, Ohio and Pennsylvania.
In North Carolina, Delhaize America employs over 30,000 associates
and operates more than 500 store locations. As you may know, Food Lion
was founded in Salisbury, NC in 1957, and we are proud of our long
history in this great State. In all of our operating states, our
company is dedicated to supporting programs and organizations that make
a difference in the lives of our shoppers and neighbors. Last year
alone, Delhaize America companies donated over 41 million pounds of
food. Through corporate and foundation giving, local programs and
individual associate involvement, millions of dollars and countless
volunteer hours are devoted to helping our communities and our
associates grow and prosper.
Delhaize America's vision is to, `Enrich the lives of our
customers, associates, and communities we serve in a sustainable way.'
Along with a culture of respect, Delhaize believes a primary way of
supporting our associates in a sustainable way is through the provision
of benefits to a large number of our associates. To meet the needs of
our associates and support their overall health and wellness, Delhaize
America provides comprehensive health care coverage, one of the most
expensive benefit options, for its associates. Delhaize is proud to
offer all our full-time associates the opportunity to enroll in
healthcare--and has done so for many, many years.
Challenges Facing Delhaize America and its Associates under the
Affordable Care Act The Patient Protection and Affordable Care Act
creates complex challenges for food retailers seeking to provide health
care coverage to associates while maintaining a viable business in an
exceedingly competitive consumer environment. Food retailers and their
associates operate under fluctuating and unpredictable work schedules
in order to meet varying consumer demand. Health coverage and
compliance costs must remain affordable to Delhaize America in order
for the company to maintain employee benefits and provide competitive
consumer prices.
Under the Patient Protection and Affordable Care Act, beginning in
2014, `large employers' (which the law defines as companies with 50 or
more full-time `equivalents') must offer coverage to full-time
employees (which the law defines as averaging 30 hours/week) and that
employer-offered coverage must be `affordable' (defined as not costing
the employee more than 9.5% of his/her household income) and provide a
`minimum value' of at least 60% of the average benefit costs covered or
face a tax penalty. While on the surface this may seem straight-
forward, there are many complications that could impact the health
coverage that Delhaize provides.
As we look ahead to the implementation of the primary provisions of
the Patient Protection and Affordable Care Act, our company foresees a
number of challenges, and I would like to draw your attention to a few
key issues for our business including: the definition of a full-time
employee, affordability criteria, mandatory auto-enrollment, the
temporary reinsurance fee and Flexible Spending Account purchases.
The definition of a full-time employee
Under the Patient Protection and Affordable Care Act (ACA; PL 111-
148), as a large employer Delhaize America must offer coverage to full-
time employees who average 30 hours per week beginning in 2014. The
companies of Delhaize America employ a significant number of both full
and part-time associates. Currently, 45 percent of our associates are
in full time hourly and salaried roles. Both full and part-time
associates who meet eligibility criteria are able to receive coverage
under our medical plan. Full-time hourly, salaried and part-time
salaried associates working at least an average of 35 hours per week
are eligible for coverage after two months of continuous employment.
The revised definition of a full-time employee under the Affordable
Care Act could result in the reclassification of many of Delhaize
America's associates from part-time to full-time. Such a change may
impact store managers' ability to provide for flexible scheduling, and
associates' hours could be impacted as a result. The definition of a
full-time employee under the Act also may cause confusion among
associates as they seek to understand which benefits they are eligible
to receive should the individual only be considered full-time for the
purposes of medical coverage.
Affordability criteria
Another complicating factor is that when coverage is offered to our
associates, the premium must not cost the associate more than 9.5% of
his/her household income and also must cover at least 60% of the
average benefit costs. Again, while that may sound simple, it is
challenging to analyze associate wages even under the current safe
harbor provisions that allow employers to use an employee's W-2 wages
to verify affordability.
Complicating matters, as I am seeking to define Delhaize America's
health plan and determine associate rates for 2014, the uncertainty
created by the federal government's delay in rule finalization affects
my ability to understand how best to craft and comply with the
Affordable Care Act as I look to finalize our company's plan for next
year.
Mandatory auto-enrollment
Delhaize America also is concerned about the Affordable Care Act's
mandatory, auto-enrollment provision. Open enrollment for Delhaize
America's medical plan is held annually in October and November to give
associates an opportunity to select coverage options for the next plan
year.
Associates with existing coverage under the company's medical plan
that do not actively engage in the enrollment process for benefits have
their benefits rolled over to their existing selections. Allowing for
the automatic enrollment of associates who have previously chosen to
receive coverage saves associates time and ensures continued coverage.
Whereas, the Affordable Care Act's mandatory associate enrollment
provision under Section 1511 could inadvertently cost associates' wages
and create duplicative coverage if a parent or spouse already covers
the associate. When associates who do not want employer coverage fail
to opt-out of the auto-enrollment process, the employer is required to
deduct a premium from the associates' paycheck. Delhaize America
supports Congressman Hudson's introduction of the Auto Enroll Repeal
Act (H.R. 1254) that would repeal the Affordable Care Act's mandatory
enrollment provision, helping to ensure that associates take an active
role in coverage determinations.
Temporary reinsurance fee
On top of all the compliance costs associated with offering health
coverage under these rules is a `temporary' reinsurance fee for
employers offering self-insured plans that will charge our company
$5.25 per month per capita in benefit year 2014 ($63 per capita for all
of 2014) and onward.
Flexible spending account purchases
Additionally, under a little known provision of the Affordable Care
Act, Flexible Spending Account (FSA) and Healthcare Reimbursement
Account (HRA) funds may no longer be used to buy over-the-counter (OTC)
medicines unless they are prescribed by a doctor. This prohibition
restricts individuals' access to OTC medications by requiring an
unnecessary and more costly visit to the doctor's office for an OTC
prescription while also putting our store locations without pharmacies
at risk of losing FSA shoppers. It was just five years ago, in 2008,
when Food Lion retrofitted its registers to comply with Internal
Revenue Service regulations to accept customers' FSA/HRA cards for
approved healthcare and pharmacy items.
Many of our customers rely on over-the-counter medicines to manage
existing conditions, and Delhaize America supports legislation that
would reinstate FSA/HRA purchases of over-the- counter medicines
without a prescription. In the 112th Congress, the Restoring Access to
Medication Act (H.R. 2529) was introduced to restore this valuable
benefit, and we would encourage the committee to evaluate options for
the introduction of similar legislation in the 113th Congress.
Conclusion
Since the Affordable Care Act became law, I have been focused on
trying to understand all of the applicable rules so we can determine
how our companies' health plans fit into this structure. I understand
that the Administration has attempted to provide some flexibility to
employers, but many of these rules were only recently released and many
rules are still pending. As a human resources professional, I cannot
afford to build a health plan based on so many uncertainties,
particularly given the complexities of these rules. Unfortunately,
there is no one place or handbook that is available for me to figure
out all of the rules and ensure that our plan is in place and our
employees understand their options--as the need to finalize my plan
design quickly bears down on me.
As an employer and retailer who is trying to do the right thing by
continuing to offer coverage to our full-time employees, I'm concerned
that even if I were to have the perfect playbook to try to make sure I
have all of my FTEs identified and I have offered the `right' coverage,
my company may still get penalized because one of our employees is
mistakenly awarded an ACA tax credit. I'm either going to be in a
position of demonstrating that we did offer affordable coverage and
have that person--that associate--penalized or Delhaize America is
going to get penalized.
Any steps that can be taken by the Committee to mitigate the
burdens employers are facing is greatly appreciated. Specifically, we
need Congress's help in addressing some of these burdens that puts at
risk our company's ability to offer health coverage that is affordable
and of value to as many of our employees as possible. First, we need
Congress to amend the ACA's full-time employee definition to be in line
with current workforce standards. Second, employers need a `transition'
or `good faith' period through 2014 to figure out all of these rules,
test how our eligibility measurements and health plans perform without
fear of being penalized--and our associates to similarly understand
what is available to them. And as a retailer, we need Congress to
restore the use of Flexible Spending Account debit card purchases
without a prescription. By no means are these suggested reforms `cure-
alls,' but the changes would potentially alleviate some of the burdens
to our business.
Delhaize America is grateful for the opportunity to appear before
you today. We welcome the opportunity to work with you in your efforts
to address and clarify provisions within the Affordable Care Act.
Representative Roe and Representative Hudson, thank you for your
time.
______
Chairman Roe. Thank you, Mr. Bass.
Mr. Tubel?
STATEMENT OF ED TUBEL, FOUNDER AND CEO,
TRICOR INC., CHARLOTTE, NC
Mr. Tubel. Chairman Roe, Congressman Hudson, thank you for
this opportunity. My name is Ed Tubel, and I am Founder and CEO
of Tricor Inc., a licensed franchisee of Sonny's Real Pit Bar-
B-Q. Today I will attempt to provide a realistic overview in
regards to the impact the Affordable Care Act has on my small
business.
I was fortunate to start Sonny's in the Carolinas in 1978
with an SBA guaranteed loan. Over 34 years, we have built 27
restaurants in four states. We currently operate five locations
in North and South Carolina and employ 178 full and part-time
people. Tricor/Sonny's has a very strong reputation locally as
a family restaurant that provides for both our customers and
our people.
Our current health program is an HRA and a mini medical
where we contribute to our 75 full-time and 103 part-time
workers.
Operating under the Affordable Care Act has negative
consequences on our company. In essence, it is really not
affordable.
Since its passage, we have studied and participated in
numerous seminars to estimate our most realistic cost in
implementing this program. Based upon this information, it
would cost our company from $140,000 to $200,000 to meet this
mandate. This is disastrous financially since we are only
projecting 2013 net profit of $240,000.
Our loan covenants require us to maintain a coverage ratio
of 1.5 to 1. This burdensome cost would reduce our coverage
ratio to below 1, thereby placing our loan in default. Our bank
could either increase our interest rate by adding to our costs,
call our loan, which is absolutely unaffordable, or allow us to
remain in default. I believe we all know the current financial
atmosphere of the banking industry today.
We have evaluated our choices to abide by the law as
presently interpreted to include, one, increasing our menu
prices to cover the additional costs, making us less
competitive and affecting our sales, which eventually could
lead to losses. The restaurant industry is very competitive and
has experienced a very traumatic down slide since 2008.
Research by the National Restaurant Association shows that
since the recession, 70 percent have changed their eating-out
habits by either reducing or even eliminating dining out.
Increasing menu prices would be my last resort.
We could reduce scheduled hours of 30 employees to less
than 29, reducing our people's hours and income and the
resulting effect on the local economy. This could require
valuable employees to either obtain a second job or quit and
seek full-time employment elsewhere.
Split the company into four or five companies with
different ownership is another option in order to stay under
the 50 full-time requirements. This is difficult, and also
costly.
Or finally, we could just pay the penalty for not providing
coverage under the Affordable Care Act.
Major companies have legal advisors who will successfully
guide them through this legislation. Small businesses such as
ours must obtain as much information as possible and do their
best to live by the letter of the law. Even after attempting in
good faith to abide by the law, because this act is so
complicated, we hope and pray we do not get penalized.
The majority of our employees are below the age of 40. Many
are students attending local schools, working during breaks and
holidays part-time to supplement their income. The restaurant
business has a history of high turnover due to this nature of
being a second occupation, a supplement for school, or even a
beginning job. Using W-2s to compute the total number of full-
time equivalents under this mandate would unfairly influence
these results. In addition, the majority of our full-time
employees believe this healthcare will be free. Many mistakenly
believe the 9.5 percent cost is coming from Tricor rather than
required from them, which many cannot afford, not to mention
the administrative nightmare of our small company just having
to enforce.
Finally, we invest the majority of our cash flow into
updating and remodeling our facilities to try to stay
competitive. However, current profit levels are not sufficient
to allow us to remodel or even consider expanding, which could
provide an additional 50 jobs per location.
The information I provided to you today is our best
indications of observing the Act. We respectfully request that
Congress reevaluate this mandate in relation to small business
concerning both the 50 full-time threshold and calculation of
full-time equivalents. With new interpretations being issued
regularly, we can only hope and pray that we will be able to
sustain our 34-year-old business and survive for both our
employees and our customers. Thank you.
[The statement of Mr. Tubel follows:]
Prepared Statement of Edmund Tubel, CEO, Tricor Inc.,
Licensed Franchisee, Sonny's Real Pit Bar B Q Restaurants
Ladies and Gentlemen: My name is Edmund Tubel and I am CEO of
Tricor Inc a licensed franchi see of Sonny's Real Pit Bar B Q
Restaurants.
Today I will attempt to provide as objective a position in regards
to the impact the Affordable Care Act has on a small business such as
our company.
I was fortunate to start Sonny's in the Carolina's in 1978 with an
SBA guaranteed loan. Over 34 years, we have built 27 restaurants in
four states. We currently operate 5 locations in North and South
Carolina and employ 178 full and part-time people. Tricor/Sonny's has a
very strong reputation locally as a family restaurant that provides not
only for their customers but also their own people.
Our current health program is an HRA and a mini medical where we
contribute to both our salary and hourly employees.
Our census includes 75 Full time and 103 part time workers with
less than 30 hours per week.
Our interest today is to illustrate not only the complexity of
operating under this legislation but also the negative consequences the
Affordable Care Act will have on our Company. In essence it's really
not affordable.
Since its passage, we having observed and studied various outlines
and participated in numerous seminars, to develop our best estimate in
implementing this program as currently outlined. Based upon this
information, it would cost our company anywhere from $150,000-$200,000
to meet this mandate. This is disastrous financially since we are only
projecting 2013 net profit of $240,000.
Our loan covenants require us to maintain a coverage ratio of 1.5
to 1. This burdensome cost would reduce our coverage ratio to below 1
thereby placing our loan in default. Being in default would require the
bank to 1) increase our interest rate, adding to our costs, 2) calling
our loan, or 3) allowing us to remain in default. I believe we all know
the current atmosphere of the financial community.
Therefore we have evaluated our choices to abide by the law as
presently interpreted. These include:
1. Increasing our menu prices to cover the additional costs thereby
making us less-competitive in the marketplace and affecting our sales
which eventually could lead to losses. The restaurant industry is very
competitive and has experienced a very traumatic downward slide since
2008. Research shows that since the recession 70% of people have
changed their eating out habits by reducing or even eliminating dining
out according to the National Restaurant Association. Increasing menu
prices should be a last resort.
2. Reduce scheduled hours to less than 29 in order to stay below
the 50 full time employee equivalent, thereby reducing our people's
hours and income and the resulting effect on the local economy.
3. Split the company into 4-5 separate companies with different
ownership in order to stay under the 50 full-time requirements.
4. 0r just pay the penalty for not providing coverage under the
Affordable Care Act.
Major companies I am sure have legal advisors that will
successfully guide them through this legislation. Small businesses such
as ours must obtain as much available information as possible and do
their best to live by the letter of the law. Then because this act is
so complicating hope and pray we do not get penalized.
Many of our employees are very young. Many are students attending
local schools working during breaks and holidays part-time to
supplement their income. The restaurant business understandably has a
history of high turnover due to its nature of being a second occupation
or a supplement for school or even a beginning job position.
Therefore using W-2's to compute the total number of those full
time equivalents under the mandate would unfairly influence these
results. In addition, the majority of our FTE employees will not be
able to afford this healthcare. Not to mention the administrative
nightmare of our small company having to enforce.
The information provided today is our best indications of observing
the act. We respectfully request that Congress reevaluate this mandate
in relation to small business concerning both the 50 fulltime threshold
and calculation of full time equivalents.
With new interpretations being issued regularly we can only hope
and pray that we will be able to sustain our 34 year old business and
survive for our employees and customers.
______
Chairman Roe. Thank you.
Dr. Huff, thank you for your service to our country.
STATEMENT OF OLSON HUFF, PEDIATRICIAN, ASHEVILLE, NC
Dr. Huff. Good morning and thank you very much for allowing
me to be here today, Chairman Roe and Congressman Hudson. I
think that we are an example of democracy at its best, and I
really appreciate the opportunity of sharing in that with you.
I have to say, however, as a pediatrician, Chairman Roe, I
may need to talk to you afterwards about some of those 5,000
children you gave me to help take care of during these years.
[Laughter.]
Chairman Roe. Well, Dr. Huff, they are all good
Republicans. [Laughter.]
Dr. Huff. I really appreciate the fact that we are in this
discussion, and in the many years, 50 or more now, that I have
been in medical practice in North Carolina and in other parts
of the world, I have dealt with countless families. I have seen
them at their best, and I have seen them at their worst.
There are three things that I have noticed about the
families and the children I have cared for which is certainly
common to all of us. Number one, when we are sick, we want to
get well. Number two, when we are injured, we want to be
mended. And number three, when we have pain, we want relief.
That basically is the scenario that has been handed to me as a
medical professional and to all of those who are my colleagues:
How do we respond to those particular issues of health?
My perspective from this presentation that I want to make
to you this morning comes not from a particular business or an
institution to which I may belong, but from the representation
that I hope that I have to say about the health of all of our
people.
As a practitioner, I have been faced over these 50 years
with a magnificent amount of change. We have seen changes in
technology, we have seen changes in the scientific advances,
and we have seen changes in how we become educated about those.
As a result, we have increased the cost of medical care
significantly in order to respond to those changes. That cost
has been shared by patients, it has been shared by payers, it
has been shared by private and by public institutions.
One of the things that I remember specifically as a young
patient of mine by the name of Alice, she has cerebral palsy.
She came into my clinic always with a bright smile and a high-
five for everyone. I asked her mother one day, ``What do you
need to make sure that Alice gets the best care?'' She said,
``I need to make sure that someone is taking care of her who
knows their business. I need to get as much of the care for her
in one place, and I need to make sure that it is covered by
some way, that it is paid for, so I can get her the care she
needs.''
That is the question that is in front of us, and I want to
give two very specific reasons that I feel it is important to
answer Alice's mother.
First of all, North Carolina has missed a major opportunity
when it failed to expand Medicaid, a portion of the Affordable
Care Act that would extend care to significant numbers of
people that would increase their opportunity for preventive
health care. In North Carolina, we lost 25,000 jobs. We failed
to add to our gross domestic product over the next 10 years, at
least $1.2 billion. But more importantly, we failed to ensure
and guarantee that access to the relief of pain, the relief of
sickness and the mending of bodies that are broken for 500,000
people.
Translate that into another factor. We have about 122,000
births in North Carolina each year, and almost 10 percent of
those are born too early. The premature birth rate at our
hospital costs us a little over $10,000 a year, compared to
under $2,000 a year for a full-term newborn baby. We can
prevent prematurity by offering better resources for preventive
health care, and Medicaid is one of the ways in which women can
get that preventive health care.
We have talked a lot about cost today, and we will continue
to talk about cost as it is related to health care. One of the
things, however, that I think is tremendously important for us
to understand is that there is a return on investment here, and
rather than spending so much time on cost, I would love to see
us spend more time on the benefits of what it means to insure
all of our people and guarantee them the relief that is so
necessary that we practitioners, hospitals, and institutions of
medicine need to provide.
Thank you for your service to our country. I continue to
hope we will dialogue about this together.
[The statement of Dr. Huff follows:]
Prepared Statement of Olson Huff, M.D., FAAP
For more than thirty-five years I have provided health care to
countless children in North Carolina and have entered the lives of
their families in substantial and enduring ways. I have seen them at
their best and their worst. In those years, I have learned many things.
Three stand out:
1. When, ill, there is a desire to be well.
2. When injured, there is a desire to be mended.
3. When in pain there is a desire for relief.
My task as a medical practitioner has been to address those issues
and to bring a resolution to those desires whenever and wherever
possible. To do so required me, and all my fellow medical colleagues,
to rely on an extensive network of health care resources. Chief among
those resources is and has been the economic strength necessary to
support an ever-expanding medical system engaged in technological,
scientific and educational advances.
From my perspective as a medical practitioner, I wish to address
two specific issues affecting children and their families in North
Carolina and the economics surrounding them.
They are:
1. Medicaid Expansion
2. Premature births
Let me first state that these two issues are only a fraction of the
many faces of health care today and both are centered squarely in the
center of preventive care, a must if health care costs are to be
reduced.
Medicaid expansion in North Carolina. This opportunity of the ACA
would have produced 25,000 jobs in North Carolina, added between 1.2
and 1.7 billion dollars to the GDP of the state and provided badly
needed health care access to 500,000 uninsured citizens. This would
have been a bold step for prevention as the most reliable index of
better health and therefore decreased medical costs is reliable access
to health care.
Premature births. In North Carolina each year, approximately
122,000 babies are born. At the last counting, 15,569 of those were
born too early. Not to even mention the human cost and impact on the
economic and emotional health of a family with a premature baby, the
average cost of caring for that baby is about $50,000.00 compared to
$4550.00 for a full term healthy infant.
The figures speak for themselves. Improved access to care, and a
reliable resource to pay for it yields better health, better prenatal
and infant care, a lowered rate of premature births and a healthier and
more dependable work force to drive the engines of commerce our state
so badly needs.
Expanding Medicaid is one easily achievable way to guarantee that
access to a population most likely to benefit and thus most likely
improve the economic bottom line that will add greatly to the future
needs and development of all of North Carolina's citizens.
______
Chairman Roe. Thank you, Dr. Huff.
Mr. Silver?
STATEMENT OF BRUCE SILVER, PRESIDENT AND CEO,
RACING ELECTRONICS, CONCORD, NC
Mr. Silver. Thank you. My name is Bruce Silver. I am the
President and CEO and Founder of Racing Electronics. We are
based in Concord, North Carolina. I am very proud to be here
today, and I want to thank the Congressman Hudson and Chairman
Roe for allowing me to speak today.
As a small business owner, I am concerned about the effects
of the Affordable Health Care Act, Obamacare, and how it
affects me and my small business in the future.
What was once a choice for Americans will now become
mandates and requirements, not only for employers but for also
employees. Our right to choose is going to be lost.
Insurance companies have already seen new taxes on health
care. These new taxes are already in place and already have
increased our premiums. In 2012, our premiums at Racing
Electronics rose by 28 percent. In this year of renewal, just
this month, in April of 2013, we have seen a 40 percent
increase this year to our health care premiums. We cannot
continue to sustain this and absorb increases and the effects
to our bottom line.
In the past, we have increased our employees' share of
their paying for their health coverage, increased co-pays, and
increased their deductibles. As a net result, our employees
enjoy a much less rich plan than they enjoyed just three years
ago.
In the past we have competed in the marketplace, and still
currently to this day we compete in the marketplace for
employees. We have job applicants who come in wanting to know
what our salary is, what their vacation time is, and what their
insurance plan is. We compete by having affordable health care
for our employees, by having substantial and equitable salaries
to offer our employees. That choice for health care is being
taken away. We can't compete with that now. It is going to be
mandated what we are going to have to give.
We are looking for automated distribution. We distribute
radios and scanners at the Nascar and Indy Car and NHRA races,
mostly all over the USA. This week in Talladega, we will have
40 staff members. I am sure you have all seen the high-tech
vending machines that have started to come to airports and
malls around the country. We are looking at that right now. We
are looking at what the benefits are if we would go and have 30
machines instead of 30 staff members at the race, and the
result--we don't want that result, we don't want that result.
Since moving our headquarters to Concord in 2005, we have
started to re-hire North Carolinians and put people back to
work. While based in New Jersey in the early 1990s, we moved
some of our production to Asia. I am very proud that we are
pulling back a lot of that production and putting people back
to work in this country. Thank you.
[The statement of Mr. Silver follows:]
Prepared Statement of Bruce Silver, President, Electronics Industries
Corp.--TIA Racing Electronics
Talking Points
Taxes Accessed to Healthcare Providers--How this affects premiums
New Mandates--The effect of mandates related to premium hikes First
year and future year costs (unknown)
The disincentives for businesses to hire--
Avoid penalties, new costs and burdens
Turning to outsource work and turn to contractors and not
hire new employees
The elements regarding hiring/retention of employees (most
desirable candidates)--Government in independent business
The effects on companies of 50 or more employees--How part-time/
seasonal employees will be classified and the affects
Related Penalties/Calculations--
Tax affects
How much penalty payments will generate What plans the
employer may be required to offer
Calculations of the employee contribution as it relates to
the household income
Why the premiums will continue to soar and the effect on
employee's rising deductibles and out of pocket expenses
______
Chairman Roe. Thank you, Mr. Silver, and thank the panel
for your testimony, all again very good.
In the right of full disclosure, the staff and I ate at a
Sonny's Restaurant last night, and we are still full. It was
very good. [Laughter.]
Chairman Roe. We know a little something about Nascar
racing in East Tennessee at the Thunder Valley and the Bristol
Motor Speedway, so we use your products there.
Mr. Silver. Thank you.
Chairman Roe. We thank you for that, and we would like to
see, of course, that business get back on its feet a little
bit, too. They have been struggling a little bit, the racing
industry has.
Let me start by saying that I share a vision and a goal,
and one of the reasons I left my medical practice and I told my
wife I am either going to quit complaining or I am going to try
to get elected to Congress and do something about the way I
think the healthcare system is going in this country. I could
see in my own patients this cost forcing people to lose their
insurance, and you have seen this recession do that. We have
fewer people now that have private health insurance coverage
than before. So we have lost coverage because of our economy,
and we are not going to increase coverage by losing jobs. We
increase it by, as you, Mr. Silver, pointed out, bringing that
manufacturing back, allowing people to get jobs and fill these
positions that have health insurance coverage.
And I went through this health care reform in Tennessee and
I watched what happened, and I can see the same thing happening
here on a national level. We have created a massive bureaucracy
for the simplest transaction in the world, and that is a
patient coming to see me and me getting paid for that
transaction. It is unbelievable when you listen to all of the
work that has to be done for that to happen now, and we have
only begun to scratch the surface. We haven't even talked about
Medicare, which is extremely important for me and extremely
complicated when you look at the Affordable Care Act.
So let me just talk about Medicaid expansion. Our state in
Tennessee elected not to do it, to expand, and elected not to
have the exchange. The Federal Government will set up the
exchange. Let me just explain to you why we elected not to do
it.
Our governor, Governor Haslam, what he wanted to do was to
have the flexibility to allow patients on Medicaid--by the way,
if you want to, go pull this up. A large study was just
published by the University of Virginia, 800,000-something
patients, not a small study. Medicaid patients' surgical
outcomes were worse than people that did not have health
insurance coverage at all. The outcomes were worse. Mortality
was higher and so forth. Why do we take a flawed, failed system
that doesn't serve the patients well, why don't we reform that
system so that it serves them better?
One of the things I think we can do with that is to allow
the private market to work. The public it has served, and, Dr.
Huff, in Tennessee, all women who don't have health insurance
coverage--because pregnancy is one of the things where you is
or you ain't. So it is not one of those things where I may be
pregnant. So in Tennessee, we cover every pregnant woman. So
they have access to coverage. And with SCHIP plan, all of our
children have coverage for pediatric coverage. So that is
happening right now in our state, and I would suspect a lot of
it is happening here.
What you are talking about is expanding the program to the
uninsured in North Carolina, and I think certainly those folks
need to have adequate coverage, but there is a better way to do
it other than Medicaid. What we wanted to do is use the same
good health insurance that I currently have, I would like to
have lower-income people have access to that, and that is what
we would like to do in Tennessee.
Mr. Bass, I am going to ask you a couple of questions. It
is extremely important what you brought out in your testimony,
which was excellent. One was defining a 40-hour work week. I
think that is very important. Two is would you go over, Mr.
Bass, a good-faith effort you were talking about in 2014? And
lastly, a lot of people don't pay any attention to it, but it
would help to fund the Affordable Care Act. To me, it was
exactly the wrong way to go, to take a flexible spending
account that I have right now and have me call my doctor to be
able to get Prilosec over the counter instead of using your
flexible spending account. You send it to the highest-cost
provider instead of just letting me go down and get my
Prilosec.
And by the way, this is a personal testimonial. Thirty-one
years I have practiced medicine, took care of some of the
sickest people in the world. I never took a Tums, and six
months after getting to Congress, I take a Prilosec every day,
to let you know how it is. [Laughter.]
So if you would go over those three points I made?
Mr. Bass. Sure can. Food Lion invested itself several years
ago to support the IRS regs around over-the-counter medications
and accepting FSA accounts, and obviously with the new laws,
that investment is going to be in jeopardy. We would similarly
argue that we think it is inefficient to have patients go to
their doctor for over-the-counter medications that they should
be able to buy via those accounts without that interruption, I
would argue.
As far as a full-time associate, we strongly believe that
for us, 35 hours and up is an adequate definition, and we
believe that the expansion of that to 30 hours will create
confusion, added cost, and in a business, frankly, where
everyone sells food, we are doing our best to serve our
customers and our associates in the best way possible. So for
us, that expansion is really something that is important to us,
and we believe we should be re-examining that.
Chairman Roe. One of the things that I wanted to bring up
that I learned in a hearing in Evansville, Indiana, obviously
in medicine, we don't do this this way, but it is profit per
employee. We had an IHOP owner that owned 12 IHOPs, had 800
employees, and he said he was very efficient. He made $2,800
per employee, and apparently in that business, that is very
good. I didn't know that. Other McDonald's franchisee owners
told me that $1,200 a year was very good per employee.
He said, Doc, what do I do? He said, if I pay for the
health insurance that I am required by the government, the
essential health package, essential health benefits it is
called--the government decides what you buy, not you, and what
you can afford. He said, it is going to cost me $8,000. I am
upside-down $5,000 per employee. If I pay the penalty and the
taxes on that, I make no money. He said, what do I do? I said,
well, by Washington speak, you charge me $10 for a pancake and
you go out of business. I think that is exactly what you just
described. I think I heard you say the last thing you wanted to
do was raise the price for your customer.
Mr. Tubel. Exactly.
Chairman Roe. Could you comment on that?
Mr. Tubel. Well, one of the problems we have is that we
compete in a very competitive marketplace to where we compete
with a lot of mom and pops. They won't have to operate under
the same mandate as we do, which would require us, if we raised
our prices, to go across the street and get something for a lot
less money than coming to us, notwithstanding the service or
the quality of what we provide.
But bottom line is, after all is said and done, we are
lucky at the end of the day to, after taxes, to make 2 to 3
percent profit, which is more in line with about $1,200 per
employee.
Chairman Roe. I thank you.
I yield to Mr. Hudson.
Mr. Hudson. Thank you, Mr. Chairman.
I thank the witnesses for your testimony.
Going back, Mr. Bass, talking about I guess these added
costs, which I think Mr. Tubel is referring to, how is your
business going to respond? You are operating on a 1 percent
profit margin on grocery items already. Are you going to raise
food prices? Do you impact the incomes of employees? Your
organization does a tremendous amount of charitable work in the
community. Is that where we will probably see the cuts? How are
you going to respond to the costs that are coming down the
pike?
Mr. Bass. That is a great question and the key one that we
are wrestling with right now. So for us, we are deep in the
planning phase. I think, as was mentioned on the earlier panel,
with many new laws, we spend a fair amount of money, frankly,
both for legal advice and for consulting advice, which could be
used to grow our business in different ways, serve our
customers differently and, frankly, serve our associates.
We have already spent a substantial amount of money to try
and determine how to comply with the regulations that are there
already. So going forward, we continue to do that work. We are
not quite sure exactly what the full impact will be. But as a
competitive business who also believes we need to serve our
employees as much as we serve our customers, we have a real
strong conviction to continue to maintain health insurance. The
form that it happens, the full impact of that, we are not quite
sure, but it is very complex, and that is really why I think we
need to consider some of the additional changes to those laws
that have been discussed already.
Mr. Hudson. I appreciate that.
Mr. Tubel, you talked about the impact on your profit
margins. I don't think folks who are not in business and,
unfortunately, the people who are writing regulations for laws
like this understand just how tight business people operate on
margins, and especially in economies like this.
You mentioned, I believe, how much time you are having to
spend on legal advice and that sort of thing. What is the
impact of that, just trying to understand the law, trying to
figure out how to comply with the law? What kind of impact does
that have on you?
Mr. Tubel. Well, what we try to do is participate in
various seminars that are provided by the industry. The North
Carolina Restaurant and Lodging Association has also brought us
a seminar, and then our franchise company has brought in legal
to try to separate the single operator to the mini operator to
the big operator. So it takes time away.
But our biggest concern is if we get to the point where we
can understand where we are at in the law, that it changes
again. It is like a moving target for us. So we try to keep
that moving target within range so we know that we have a
probability of meeting the demands of the Act.
Mr. Hudson. I know it is frustrating. I continue to try to
beat that drum when we go to Washington just about what the
uncertainty does to business people like yourself. So I will
continue to be your advocate.
Mr. Silver, thank you for your testimony. Can you elaborate
a little bit on what you mentioned just in terms of the health
care cost as a disincentive for hiring folks like you?
Mr. Silver. Sure. Right now, we have offered a very
healthy, rich plan, didn't try to incentivize people coming on
board and working for our company. We are going to have to
limit that. We are going to have to back down on some of the
coverage and, frankly, we feel we're going to lose some
employees to other employers because we are not going to be
able to sustain the level of health care that is going to be
mandated.
Mr. Hudson. Well, you have certainly been a great citizen
of this community, as was recognized by the Chamber, recognized
U.S. Business of the Year, and we appreciate what you do for
the community and the type of quality jobs you provide.
Mr. Silver. Thank you. I am honored.
Mr. Hudson. In my opinion, the Federal Government ought to
be doing everything we can to get out of the way of people who
are manufacturing things in this country, and we hope you can
continue to have real people handing me a scanner at the race
and not a machine.
Mr. Silver. That is our goal. It will be a sad day for me
and my company if we ever have to really go down that route.
Mr. Hudson. Yes, sir. Well, as we look at just sort of what
is the impact on your business, what do you think is the
greatest impact out of this law as we look at ways we might
improve it and tweak it? What is sort of the biggest thorn, the
biggest burr in your saddle there?
Mr. Silver. The lack of choice. We don't have a choice. We
are told what we need to do. We are told how we need to do it.
Instead of letting business do what businesses do and compete
in the marketplace with good products and for good employees,
we are told that we can't do that anymore. More regulation is
not healthy for business.
Mr. Hudson. That is very well said.
Mr. Chairman, before I yield back, during our break one of
our citizens in the audience grabbed me and handed me an
article about--it is titled, ``Republicans and Democrats in
Washington Conspire to Exempt Themselves from Obamacare,'' and
I just wanted to state on the record that I have nothing to do
with those negotiations, and as far as I am concerned we need
to live under laws that we pass. So I don't support any efforts
to exempt Congress, although I would love to find a way to
exempt everyone from this health care law.
But with that, Mr. Chairman, I will yield back.
Chairman Roe. I thank the gentleman for yielding.
I had an email about that yesterday, and my response was I
would vote against me if I did that. So I would vote against
myself.
A couple of things that I want to sort of start by sharing
with you to show you how complicated and complex this health
care system this, and Dr. Huff brought it out. He spent his
life taking care of poor children in western North Carolina,
and that is a noble goal, something that just--literally across
Mountain Sam's Gap is where I live. Medicaid is one way to do
it. It was started in 1965, as Medicare was. Medicare began as
a plan that cost $3 billion, and the government in 1965, the
government estimator said that in 1990, 25 years later, it
would be a $13 billion program, a $12 billion program. It is
$110 billion. They missed it just a little bit, by a factor of
nine.
Medicaid has had the same explosive growth. Over 40, 50
million people now have Medicaid in this country as their
primary. And again, if it were a system that were working for
them, that would be one thing. Because you get a Medicaid card
doesn't mean you can get access to health insurance coverage.
Our Medicaid patients tend to use more than the uninsured the
emergency room, which is the most expensive, the worst thing
you can do. And then there is the cost shifting that goes on.
Let me explain what that is.
When you come in to the hospital or to the doctor's office,
it pays, Medicaid pays less than 60 percent of the actual cost
of providing the care. So that cost is shifted onto the private
sector, forcing all of these gentlemen up here who provide
health insurance coverage for their employees to go higher. So
the government program is actually shifting the cost to the
private sector, and let me give you an example.
When implantable defibrillators first came out, there was a
man, a gentleman who needed one, and it was put in. Medicaid
paid $800 for that device. The only problem with it, it cost
$40,000. So that $38,000, $39,200--I am a public school guy;
you see how I did in my math--that $39,200 was shifted to
private insurers. So we have to stop this cost shifting that is
going on right now, currently. And remember that hospitals and
doctors have the responsibility by the EMTALA law that anyone
who comes up, whether you are legally in this country or
illegally in this country, have a right to health care. If you
show up in the emergency room, Dr. Huff will see you if he is
on call. If you show up in the emergency room, I will see you,
and we will treat you whether you can pay or not, and no one is
complaining about that.
But we have to figure out a way to make this--as you heard
these gentlemen say, their businesses can't afford it, and they
can't afford more cost shifting. And it also occurs to a much
lesser extent in Medicare.
So I am going to finish up my questions, and I certainly
appreciate this panel. It has been very, very informative.
I think, Mr. Bass, you bring a point out that I had not
thought of, which is the good faith period. I think we have to
have a time, since I don't believe the Federal Government is
going to be prepared for this come January 1, 2014, and it is
the law of the land. I mean, it is the law we have to comply
with and live with, and the thousands of pages somebody has to
read. You guys are spending an inordinate amount of money and
time doing that. Smaller businesses like these, they don't have
an HR department to do that, so I don't know how they get the
information. But we do need a grace period. I am taking that
back. That is something I think we do.
And the question I have for all of you all, we have
Secretary Sibelius in front of my committee on the 15th of May.
If you had a question to ask her, what would you want me to
ask? And I will take it back from right here and ask it.
Mr. Bass. I would emphasize a grace period that you just
outlined. Food Lion and Delhaize America are proud to be strong
partners in our communities. We will support both the law of
the land and the desires of the communities we work within. We
are proud to do that. We will do our best to comply with the
law, but there are fairly strong penalties involved for lack of
compliance that--we will not comply because we want to. We
won't probably comply because we don't have the knowledge and
skills yet. So if there were a grace period, that would be a
huge plus from our perspective, and we would ask you to ask her
that question.
Chairman Roe. And Secretary Sibelius is, by the way, for
those of you in the audience who don't know, is the Secretary
of Health and Human Services, who is responsible for the
implementation of the Affordable Care Act.
Mr. Tubel. I think my question would be how do you apply
one size to fit all? I mean, that is probably one of the
biggest questions we have in health care, is that you can't put
the one program in to cover everyone because everyone is
different, and there should be some basis that you could allow
some correction within the industry, based upon the industry
demographics, to allow us to be able to afford the health care.
Chairman Roe. Dr. Huff?
Dr. Huff. How do we provide incentives that are already
part of the Affordable Care Act to increase the ability to make
sure that primary care physicians are readily available in this
country to take care of the people we need? Because we have a
significant lack of primary care physicians, and part of the
reason that we need health care reform is to make sure we
incentivize the educational programs to make sure those persons
are going to those areas of need.
Chairman Roe. Thank you, Dr. Huff.
Mr. Silver?
Mr. Silver. I would challenge the Secretary to make this a
good program, to implement changes that would not have the
negative impact that they have now. It is beyond belief how
complex, needlessly how complex this program has become, and
that is my question.
Chairman Roe. We will pose those questions. And before I
yield to Mr. Hudson for the last questions, Dr. Huff, just to
let you know, there is a program in Medicare called Graduate
Medical Education, GME. I am co-chair of the Academic Health
Caucus in the Congress. What the Affordable Care Act did was in
graduate--GME is graduate medical education--is how we train
our young doctors across the country, and you are absolutely
correct, we do not have enough. We will have, by 2025, 120,000
primary care doctors short in this nation, and we are going to
be lined up around Wal-Mart to get in.
The Affordable Care Act cut the funding for graduate
medical education so there is less money to train our
residents. We are graduating more medical students, but they
can't get into residency slots, and that is an impending
disaster that we are working on.
Mr. Hudson, I yield.
Mr. Hudson. Thank you, Mr. Chairman.
It was very enlightening to hear each of you say what you
would ask the Secretary, and I think that is important. And
again, I think that was part of the goal of this, was to allow
real people to talk about real challenges out here in the real
world. And so I appreciate your testimony and I appreciate
those candid answers.
I guess I would just try to dig a little bit deeper on what
are some of the things in each of your businesses that you do
to control health care costs, and how does this law impact
that. So what are some of the processes you go through, the
decision-making you do currently to control costs, and then how
does this law impact that sort of decision-making process? And
I will just start with Mr. Bass.
Mr. Bass. For us, similar to other panelists, we have a
significant emphasis on wellness. We do cover preventive care
and the like, and we believe that that sets the stage for
better long-term care and outcomes for the associate, as well
as for us as a business, as well, on the cost side. There is a
lot of uncertainty about exactly how wellness discounts work
within the rate structure, and that is a significant question
for us and, frankly, a concern, and that could dramatically
impact how we offer wellness programs which, in the end,
benefit the associate as much as it benefits our business.
Mr. Hudson. Thank you.
Mr. Tubel?
Mr. Tubel. Well, because of the nature of our business, we
encourage our people to join the YMCA and the other fitness
places around. We have a lot of time to group together and do
it as teams, but we don't have anything formal within the
actual restaurant itself.
Mr. Hudson. Thank you.
I don't know if this question applies to your practice,
but----
Dr. Huff. Well, actually, I have in front of me my notepad
that says, ``Eat smart, move more, North Carolina.'' I think
the things that you all are talking about that provide
healthier ways of living is really a great emphasis.
I would like to mention one program in Greenville, South
Carolina, and this is an OB/GYN program. Under the Medicaid
program in South Carolina, they have actually taken pregnant
women who are in the highest risk categories and reduced the
premature birth weight by 47 percent. That is how we save
money, and that is how we reduce costs, by really attending to
those areas that are high risk and need attention to prevent
it.
Mr. Hudson. Mr. Silver?
Mr. Silver. I am a small business. I started this out of my
condominium in 1988 as a part-time job, and we kept adding and
adding people. Two areas that I am a little sensitive to is
weight and smoking, so I personally reward people that work
within the company that quit smoking, financially, out of my
own pocket, and lose weight for some people that we have had
who had serious weight problems. We just preach a healthy
lifestyle.
Mr. Hudson. That is great. Well, I am impressed with your
answers. But did any of you want to elaborate, though, on what
the new health care law, the impact it will have on your
ability to do some of these incentive programs? Is it going to
be helpful, or is it going to kind of eliminate some of your
flexibility to do these things? Anyone want to jump in? Mr.
Bass?
Mr. Bass. Yes, I will jump in. I think that the key for us
is that lack of clarity around the rate structure and discounts
for wellness programs. At the end, we have so many dollars we
can really spend on our benefits program. We are proud to do
that. But to the extent that there is a lack of clarity and
uncertainty, it puts us at risk of compliance, and the fines
involved typically are much more expensive than some of the
benefits involved. So it forces us into potentially making hard
choices. We don't know where it is going to go quite yet as we
gather all the information over the course of the summer. But
there is a significant potential negative impact, I think, for
myself and other large employers who are considering the pros
and cons of the rates, the regs, and the impact on wellness.
Mr. Tubel. We would hope that the Affordable Care Act would
provide some means for just about everybody to have the
opportunity to be involved in the YMCA or a fitness center on a
regular basis.
Dr. Huff. And in relationship to prevention, again, North
Carolina has drawn down several million dollars already from
the Affordable Care Act to put into place prevention programs
for obesity prevention, smoking prevention, and to increase
activity. So there has been some effort that has been made
under the Affordable Care Act for different states, certainly
North Carolina, to benefit from some of the monies that can
provide better prevention.
Mr. Silver. We are going to continue to do what we have
been doing, and that is to try to make our company as strong as
it can be and our employees as healthy as they can be.
Mr. Hudson. Great. Well, I thank the panel and, Mr.
Chairman, I yield back.
Chairman Roe. I thank the gentleman for yielding, and I
certainly want to thank our witnesses for taking your time
today. It has been fantastic. And I also want to thank all the
people here in the audience who came in. As you can see, this
is incredibly complicated, and we have only been two hours. We
have only begun to scratch the surface of how complex our
health care system is.
By the way, I want to mention one thing. I think when the
Lord walks on this earth again, it will start at St. Jude's
Children's Hospital. I was a medical student there in 1969. My
first rotation, pediatric rotation, was St. Jude's Children's
Hospital. At that point in time, 90 percent of those children
died, 90 percent. Today, 90 percent of those children live. It
is absolutely unbelievable. And every child is treated for
free. Every child's family is flown there for free. I probably
will get a little bit emotional talking about this.
My partner's child, my partner in medical practice, his
wife was in the hospital having a baby when his 3-year-old
child had a seizure and found out that he had a metastatic
tumor from the abdomen with a 98 percent mortality. He was 3
years old. That boy graduates from high school this year. It is
an amazing story. I hope that this health care plan, or
whatever you want to call it here, doesn't interrupt the
incredible medical innovations that we have in this nation.
Yesterday on the airplane flying over here to Charlotte
from the Tri-Cities, I ran into a constituent of mine who was
going to the M.D. Anderson Hospital. He had a familial leukemia
that had a 4-month survival rate 12 years ago. We don't want to
stop that in this nation. We want to continue to be the country
that provides that medical research and doctors that provide
the kind of care that we are getting that is available nowhere
else in the world.
I will now yield to my good friend, Mr. Hudson, for his
closing remarks.
Mr. Hudson. Thank you, Mr. Chairman. Again, thank you for
being here today, bringing this hearing to Concord and Cabarrus
County. This has been extremely informative to me, and I thank
our witnesses from both panels for sharing your testimony.
I think we all share the goal of having the best health
care in the world here in this country, having it accessible to
everyone, and having it at a price people can afford. My desire
is that individuals have more power and more control over the
decisions when it comes to health care. A lot of you may have
seen Dr. Ben Carson when he spoke at the Prayer Breakfast
recently. I thought he put it so well when he said if it was up
to him, every child who is born in this country, he would hand
them a birth certificate and a health savings account. And if
they couldn't afford to put money in their health savings
account, then the Federal Government would put it in for them
because it would be cheaper than a lot of the social welfare
programs we do now.
And by putting the power in that individual's hands to make
health care decisions, if you combine that with some
commonsense things like liability reform, like more
transparency in costs, allowing insurance companies to compete
across state lines, tax credits for folks who buy their own
insurance, if you bring these market-based reforms into health
care and empower individuals to make decisions, individuals
will make smarter decisions. They will make smarter decisions
about what kind of preventive care they seek. They will make
smarter decisions about what kind of tests that they and their
doctors decide they might need or that a family member might
need, and we will continue to have the best quality health care
in the world.
There is a reason people come here for health care from
other parts of the world. It is because we have the best
quality. So I want to see us move toward more access, more
affordability, but keep that quality of care. I am just really
afraid that the program we are moving towards, the Affordable
Care Act, is going to destroy the quality and the access in an
attempt to fix the price.
And then the other side effect that we have talked about a
lot today here is the impact on our businesses, businesses who
are trying to do the right thing, to provide health care, to
even provide preventive care. I have heard some remarkable
stories here today. But this law is going to become such a
burden to these businesses. Not only can they not afford to do
what they are doing to take care of their employees, but I
question whether they can keep their doors open and keep the
jobs that we need so desperately in our communities.
And so I appreciate the testimony, I appreciate the
opportunity to highlight these issues, and I just pledge to you
that I will continue to work as hard as I can to make
improvements to this law as long as this law is the law of the
land and look for alternatives to this law as we build support
to do that.
So, with that, Mr. Chairman, with much gratitude to you for
being here, I yield back to you, sir.
Chairman Roe. I thank the gentleman for yielding, and I
want to thank the panel and the audience. You have been great
out there.
And if he is not going to do it, if Mr. Hudson is not going
to do it, I am going to introduce his mother, who is here in
the audience today----
[Laughter.]
Chairman Roe [continuing]. And thank her for being here,
because without you, he wouldn't be here. So, thank you for
that.
I was out at a VA jogging many years ago when this veteran
stopped me and he said, Doc, he said, do you know what the
problem with this place is? And I said no. And he said,
alcohol, tobacco, and inertia. And I think that is what
basically, Mr. Bass, you said was the problem we have, is that
people need to get up and move and not smoke and drink too
much, and that probably would take care of their own health.
To give you an example of a wellness program, the
government had absolutely nothing to do with this. It is called
BAE. BAE is a large, worldwide corporation, and they make in my
district C-4. If it blows up in Afghanistan, we made it in
Kingsport, Tennessee. When the helicopter blew up inside the
bin Laden compound, I know where the C-4 came from.
They started a prevention program about six years ago where
if you were an obese, diabetic, smoking, hypertensive train
wreck waiting to happen, you could do that, but you were going
to be an expensive train wreck and it was going to cost you.
But if you got your hemoglobin A1C down, you quit smoking, you
got on the wellness program, they would pay you. So they
reversed the incentives. Doctors have been incentivized to take
care of sick people instead of incentivized to make people
well. So what they did was they had put this program in, and
all of their 700 employees, every single one of them
participated in this program, and in six years, even with these
huge rate increases--they are self-insured--they have had one
minimal rate increase in six years. It is amazing. That should
be done around the country.
I personally use a health savings account, as Mr. Hudson
said. I am a very savvy consumer of health care. I negotiate. I
went into the outpatient clinic not long ago for a procedure. I
had to have a minor procedure. So I negotiated the price,
because they got their money in a millisecond. I didn't ask the
insurance company. I asked my doctor. I knew I needed it. I
went in and got it done. I got a 35 percent discount. My son
worked for the hospital medical system. He said, dad, you could
have gotten a 50. I wasn't as good a negotiator as I thought.
[Laughter.]
But anyway, I think we have learned a lot today, and I want
to thank the host here at the college for allowing us to be
here and sharing this facility, and all of you all for coming.
I have learned a lot. You can see just how we have just
scratched one part. We haven't even talked about Medicare,
which I am passionate about. I have a bill out there that I am
the primary sponsor of, and Mr. Hudson is a co-sponsor of this
bill, to repeal the IPAB. It is the worst piece of the entire
health care bill, and it is going to drastically affect our
senior citizens in a negative way. It will ultimately ration
their care.
So I am going to continue to work on this as long as I am
allowed to serve in the Congress of the United States, and
certainly his door is open, my door is open. I have learned
more at these hearings out here in the field than I do back in
D.C., and I want to thank you all for being here, all eight of
you.
And without any further comments, this hearing is
adjourned.
[Whereupon, at 11:00 a.m., the subcommittee was adjourned.]