[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]



 
                    TAX-RELATED PROPOSALS TO IMPROVE

                              HEALTH CARE

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

                                HEARING

                               before the

                         SUBCOMMITTEE ON HEALTH

                                 of the

                      COMMITTEE ON WAYS AND MEANS
                     U.S. HOUSE OF REPRESENTATIVES

                    ONE HUNDRED FOURTEENTH CONGRESS

                             SECOND SESSION

                               __________

                              MAY 17, 2016

                               __________

                          SERIAL NO. 114-HL07

                               __________

         Printed for the use of the Committee on Ways and Means
         
         
         
         
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]         






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                      COMMITTEE ON WAYS AND MEANS

                      KEVIN BRADY, Texas, Chairman

SAM JOHNSON, Texas                   SANDER M. LEVIN, Michigan
DEVIN NUNES, California              CHARLES B. RANGEL, New York
PATRICK J. TIBERI, Ohio              JIM MCDERMOTT, Washington
DAVID G. REICHERT, Washington        JOHN LEWIS, Georgia
CHARLES W. BOUSTANY, JR., Louisiana  RICHARD E. NEAL, Massachusetts
PETER J. ROSKAM, Illinois            XAVIER BECERRA, California
TOM PRICE, Georgia                   LLOYD DOGGETT, Texas
VERN BUCHANAN, Florida               MIKE THOMPSON, California
ADRIAN SMITH, Nebraska               JOHN B. LARSON, Connecticut
LYNN JENKINS, Kansas                 EARL BLUMENAUER, Oregon
ERIK PAULSEN, Minnesota              RON KIND, Wisconsin
KENNY MARCHANT, Texas                BILL PASCRELL, JR., New Jersey
DIANE BLACK, Tennessee               JOSEPH CROWLEY, New York
TOM REED, New York                   DANNY DAVIS, Illinois
TODD YOUNG, Indiana                  LINDA SANCHEZ, California
MIKE KELLY, Pennsylvania
JIM RENACCI, Ohio
PAT MEEHAN, Pennsylvania
KRISTI NOEM, South Dakota
GEORGE HOLDING, North Carolina
JASON SMITH, Missouri
ROBERT J. DOLD, Illinois
TOM RICE, South Carolina

                     David Stewart, Staff Director

                   Nick Gwyn, Minority Chief of Staff

                                 ______

                         SUBCOMMITTEE ON HEALTH

                   PATRICK J. TIBERI, Ohio, Chairman

SAM JOHNSON, Texas                   JIM MCDERMOTT, Washington
DEVIN NUNES, California              MIKE THOMPSON, California
PETER J. ROSKAM, Illinois            RON KIND, Wisconsin
TOM PRICE, Georgia                   EARL BLUMENAUER, Oregon
VERN BUCHANAN, Florida               BILL PASCRELL, JR., New Jersey
ADRIAN SMITH, Nebraska               DANNY DAVIS, Illinois
LYNN JENKINS, Kansas                 JOHN LEWIS, Georgia
KENNY MARCHANT, Texas
DIANE BLACK, Tennessee
ERIK PAULSEN, Minnesota


                            C O N T E N T S

                               __________

                                                                   Page

Advisory of May 17, 2016 announcing the hearing..................     2

                               WITNESSES

PANEL ONE

The Honorable Lynn Jenkins, Member of Congress, Washington D.C...     5
The Honorable Erik Paulsen, Member of Congress, Washington D.C...    13
The Honorable Adrian Smith, Member of Congress, Washington D.C...     6

PANEL TWO

The Honorable Mike Kelly, Member of Congress, Washington D.C.....    18
The Honorable Mark Meadows, Member of Congress, Washington D.C...    17
The Honorable Luke Messer, Member of Congress, Washington D.C....    16
The Honorable Kristi L. Noem, Member of Congress, Washington D.C.    15

PANEL THREE

The Honorable Ami Bera, Member of Congress, Washington D.C.......    20
The Honorable Charles W. Boustany, Member of Congress, Washington 
  D.C............................................................    22
The Honorable Chris Stewart, Member of Congress, Washington D.C..    23
The Honorable Mike Thompson, Member of Congress, Washington D.C..    21

PANEL FOUR

The Honorable Suzan K. DelBene, Member of Congress, Washington 
  D.C............................................................    24
The Honorable Martha McSally, Member of Congress, Washington D.C.    27
The Honorable Grace Meng, Member of Congress, Washington D.C.....    26

                   MEMBER SUBMISSIONS FOR THE RECORD

Rep. Charles W. Boustany, Jr. 1..................................    29
Rep. Charles W. Boustany, Jr. 2..................................    31
Rep. Charles W. Boustany, Jr. 3..................................    32
Rep. Randy Hultgren..............................................    34
Rep. Lynn Jenkins................................................    41
Rep. Kenny Marchant 1............................................    42
Rep. Kenny Marchant 2............................................    43
Rep. Richard E. Neal.............................................    44
Rep. Joe Courtney................................................    45
Rep. Bill Huizenga...............................................    48

                       SUBMISSIONS FOR THE RECORD

American Society of Clinical Oncology, statement.................    49
The Organized Dentistry Coalition, statement.....................    57
Michael G. Bindner, Center for Fiscal Equity, statement..........    59
May 31, 2016, letter.............................................    63
Healthcare Leadership Council, statement.........................    64
April 12, 2016, letter...........................................    69
Natural Products Association, letter.............................    72
Comment for the Record, statement................................    74
Church Alliance, statement.......................................    75
WageWorks, statement.............................................    80
Yoga Alliance, statement.........................................    83


                    TAX-RELATED PROPOSALS TO IMPROVE



                              HEALTH CARE

                              ----------                              


                         TUESDAY, MAY 17, 2016

             U.S. House of Representatives,
                       Committee on Ways and Means,
                                    Subcommittee on Health,
                                                    Washington, DC.

    The Subcommittee met, pursuant to notice, at 10:04 a.m. in 
Room 1100 Longworth House Office Building, the Honorable Pat 
Tiberi [Chairman of the Subcommittee] presiding.
    [The advisory announcing the hearing follows:]
    
    
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      Chairman TIBERI. The subcommittee will come to order. 
Welcome to the Ways and Means Health Subcommittee Member Day 
hearing entitled, ``Tax-Related Proposals to Improve Health 
Care''.
    Without objection, I would like to recognize our Ways and 
Means Committee chairman, the Honorable Chairman Kevin Brady 
from Texas, for an opening statement.
    Thank you for joining us today, Chairman.
    Chairman BRADY. Well, thank you, Chairman Tiberi, for 
holding this Member Day hearing, for your leadership on health 
care issues.
    Last week Tax Policy Subcommittee hosted the first Member 
Day hearing we've had in years. Members on both sides of the 
aisle presented their ideas for improving our current tax 
system.
    We're continuing that open and transparent process today 
under Chairman Tiberi with another Member Day hearing focused 
on a major priority of our committee, health care. We are 
moving forward with innovative solutions to provide Americans 
more access, better choices, and greater flexibility in health 
care.
    This hearing is an important opportunity to show the people 
and families in our districts we're serious about making our 
health care system work better for them. A number of provisions 
in the Tax Code were created to expand health care access and 
lower costs for the American people. But some of them work 
better than others, and some may not be working at all. It is 
our responsibility to take a hard look at the Tax Code, build 
on what's effective, and fix what is not delivering results.
    We need bold, forward-thinking solutions to ensure our Tax 
Code promotes the high-quality, patient-centered health care 
options Americans want and they need. The best way to do that 
is through an open, transparent, and collaborative process, one 
that returns us to regular order and allows Members to advance 
the priorities of their constituents.
    That is what this Member Day hearing of the health care 
task force is all about. We are coming together to develop 
innovative legislative solutions and begin moving them to the 
floor. I am grateful to all the Members and to the chairman and 
ranking Member who are here today to present proposals. Your 
participation in this process is invaluable. It is a clear 
illustration of what we can achieve through regular order.
    We are excited to hear about all of your ideas to modernize 
the Tax Code and improve our health care system.
    And so, thank you, Chairman Tiberi, for your dedication and 
hard work and your leadership of the Health Subcommittee.
    Chairman TIBERI. Thank you, Mr. Chairman. And thank you all 
for joining us today. This is exciting, because today is--the 
subcommittee is providing a public platform for any and all 
Members of Congress to discuss bills that they have introduced 
that modify the way health care is treated in our Tax Code.
    Members have put a lot of work into developing and drafting 
these pieces of legislation, sometimes over years. And this 
Member Day hearing is their opportunity to share with their 
colleagues and the American people why these bills are 
important and why this Committee should take them up.
    In addition to my colleagues from Ways and Means Committee 
I am excited to hear from other Members who serve on other 
committees who have worked diligently on their own health tax 
idea, health tax bills. We are committed to working through 
regular order, and that includes hearing from all those who are 
working in this space.
    So, how is this going to work? Simple. Members will have 
five minutes to discuss their current health tax legislative 
priorities. And I would remind Members that they are also able 
to submit written testimony in support of their legislation.
    Thank you again to all the witnesses for taking time out of 
your busy schedules to join us today, and we look forward to 
hearing from all of you.
    Chairman TIBERI. I will now yield to the distinguished 
ranking member, Dr. McDermott, for the purposes of his opening 
statement.
    Mr. MCDERMOTT. Thank you, Mr. Chairman and Mr. Chairman 
Brady. I know it is election season and we have to have 
hearings like this. I am not sure--I don't know if this is on 
CSPAN or not, but it is a good time to get some footage of you 
defending something or other for your campaign commercials. And 
I really am glad we are holding this. It gives everybody a 
chance to get up on TV.
    The legislating that we will be discussing should be 
scrutinized carefully. And I hope we can make some constructive 
conversation today, although I am not sure how much questioning 
there will actually be. There needs to be tough questions asked 
at each of these bills.
    At the heart of our analysis what must be is a careful 
examination of what these bills do to the health security of 
the American people. We must also consider the impact these 
bills will have on the sustainability of our health care 
system. Proposals that undermine the reforms provided by the 
Affordable Care Act will weaken health security by taking 
coverage away from working families, and the proposals that 
carve unnecessary holes in the Tax Code deprive the Federal 
Government of the needed revenue to make the system 
sustainable. None of these ideas should get a free pass.
    As the Ways and Means Committee, it is our duty to analyze 
and scrutinize the legislation that comes before us. We can't 
gloss over the important facts, such as the fact that unpaid-
for tax breaks add billions to the deficit, or that political 
attacks on the ACA undermine health care reform.
    Today's hearing is just the first step in what should be an 
ongoing process. I saw on Sunday's paper that it is now costing 
people $2,000 more a year on their hospital bills because of 
consolidation. We ought to be looking at issues like that, as 
well.
    I hope that it might be even an opportunity to fulfill my 
Republicans--colleagues' unrealized promise of a return to 
regular order. Chairman Brady has mentioned it, and I think it 
is the only way this Congress is going to get back to a 
functioning stance.
    Returning to regular order means we listen to ideas, some 
good, some bad, and make informed decisions that are the 
product of careful debate. Holding this Members Day is not 
enough. It is a nice start, but substantive legislative 
hearings, markups, amendments, and further debate will allow us 
to take a hard look at these proposals and find ways to improve 
them.
    There is something that has been missing from the Congress 
and that this--and for this Committee for some time. I look 
forward to learning more about the legislation our witnesses 
will discuss this morning, and I intend to ask tough questions 
about these ideas. Thank you, Mr. Chairman.
    Chairman TIBERI. Thank you, Ranking Member McDermott. 
Without objection, other Members' opening statements will be 
made part of the record.
    Let's move on to today's first panel of witnesses. And our 
first panel consists of members of our Health Subcommittee. The 
three witnesses that will be testifying from our Health 
Subcommittee are the gentlelady from the second district of 
Kansas, Ms. Jenkins; the gentleman from the third district of 
Nebraska, Mr. Smith; and the gentleman from the third district 
of Minnesota, Mr. Paulsen.
    And we will start with ladies first. Ms. Jenkins is 
recognized for her testimony.

 STATEMENT OF THE HONORABLE LYNN JENKINS, A REPRESENTATIVE IN 
               CONGRESS FROM THE STATE OF KANSAS

    Ms. JENKINS. Thank you, Chairman Tiberi, for holding this 
hearing and allowing me to have an opportunity to speak on H.R. 
1270, the Restoring Access to Over-the-Counter Medication Act, 
legislation that I have sponsored along with our colleague, 
Representative Kind from Wisconsin.
    I was very pleased that the committee decided to mark up 
this legislation last October, and subsequently reported it 
favorably out of committee. This legislation still merits more 
discussion to ensure that we get it across the finish line and 
into law before the end of the year.
    H.R. 1270 would eliminate the unnecessary requirement that 
individuals have a prescription from a physician in order to 
purchase over-the-counter medicines with their health savings 
accounts and flexible spending accounts. Health savings 
accounts and flexible spending accounts allow individuals and 
families to make their own health care choices, while 
simultaneously making them aware of health care costs and 
giving them incentives to make financially prudent decisions.
    And for many years, folks in Kansas and all across the 
country used these accounts to buy over-the-counter 
medications, including products such as allergy or cold 
medicines, antibiotic ointment or pain relievers. The FDA 
thoroughly and rigorously examines all over-the-counter drugs, 
also known as OTC drugs, to ensure that they are indeed safe 
and effective for self-treatment. And in 2002 the IRS 
designated OTC drugs as qualified medical expenses.
    Despite this fact, the President's health care law added a 
layer of bureaucratic red tape that forces account holders to 
go to their doctor to obtain a prescription for these OTC 
medicines before purchasing them with their HSA or FSA. If the 
patient does not jump through these hoops and still purchases 
OTC medications with their account, they receive a tax penalty 
from the Federal Government for making a non-qualified 
distribution.
    This law not only defeats the entire purpose of OTC 
medications, but it also places a bureaucratic burden on 
account holders, it clogs doctor's offices with needless 
visits, it decreases access to OTCs, and it increases health 
care costs all around. Worst of all, it discourages people from 
taking control of saving for their health care needs.
    H.R. 1270 would roll back this Obamacare tax, help keep 
costs down, and improve customer choice and access to health 
care. As we all work towards getting our financial house in 
order while also ensuring Americans are receiving quality 
health care, I strongly encourage my colleagues to support this 
legislation and help bring it to the House floor.
    Thank you, Mr. Chairman, and I yield back.
    Chairman TIBERI. Thank you, Ms. Jenkins.
    Mr. Smith, you are recognized. Proceed for your testimony.

 STATEMENT OF THE HONORABLE ADRIAN SMITH, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF NEBRASKA

    Mr. SMITH OF NEBRASKA. Thank you, Mr. Chairman, Ranking 
Member McDermott, and certainly the subcommittee, for being 
here today and allowing the opportunity to share ideas.
    I introduced a bill as a result of taxpayers facing 
penalties through no fault of their own through losing--their 
losing coverage, health care coverage, through the failure of 
the consumer-operated and oriented plans, or so-called co-ops. 
And I appreciate, like I said, this opportunity.
    My bill would exempt taxpayers from the individual mandate 
if they would lose health coverage because of the failure of 
the co-ops in their local area. Under my bill the exemption 
applies for the remainder of the calendar year for those who 
lose coverage in the months of January through September, and 
through the next calendar year for those who lose coverage in 
October, November, or December.
    With co-ops failing and other insurers choosing to pull out 
of the marketplaces, more than 650 counties, largely in rural 
areas, are projected to be covered by only one health insurance 
provider in 2017. This compounds the existing barriers impeding 
access to necessary, affordable health care for rural 
Americans.
    I would like to ask unanimous consent to include in the 
record a May 15th Wall Street Journal article titled, 
``Insurance Options Dwindle in Some Rural Regions.''
    Chairman TIBERI. Without objection.
    [The information follows:]
    
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    Mr. SMITH OF NEBRASKA. Thank you. Created under the 
Affordable Care Act, the 23 co-ops were authorized by the 
Centers for Medicare and Medicaid Services. They received 
nearly $2 billion in federal startup funds, mostly in the form 
of loans.
    However, on December 23, 2014, the Iowa insurance 
commissioner filed a petition to liquidate CoOportunity Health, 
which was providing coverage to nearly 120,000 people across 
Nebraska and Iowa. In 2015 an additional 11 co-ops discontinued 
operations. The 11 remaining co-ops also continued to lose 
money, including Community Health Options of Maine, the only 
one of these entities ever to have reported a period of 
profitability.
    While taxpayers deserve an accounting of what went wrong 
with the co-ops, where this money went, and if these loans will 
ever be paid back, it is not the focus of today's hearing or my 
testimony. The premise of my legislation is simple: Regardless 
of one's opinion of the ACA, the facts remain. Consumers were 
required to purchase health insurance under that law. Many 
chose to purchase insurance through the state and federal 
exchanges, and consumers in 13 states who chose co-op plans 
lost coverage through no fault of their own. Those consumers 
who made a good-faith effort to comply with the law should not 
be forced to pay a penalty because the plan they chose ceased 
operation.
    While CoOportunity is the only co-op to be liquidated in 
the middle of a plan year so far, experience tells us it may 
not be the last. Community Health Alliance of Tennessee was in 
danger of midyear liquidation before HHS permitted it to halt 
enrollment. And recent reports indicate Community Health 
Options of Maine may be on the brink of collapse.
    I would also like to ask unanimous consent to enter into 
the record a March 23, 2016 article from the Portland press 
entitled, ``Maine Sought to Put Struggling Health Insurance Co-
op Into Receivership.''
    Chairman TIBERI. Without objection.
    [The information follows:]
    
    
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]    
    
 
    Mr. SMITH OF NEBRASKA. Thank you. A recent lawsuit by the 
Iowa insurance commissioner against the U.S. Department of 
Health and Human Services over the distribution of corridor 
funds to CoOportunity may raise additional solvency concerns 
and drive liquidation decisions for commissioners overseeing 
the remaining co-ops.
    I would also like to note, while Nebraska and Iowa 
consumers were provided a special enrollment period to select a 
new insurance plan, we should not assume one will be provided 
in the future.
    In addition, depending on how quickly consumers choose a 
new plan during a special enrollment, they may still have 
uninsured months which could be subject to penalty.
    Some consumers who choose high-deductible plans should not 
be penalized if the best decision for them is to wait until a 
new plan year, rather than start over on a new deductible, when 
they have already paid large sums toward a deductible in their 
previous plan. True fairness would waive penalties for these 
taxpayers.
    Again, I thank you for the opportunity to testify today. My 
bill is a simple solution which would provide a measure of 
relief for consumers who follow the law and purchase health 
coverage, only to lose it through no fault of their own.
    I look forward to working with you to improve our health 
care system. Thank you.
    Chairman TIBERI. Thank you. Mr. Paulsen is recognized.
    You can proceed with your testimony.

 STATEMENT OF THE HONORABLE ERIK PAULSEN, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF MINNESOTA

    Mr. PAULSEN. Thank you, Mr. Chairman, also for holding the 
hearing today and giving Members the opportunity to share our 
ideas on how we can improve health care in America.
    I want to start by thanking the committee for moving 
forward last year on my bipartisan legislation to permanently 
repeal the harmful medical device tax. Congress wisely turned 
off this tax for two years in January, and we are already 
seeing the results, because medical technology manufacturers 
are investing more in R&D, they are creating more jobs, and 
they are producing more life-improving and life-saving devices. 
We need to make sure this bad policy doesn't start back up 
again, and I look forward to working with the committee to 
permanently end this thoughtless tax.
    But I want to spend the rest of my time discussing the 
legislation that Senator Hatch and I have authorized to expand 
and improve health savings accounts. When I host telephone town 
halls and Congress on Your Corner events and speak with 
Minnesotans, one of the most common topics that people bring up 
is health care. Their message is clear: costs are too high, 
seeing your doctor is too complicated, insurance coverage is 
too confusing, and patients lack control of their health care 
decisions.
    Minnesotans want to have more choice and flexibility when 
it comes to health care for themselves and their families. They 
want to be empowered to shop around for the best quality care 
at the lower cost, like anything else that they can buy. That 
is why more than 800,000 Minnesotans have opted for an HSA-
eligible health plan. Minnesotans aren't the only ones that are 
using these accounts. Nearly 20 million Americans now have an 
HSA-eligible plan, and HSAs should be a central component of a 
health care--health care in the United States.
    Unfortunately, too many Americans are barred from 
contributing and using these accounts. Furthermore, current law 
is too restrictive in what types of health care services these 
accounts can be used for. That is why Senator Hatch and I have 
introduced the Health Savings Act, H.R. 4469. This bill removes 
barriers to allow seniors on Medicare, active duty members of 
the military, Native Americans, and members of health care 
sharing ministries to save their money in HSAs, where it can 
grow tax free, and can be used to pay for their medical 
expenses.
    It also expands what these accounts can be used for, 
including direct primary care, preventative and over-the-
counter medications, nutrition and dietary supplements, 
exercise equipment, physical fitness programs, and membership 
at a physical--at a fitness facility.
    I want to thank Representatives Jenkins, Kind, Boustany, 
and Kelly for their work on individual pieces of legislation 
that are included in my larger bill. I support their bills, as 
well, which they are sharing today.
    And in addition to their bills, I would like to highlight 
two individual parts of my bill that the committee should 
consider.
    While Medicare will pay for much of a senior's health care 
costs, a study found that an average couple turning 65 will 
need to find some other way to pay for about $250,000 of health 
care costs the rest of their lives, and that is a lot of money. 
As a result, nearly 20 percent of Americans aged 65 or older 
are still working. Upon turning 65, most seniors are 
automatically enrolled in Medicare Part A, which still comes 
with a high deductible for hospital admission.
    What they don't know is this automatic enrollment also 
terminates their ability to contribute to their HSA, even if 
they are still working. Allowing seniors to continue to 
contribute to their HSA will help millions of seniors save for 
the long-term care costs that are not covered by Medicare. My 
bill would empower seniors by allowing those enrolled in 
Medicare Part A to continue to contribute to their HSA.
    It would also allow Medicare beneficiaries participating in 
Medicare Advantage to contribute their own money to their 
medical savings accounts. Currently, these seniors only receive 
a contribution from Medicare. Medicare has done wonderful 
things, Mr. Chairman, to improve the health of America's 
seniors, and we can help our seniors even more by increasing 
the number of tools beneficiaries have at their disposal to pay 
for their health care costs.
    The other provision I would like to highlight is the tax 
treatment of direct primary care models. Direct primary care is 
an innovative, alternative payment model offering low monthly 
membership-based payments for integrated primary care services. 
Employers and employees both love this setup, because it is 
cost effective, it keeps patients healthy, and it provides 
high-quality care.
    Unfortunately, the IRS effectively bars you from utilizing 
direct primary care arrangements if you have a high deductible 
health plan that is paired with an HSA. And this is simply due 
to the IRS's outdated definitions that consider these 
innovative models as a form of insurance. My bill would simply 
clarify that these are not health plans and would expand who 
can access these primary care models.
    This provision is common sense and has bipartisan support 
with Senators Cassidy and Cantwell introducing a stand-alone 
bill.
    In conclusion, Mr. Chairman, HSAs are an important way to 
empower consumers and reduce costs. I would encourage the 
committee to look at all initiatives, including the Health 
Savings Act, that will end--be able to expand these innovative 
and popular accounts. I yield back.
    Chairman TIBERI. Thank you, Mr. Paulsen.
    Our second panel is--sorry about the competition with the 
drill, by the way. We are trying to take care of that. The 
second panel is with us.
    We have, representing the entire State of South Dakota, 
Mrs. Noem. You are recognized for five minutes.

  STATEMENT OF THE HONORABLE KRISTI NOEM, A REPRESENTATIVE IN 
            CONGRESS FROM THE STATE OF SOUTH DAKOTA

    Mrs. NOEM. Thank you, Mr. Chairman. And I want to tell you 
how much I appreciate the opportunity to testify today.
    If you remember my testimony from last week before the Tax 
Policy Subcommittee on H.R. 3080, the Tribal Employment and 
Jobs Protection Act, because it is both a tax and a health care 
issue. But the reason I am before you today is because the 
employer mandate in the Affordable Care Act is poised to have a 
very negative impact on tribal governments, on tribally owned 
business in Indian Country. And many of the areas that we are 
talking about are some of the poorest in the country, including 
several in my home State of South Dakota. The last thing the 
tribes in South Dakota need is a punitive tax penalty from the 
Federal Government.
    The Federal Government has a trust responsibility to 
provide health care for Native Americans and for Alaska 
Natives. This means the Federal Government supports the care of 
Native Americans through the Indian Health Service and other 
departments and agencies. For this reason, individual tribal 
members are exempt from the individual mandate under the ACA.
    But only in Washington, D.C., and with hastily-written 
legislation like the ACA, could you come up with the scenario 
tribes and their members now find themselves in today. 
Individual tribal members are exempt from the individual 
mandate. However, tribal governments, which primarily employ 
tribal members, are not exempt from the employer mandate. As a 
result, tribes must offer coverage or pay a tax penalty for not 
providing coverage to people the Federal Government is already 
responsible for caring for.
    Moreover, the Federal Government contracts with tribes to 
provide other vital services in Indian Country, whether it is 
law enforcement, education, or health care. Imposing the 
mandate penalty on tribes, which I believe it was never 
intended to do, will divert limited resource from other areas. 
As the Rosebud Sioux Tribe in South Dakota wrote to me, ``With 
over 800 employees, estimates show that compliance with this 
mandate could possibly cost the Rosebud Sioux Tribe in excess 
of $6 million annually.''
    For an already impoverished people residing on a 
reservation with an unemployment rate that hovers around 87 
percent, this could quite possibly mean dissolution of any of 
the tribal jobs that do currently exist on Rosebud today. It 
will also result in the reduction in services to our elders and 
youth and the imposition of severe limitations on various other 
social programs.
    Clearly, tribes are very concerned. And over the past 
several years they have tried to work with the Treasury 
Department on a solution. Just last week Treasury had a 
government-to-government consultation call with tribes from 
across the country, where it reiterated that it has no 
authority to exempt tribes from the large employer mandate. 
While that may be true, Treasury also seems to be unwilling to 
advocate for a constructive policy solution to this issue.
    We owe it to the tribes to provide them with certainty they 
need to provide for the general welfare and opportunity of 
their members and exempt them from the employer mandate. This 
is why I have introduced legislation, and I look forward to 
working with the members of this Committee to fix this critical 
situation.
    With that, I yield back.
    Chairman TIBERI. Thank you. We are pleased that you came to 
share your information with us today. And obviously, an 
important member of our Ways and Means Committee.
    We are now welcomed by a member of our leadership, our 
policy chairman who represents the sixth district of Indiana 
[sic]. Mr. Messer is recognized for five minutes.

  STATEMENT OF THE HONORABLE LUKE MESSER, A REPRESENTATIVE IN 
               CONGRESS FROM THE STATE OF INDIANA

    Mr. MESSER. Thank you, Mr. Chairman, and thanks to the 
entire committee. I appreciate this process today, allowing 
Members of the body to come forward with legislation and 
testify and, of course, give a voice to the people we 
represent.
    I rise today in support of what I believe is a modest 
proposition that will make a big difference for schools all 
across America. You know, whatever you think of the President's 
health care law, it wouldn't be fair that we would be paying 
for that health care law on the backs of schools across this 
country. And if we really care about our kids, we need to do 
something about it. And that is what my bill does.
    It is called H.R. 769. It is the School Act. And it very 
simply exempts K through 12 schools, institutions of higher 
learning, and state and local education agencies from the 
requirements of the President's employer mandate. The handout 
that I have before you highlights the impact of this bill--this 
problem in districts all across this country.
    We have had hearings both out in the field and in the 
Education and Workforce Committee highlighting the very real 
impact for schools. One witness that testified in the hearing 
last year said that the President's employer mandate would have 
a $4.6 million impact in their school district. I have had 
districts--or school districts in my congressional district 
that have shown impacts as high as 300, 400, up to $1 million 
dollars.
    And of course, the real challenge when this happens in 
cash-strapped times is that the kids and instruction are being 
impacted, as well. It is a problem that this Committee knows 
well, that when the mandate within the law was set at the 30-
hour threshold, employers across America were required to push 
employees below that threshold or release them all together.
    We have, as an institution, through the Hire More Heroes 
Act, the Protecting Volunteer Firefighters Act, addressed this 
problem for other groups. And I think it is important that we 
address it for schools.
    Thank you, I yield back.
    Chairman TIBERI. Thank you for your testimony.
    We are joined by the gentleman representing the 11th 
district of North Carolina. Mr. Meadows is recognized for five 
minutes.

 STATEMENT OF THE HONORABLE MARK MEADOWS, A REPRESENTATIVE IN 
           CONGRESS FROM THE STATE OF NORTH CAROLINA

    Mr. MEADOWS. Thank you, Chairman Tiberi. Thank you, Ranking 
Member McDermott and members of this Subcommittee for this 
forum. We had the opportunity just a few days ago to come 
before a different subcommittee on this same bill, and with Mr. 
Kelly and Mr. Renacci attending there, and it is refreshing to 
see the open dialogue, to be able to put forth ideas.
    I am asking for your consideration of H.R. 210, which is 
the Student Exemption Act. Really, the genesis of this 
particular piece of legislation came from a chancellor of a 
university in my district. As all of the best ideas typically 
come from those we represent, this is no exception. And as we 
look at this particular bill, it is designed to exempt student 
workers at universities.
    One of the byproducts of the Affordable Care Act, not 
debate the merits pro or con, was to include student workers in 
the mandate. The university would actually have to provide 
coverage if they were temporary workers. Well, this had a 
chilling effect on student workers, as you well imagine, 
increasing the cost. And actually, under the Affordable Care 
Act, most students are required to be covered under their 
parents' coverage up to age 25, or other related activities. 
And so we actually are requiring them to be double-covered by 
insurance.
    And so, this particular Act is very specific in that it 
would actually exempt those student workers, it would allow 
them to actually work their way through college, instead of 
having universities cut back on their hours.
    We were very encouraged to get endorsements from a variety 
of associations and institutions of higher learning, typically 
the type of endorsements that someone with my conservative 
background would not get. And so, as I look at that, it is 
something that not only we could find great bipartisan support, 
but certainly it is one that makes a difference for students, 
universities, and keeps costs low for those institutions and 
students who are just trying to work their way through college.
    And so, I would ask for your consideration. I thank you for 
this environment, and I yield back, Mr. Chairman.
    Chairman TIBERI. Thank you for bringing that to our 
attention. We have had students in our district who have 
experienced that same problem. Thank you.
    We are joined by another member of the full Ways and Means 
Committee, the gentleman representing Northwestern 
Pennsylvania. Mr. Kelly is recognized for five minutes.

  STATEMENT OF THE HONORABLE MIKE KELLY, A REPRESENTATIVE IN 
         CONGRESS FROM THE COMMONWEALTH OF PENNSYLVANIA

    Mr. KELLY. Thank you, Chairman Tiberi and Dr. McDermott, 
for giving us this opportunity.
    I actually have two tax-related health care bills that I 
wish to discuss today: H.R. 3678 and H.R. 1752. And both 
involve making slight modifications to the Affordable Care Act.
    But I think the real key is that these are people policies. 
These are the type of things that people send us here to do for 
them, and develop policies that actually help people. Too often 
we are on other sides of the debate and, at the end of the day, 
neither side wins, but our people lose.
    So the first one is the Preserving Access to Orphan Drug 
Act. Congressman Neal and myself are on this bill. It has eight 
other Ways and Means sponsors, including you, Mr. Chairman. In 
short, H.R. 3678 would change the orphan drug exception to the 
annual fee on branded prescription pharmaceutical manufacturers 
and importers.
    By the way of background, the longstanding policy has been 
to have laws on the books to encourage the development of 
orphan drugs to treat Americans with rare diseases. The fact 
that it is an orphan drug just means it is such a small patient 
population--and these are rare diseases--that there is 
generally not a financial incentive. In some cases, there is a 
financial loss associated with developing these drugs.
    Now, when the ACA was being crafted, orphan drug production 
was exempted from the annual tax on branded drugs. The reason 
is there is widespread recognition that there are significant 
costs and challenges in developing these orphan drugs. 
Therefore, the orphan drug production was supposed to be 
exempted from the new fee. Yet, in drafting the exemption they 
tied the exemption to the use of another tax credit, the orphan 
drug credit, which created a problem. And the problem is that 
not all companies take this credit. And because of this, they 
would not be exempted from the new ACA fee.
    Now, after passage of the Affordable Care Act, it was 
discovered that an estimated 41 orphan drugs were ineligible 
for the exemption. And you can imagine this caused quite a 
problem. So our legislation seeks to remedy the Affordable Care 
Act fee issue as it relates to the development of orphan drugs, 
to ensure that there remains an adequate pipeline of drugs and 
therapies to help the most vulnerable of patients, many of them 
children.
    Our legislation would exclude all therapies licensed and 
indicated solely to treat rare diseases at the time of the 
Affordable Care Act's passage from the annual pharmaceutical 
fee, regardless of whether the orphan drug tax credit was 
claimed at that time. This issue has been reviewed by the Ways 
and Means Committee in the past. In the last Congress Mr. 
Gerlach introduced similar legislation. That language was 
incorporated into the Camp tax reform template published by the 
majority two years ago.
    This legislation is supported by the National Organization 
for Rare Diseases, a coalition that has served Americans who 
suffer from rare diseases.
    Making this minor modification to the ACA will go a long 
way towards helping Americans today and in the future with 
those that suffer from rare diseases.
    And the second bill is a bill that I have put together with 
Congressman Dan Lipinski. This is H.R. 1752, the Health Care 
Sharing Ministries bill. The bipartisan bill right now has 113 
cosponsors in the House; 15 of my colleagues on Ways and Means 
are on the bill, with a majority of members of the Health 
Subcommittee.
    As you know, millions of Americans decline to carry health 
insurance for religious or ethical reasons. Many Americans 
cover their medical expenses by becoming members of a health 
care sharing ministry. Now, this is not insurance, but rather a 
form of mutual aid. Members help each other pay their medical 
bills in a personal, faith-filled way.
    Health care sharing ministries operate similarly to other 
religious-based mutual aid societies that have existed for over 
100 years. This is just basically what we do in this country. 
Our country has such an open heart, and our faith-based people 
feel that they have an obligation not just to themselves, but 
to each other.
    Now, the issue is that uncertainties exist with respect to 
the appropriate savings treatment of these arrangements with 
regard to the health savings accounts and deductibility. In 
recognizing health care sharing ministries in the Affordable 
Care Act, Congress did not update the HSA section of the code, 
Section 223, that effectively bars hundreds of thousands of 
American families from having a health savings account. Because 
of its voluntary, non-contractual nature, membership in a 
health care sharing ministry probably does not qualify as 
health insurance for purposes of the medical expense deduction 
under the Tax Code, although it serves a similar function.
    Now, I believe Congress needs to clarify the Tax Code on 
these questions to that end. I have introduced legislation to 
correct this problem. H.R. 1752 would treat membership in a 
health care sharing ministry as coverage under a high-
deductible plan.
    Mr. Chairman, thank you for allowing us to be here today. I 
think when people see what is going on, they say, ``This is the 
Congress that we have always thought should be there. This is 
the Congress that the founders put together. This is the 
Congress that actually works in solving problems for the 
people.'' I don't care how they are registered; they are all 
Americans, and we got to take care of them, and we can.
    Mr. Chairman, thank you. I yield back.
    Chairman TIBERI. Thank you, Mr. Kelly.
    And I would like to thank the four of you for your 
testimony today. You are more than welcome to get on with your 
day, appreciate you being here, and we will go to the next 
panel.
    And one of those panelists is here, so I will introduce the 
first person in our next panel. Representing the seventh 
district of California, Dr. Bera is recognized for five 
minutes.
    Thanks for being here.

   STATEMENT OF THE HONORABLE AMI BERA, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CALIFORNIA

    Mr. BERA. Thank you, Mr. Chairman. I appreciate the 
opportunity to talk about this issue, H.R. 4217. It is to amend 
the Internal Revenue Code of 1986 to determine eligibility for 
health insurance subsidies without regards to amounts included 
in income, by reason of conversion to a Roth IRA.
    This bill came to me and this idea came to me through a 
constituent, Larry. Larry was not yet eligible for Medicare, 
and decided to purchase health insurance through California's 
online exchange, Covered California. Because his only income in 
2014 was through Social Security, Larry qualified for a tax 
credit to help him pay for his health insurance premium.
    Larry was also proactive in preparing for retirement, and 
decided to transfer money from his traditional IRA to a Roth 
IRA. Because that is a taxable event, Larry paid the income tax 
on that money. However, at the end of the year, Larry found out 
that Covered California viewed that transition as income, and 
determined he was not eligible for any premium assistance.
    Additionally, they required that Larry repay the full value 
of his advanced tax credit for the past year, over $7,000. Now, 
that is not appropriate. We shouldn't be punishing people who 
are saving for retirement. Larry never saw any of this income 
as new money in his pocket. It remains in his retirement 
account. Asking someone who is living solely on Social Security 
to pay over $7,000 is unreasonable and unfair.
    The challenge is, because of the inflexibility of the Tax 
Code, the IRS and Covered California have no choice but to 
follow the law. My bill is simple. For the purposes of 
calculating premium assistance, IRA conversions would not be 
included in gross income.
    Regardless of how you feel about the Affordable Care Act, 
we should not be punishing seniors who are doing the right 
thing to save for retirement.
    Chairman TIBERI. Thank you for your testimony today.
    Mr. BERA. And Mr. Chairman, I have got a----
    Chairman TIBERI. Okay.
    Mr. BERA. I have got a second bill here.
    Chairman TIBERI. You have got three minutes, go ahead.
    Mr. BERA. H.R. 4832, the Health Savings Protection Act. 
This is a bill that I was honored to again work with a fellow 
doctor, Dr. Boustany, on, a common-sense health care fix.
    The so-called Cadillac tax was well intentioned to bring 
down the cost of health care, but it is a blunt tool. I have 
serious concerns about how it might affect the costs that are 
passed through to employees, especially in high-cost states 
like my home state, California.
    While I was happy to see a delay included in the recently-
passed spending bill, more has to be done. That is why Dr. 
Boustany and I introduced the Health Savings Protection Act.
    As it stands right now, when the Cadillac tax goes into 
effect, employees' personal contributions to their health 
savings accounts will be counted towards the calculation of the 
tax, and the dollar value of their overall health benefit. This 
was not the intention of the Cadillac tax. This will discourage 
responsible Americans from saving for their health care needs, 
and threatens to eliminate HSA. Employers simply won't offer 
the option to open a HSA if it could threaten to trigger the 40 
percent tax. And if they do, we all know the excise taxes 
almost always surface as pass-throughs. The employees will 
ultimately be left footing the bill.
    We should be doing more to encourage savings for unexpected 
health expenses. That is why we introduced this simple bill to 
preserve health savings accounts and protect workers from 
seeing increases in health costs. The bill would exclude any 
employee contributions from triggering the Cadillac tax.
    I want to thank Dr. Boustany for his hard work on this 
bill, and hope that we can come together to give families the 
certainty they need. Thank you.
    Chairman TIBERI. Thank you for joining us today. We are now 
going to turn to a member of the subcommittee, fellow member of 
the subcommittee representing the fifth district of California.
    Mr. Thompson is recognized. Please proceed.

 STATEMENT OF THE HONORABLE MIKE THOMPSON, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CALIFORNIA

    Mr. THOMPSON. Thank you, Mr. Chairman, and thank you for 
providing this opportunity today. I am going to talk about 
legislation that I have introduced with my colleague and my 
friend, Congressman Boustany from Louisiana.
    Our bill is bipartisan and it is bicameral. It has got more 
than 85 cosponsors in the House, and it is endorsed by dozens 
of small businesses and small business organizations across the 
country. Our bill would allow small businesses with fewer than 
50 employees to offer health reimbursement arrangements, HRAs, 
accounts that employees could use to buy health insurance in 
the individual market, or to pay for qualified health expenses 
if they are already covered.
    Right now small businesses are subjected to a $100-per-
person-per-day fine for offering HRAs to their employees, 
because an HRA doesn't meet the requirements for group health 
plans. The businesses that we are talking about don't even have 
to offer any type of health coverage to their employees. There 
is no requirement for small companies of 50 or fewer people to 
provide health insurance. These are businesses that offer HRAs 
because they are looking for a way to support their workers.
    HRAs are a critical retention and attrition tool that puts 
small businesses that may not have the resources to negotiate 
employer-sponsored coverage on a level playing field with their 
larger competitors. We shouldn't be penalizing responsible 
business owners who are going above and beyond for their 
employees.
    Small businesses drive job creation and grow our economy. 
We should be going out of our way to help them support their 
employees and focus on what they do best, running their 
business.
    And this is working. These small businesses are providing 
health care for their employees. This penalty takes that away 
from them. And I am proud to join my friend in trying to 
resolve this issue.
    And I yield back, Mr. Chairman.
    Chairman TIBERI. Thank you, Mr. Thompson. We are now joined 
by another member of the Ways and Means Committee, a leader on 
health care issues representing the third district of 
Louisiana.
    Dr. Boustany, you are recognized. Please proceed with your 
testimony.

 STATEMENT OF THE HONORABLE CHARLES BOUSTANY, A REPRESENTATIVE 
            IN CONGRESS FROM THE STATE OF LOUISIANA

    Mr. BOUSTANY. Well, thank you, Mr. Chairman, and it is 
great to see everybody on the dais there. And I want to thank 
my friend and colleague, Mr. Thompson from California, for 
describing out bill, H.R. 2911, which would give small business 
relief from this onerous penalty.
    If you recall, going back into the last Congress I 
questioned Secretary Lew about this penalty, and Secretary Lew 
admitted that this was a serious problem for small businesses. 
And the Administration actually put these penalties on hold for 
almost a year. But now they have come back, and we are hearing 
from small businesses across the country about this onerous 
$100-per-day-per-employee penalty, which is penalizing small 
businesses that are trying to do the right thing, provide 
health insurance for their employees.
    So this is a carefully crafted bill. It has got bipartisan 
support in both the House and Senate. And I certainly hope that 
we can move forward to a formal committee markup of the bill.
    I have two other bills I would like to highlight. And 
again, I thank my colleague, Mr. Thompson, on this. But H.R. 
928 is repealing the health insurance tax. For more than five 
years and three congresses I have been proud to introduce 
legislation to repeal the Affordable Care Act's annual tax on 
health insurance providers. And as the committee is well aware, 
the health insurance tax will generate $156 billion in revenue 
between 2017 and 2026, according to CBO estimates, a cost that 
will be borne entirely on the backs of everyday Americans 
through increased premium costs and out-of-pocket expenses.
    Mr. Chairman, we continue to see the cost of health 
insurance premiums and deductibles rise precipitously, while 
the portion of health care costs our insurance plans actually 
cover has declined. Americans are struggling, struggling to 
afford coverage at all. We could provide some relief by simply 
repealing this onerous tax. This would be very helpful to small 
businesses and families, and I hope we can work with the 
committee to see this pathway on this.
    We were able to put the tax on hold this year for this in 
the PATH Act, but it is going to bounce back. And we are 
projected to see massive hikes in premiums in every state, as a 
result of this tax. I am hopeful we can do something on it.
    And lastly, I also--I have another bill that I have 
cosponsored with my friend from California, Mr. Thompson, a 
bipartisan bill, H.R. 3539, Reinvigorating Antibiotic and 
Diagnostic Innovation Act.
    I want to highlight this bipartisan bill because we have 
got problems today with resistant bacteria and resistant 
infections at hospitals that no antibiotic treatment is 
available for them. Bacteria tend to change over time. They 
evolve and develop this resistance, and they lead to these 
horrible infections, sometimes after surgery, sometimes just de 
novo infections. And what our legislation would do would be to 
establish a tax credit for up to 50 percent of the clinical 
development of expenses to incentivize the development of two 
components necessary to making progress to reducing these very 
virulent infections.
    First, new diagnostic tests for initial and expedited 
identification of the underlying bacterial or fungal infection. 
We need this because delay, even by 24 hours, can cause deaths 
in a hospital, and certainly extensive morbidity. So rapid 
detection and rapid understanding of the underlying features of 
these infections is very important.
    And secondly, developing antibiotic and antifungal 
medications that treat these serious life-threatening 
infections for which there is currently no reliable medical 
course of action for recovery.
    Mr. Chairman, this two-pronged approach to jumpstart new 
innovation in antibiotics, antifungal medications, and 
diagnostics will not only help to tackle the critical and 
growing problem of medication resistance, antibiotic 
resistance, but it also will help preserve medical innovation 
and those industry jobs here in America. This is also a big 
source of cost in our hospitals today. And so this is a very 
small step, very important step, I believe, in spurring 
innovation.
    So I look forward to working with the committee to advance 
this legislation as well, and I yield back my time. Thank you.
    Chairman TIBERI. Thank you, Dr. Boustany, for your 
testimony today.
    We are now joined by the gentleman from Utah representing 
the second district.
    Mr. Stewart, you are recognized for five minutes. Thanks 
for being here.

 STATEMENT OF THE HONORABLE CHRIS STEWART, A REPRESENTATIVE IN 
                CONGRESS FROM THE STATE OF UTAH

    Mr. STEWART. Thank you, Chairman. And to other Members of 
the Committee, thanks for the opportunity to come and talk to 
you about a bill that I have been working on for nearly two 
years, H.R. 868, Veterans TRICARE Bill. And let me explain just 
very briefly what it does.
    If you are a veteran, like myself, and you ever opt in to 
an HSA account, it terminates your TRICARE from that moment 
forward, and there are disincentives to do something that many 
people recognize is efficient for themselves, for their family. 
They can build an asset through the HSA. In many cases, it is a 
great option for their family. But they are disinclined to do 
that because they lose their TRICARE, their veterans benefit, 
after that.
    This simply allows an off-on switch so that someone like 
myself could maybe opt in to an HSA for, you know, a period of 
time, maybe when it is offered through my wife's employment or 
through my own and, you know, 5 years or 10 or 20 years later, 
when that phase of my life is complete, to opt back in to the 
TRICARE program.
    It has broad support, bipartisan support, 92 cosponsors. It 
is about a 60-30 split between Republicans and Democrats. I 
believe there was something like 12 members of this Committee 
that have signed on on this, a number of subcommittee chairmen. 
We originally sponsored the bill with our Democratic cosponsor, 
Tulsi Gabbard, who is a strong supporter of the bill.
    It is also supported by many outside organizations that 
deal with veterans or veterans issues: The National Guard 
Association; Airline Pilots Association. Not surprising that 
many of them are former veterans who would like to take 
advantage of HSAs offered through their employment but, again, 
don't because they are afraid of losing that benefit. The 
Association of the U.S. Navy is a supporter of this, as well.
    So, support among veterans groups, professional groups, 
very simple, very little cost, and we would just ask your 
support. I mean, honestly, it is a little frustrating to me 
that for two years we have been trying to do this very simple 
bill with bipartisan support that helps our veterans, and 
haven't been able to do that. So we look forward to the 
committee taking this up, and your support.
    And with that, Mr. Chairman, I yield back.
    Chairman TIBERI. Thank you for bringing that to our 
attention today.
    We are now joined by two more Members. I will first 
recognize in order of coming the gentlewoman representing the 
first district of Washington State. Ms. DelBene is recognized 
for five minutes.

 STATEMENT OF THE HONORABLE SUZAN DELBENE, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF WASHINGTON

    Ms. DELBENE. Thank you, Mr. Chairman and Ranking Member 
McDermott and Members of the Subcommittee. I really appreciate 
the opportunity to testify today on my legislation to improve 
the small business health insurance tax credit.
    As a former businesswoman and entrepreneur, I know 
firsthand that when small businesses and start-ups get the 
tools and the opportunities to succeed, America's economy is 
stronger. And in my home state of Washington there are over 
half-a-million small businesses. They comprise 98 percent of 
all businesses and employ nearly 1.3 million workers, more than 
half of the state's private sector workforce. Helping small 
businesses thrive is an important way to grow our economy 
across the country.
    From the businesses that I have met with, I have heard 
repeatedly how important health coverage is to recruiting and 
retaining great employees. Whether it is Bramble Berry in 
Bellingham, or Frost Doughnuts in Mill Creek, they all want to 
provide quality coverage, but often find it is too expensive, 
too complicated, or there are too few options that are 
available to them.
    In fact, according to the Small Business Majority, 70 
percent of small business owners who don't offer health 
insurance to their workers say it is because they can't afford 
to do so. These business owners just want a little bit of help. 
And the Affordable Care Act took an important step in 
addressing this problem. It created a tax credit to help small 
businesses afford the cost of health coverage for their workers 
and their families.
    Unfortunately, the ACA small business tax credit isn't 
working as well as it was intended. Too many businesses are 
either ineligible for the credit or discouraged by the 
complexity of its requirements. In 2012 the Government 
Accountability Office found that only 170,000 small employers 
had claimed the credit, a fraction of the up to 4 million 
businesses that were estimated to be eligible by federal 
agencies and small business organizations.
    To help small businesses compete and grow, Congress should 
make the tax credit more accessible to employers, and available 
for a longer period of time. That is precisely what my 
legislation would do. Among other changes, the Small Business 
Tax Credit Accessibility Act would raise the maximum size of 
businesses that are eligible for the credit from 25 to 50 
employees. It would increase the number of years for which a 
small business can receive the credit from two to three 
consecutive years, and eliminate eligibility requirements that 
are unnecessarily complex and discourage businesses from 
claiming the credit.
    This proposal will go a long way towards ensuring that more 
small businesses can provide health coverage to their workers, 
while continuing to compete and grow in a still-fragile 
economy.
    I am grateful to have been able to partner with Congressman 
Kind on this effort, along with Senators Koon and Merkley, who 
have introduced companion legislation in the Senate. It enjoys 
broad support among industry, small businesses, and health care 
organizations, including the National Association of Health 
Underwriters, the National Grocers Association, the National 
Retail Federation, Third Way, and Small Business Majority. I 
urge members of this Subcommittee to support it.
    Members of Congress have a responsibility to be good 
stewards of public policy by keeping our laws updated and 
making adjustments, when necessary, to ensure that they work in 
the real world. This is a common-sense bill that will offer 
meaningful help to entrepreneurs and workers across the 
country, and I look forward to working with Members of the 
Committee from both sides of the aisle to move it forward.
    Thank you so much for the time, and I yield back.
    Chairman TIBERI. Thank you for joining us today.
    We are now joined by the gentlelady representing the sixth 
district of New York. Ms. Meng is recognized for five minutes.

  STATEMENT OF THE HONORABLE GRACE MENG, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF NEW YORK

    Ms. MENG. Thank you, Chairman Tiberi, Ranking Member 
McDermott, and our distinguished Members of the Subcommittee. 
Thank you for the opportunity to share my proposals with you. I 
am here today to discuss H.R. 3117, the Fund Essential 
Menstruation Products, or FEM Products Act of 2015.
    Before I get to my legislation, I want to share just how 
important access to affordable feminine hygiene products is. 
Access to these products is a serious and ongoing need for 
women and girls in the United States. When women are able to 
purchase quality safe and affordable feminine hygiene products, 
we are able to continue on with our daily lives at work, at 
school, and in our communities with minimal interruption.
    According to a Feeding America survey from 2011, people 
across the country at all income levels listed these products 
as ``items that cannot be foregone or easily substituted.'' 
When women do not have access to sanitary feminine hygiene 
products, we are forced to substitute cheap materials, and this 
can cause some serious health problems.
    Unfortunately, this happens every day in the United States. 
This is a real issue in New York City, so much so that the YMCA 
of Greater New York began providing these products to young 
women and girls in order to make sure that these girls actually 
stayed in the programs and stayed in school. The YMCA now 
provides these products as part of the first aid kits at many 
of their programs across our city. Feminine hygiene products 
are also among the most requested items at food pantries and 
homeless shelters in New York City.
    But this is not just an issue for low-income or homeless 
women and girls. Women make up 50.8 percent of the U.S. 
population. And in an average lifetime, a woman will use about 
10,000 tampons or pads, 2 of the most common types of products. 
Purchasing these products is a continuous and costly expense 
for women that women must bear for much of our lives, from when 
menstruation begins at about age 12 to the time of menopause at 
approximately 54 years of age. Many women will spend at least 
$7,000 over the course of our lives.
    Now, different population of women and girls face different 
barriers, in terms of access to affordable feminine hygiene 
products. I introduced H.R. 3117 to help women and their 
families to mitigate the costs of purchasing these products. 
This bill will also add feminine hygiene products to the list 
of items that can be purchased with funds in an FSA, flexible 
spending account.
    An FSA allows for individuals to place up to $2,550 of 
their income in an untaxed account where the money currently 
can be used for certain medical expenses like bandages, 
crutches, and prescription medications. It only makes sense to 
include tampons, pads, and other feminine hygiene products, as 
well.
    I also plan to introduce legislation that would create a 
refundable tax credit for feminine hygiene products for 
individuals who regularly use them. I am currently in 
discussion with advocates and industry experts to best 
determine yearly expenses. And I will scale the tax credit 
accordingly. It would cover low and middle-income individuals 
and families, and there would be no limit to the number of 
dependents who can claim this credit. A family with three 
teenage daughters or a same-sex female couple should receive a 
credit in accordance with their real costs.
    I have already spoken at length about the great need for 
assistance in this area. A tax credit would help families 
afford these costly items and ensure that women and girls can 
continue to lead their lives without worrying about this basic 
health care need.
    My efforts are part of an international movement to make 
these products more affordable through common-sense tax policy. 
Currently, 40 out of the 45 states that have a sales tax charge 
these products as luxury items. The sales tax is affectionately 
known as the Tampon Tax. In the past year, legislation to 
remove the tax has been introduced in seven states, including 
my home state of New York, where it has already passed both 
houses of the state legislature, and is awaiting the governor's 
signature. On the international stage, Canada got rid of this 
tax last year, and the United Kingdom has engaged in a heated 
debate over the issue for the past year, as well.
    This is a complicated issue, because different populations 
of women and girls face different barriers in terms of 
accessibility and affordability. As Members of Congress, we 
should ensure that women and girls have access to safe quality 
and affordable feminine hygiene products, however we can. Thank 
you.
    Chairman TIBERI. Thanks for your testimony.
    We are now joined by the gentlelady from the second 
district of Arizona.
    Ms. McSally, you are recognized for five minutes.

STATEMENT OF THE HONORABLE MARTHA MCSALLY, A REPRESENTATIVE IN 
               CONGRESS FROM THE STATE OF ARIZONA

    Ms. MCSALLY. Thank you, Chairman Tiberi and Ranking Member 
McDermott, for hosting this important hearing to discuss tax-
related proposals to improve health care, and for the 
opportunity to discuss legislation I introduced earlier this 
Congress.
    Much attention has been given to taxes that pay for the 
Affordable Care Act, such as the medical device tax or the 
Cadillac tax. But buried in the Affordable Care Act is a 
lesser-known tax increase that is already hurting middle-class 
families, and is about to hit seniors. My bill, H.R. 3590, the 
Halt Tax Increases on the Middle Class and Seniors Act, 
protects seniors from this tax hike and rolls it back for 
middle-class families.
    Health care costs are already high. Since 2005, costs have 
risen faster than inflation every year except 2008. 
Additionally, the trend towards rising health insurance 
deductibles is leaving people exposed to increasing out-of-
pocket expenses. We should be working to reduce this burden, 
not making it worse. But that is not what this hidden tax hike 
in the Affordable Care Act would do.
    Currently, the IRS allows Americans with high health care 
costs to deduct certain out-of-pocket expenses from their 
taxes. Before 2013, individuals could deduct out-of-pocket 
medical costs that exceeded 7.5 percent of one's adjusted gross 
income, or AGI. The Affordable Care Act changed that for 
Americans under the age of 65 by increasing that threshold to 
10 percent of an individual's AGI, effectively raising taxes on 
middle-class Americans.
    To make matters worse, the same tax is scheduled to hit 
Americans 65 and older, starting on January 1, 2017. Though it 
has not received much attention, the medical expense deduction 
means a great deal to some of the most vulnerable Americans. 
According to the IRS, more than 10 million people use this 
deduction; 87 percent of them earn less than $100,000 a year.
    The average family taking advantage of this deduction makes 
just over $58,000 a year, and has seen an income tax increase 
of several hundred dollars per year since the threshold was 
raised for those under 65 in 2013. This deduction is extremely 
important for low- and middle-income Americans who have already 
spent thousands in out-of-pocket medical costs, and they can't 
afford another shock to their wallets.
    The same goes for seniors, many of whom already live on 
fixed incomes and struggle to make ends meet. Currently, 
seniors make up 56 percent of all claimants of the medical 
expense deduction. If the threshold is raised in January 2017, 
many seniors who have saved for their entire lives and have 
carefully planned for retirement will suddenly be faced with 
hundreds of dollars in extra taxes on top of the out-of-pocket 
medical costs they already pay.
    That is why I introduced H.R. 3590, a bipartisan bill to 
stop this tax increase for seniors and roll it back for those 
under 65. The impetus to this legislation came to me from one 
of my constituents from Green Valley, Arizona. His name is 
Loren Thorson. Tragically, Loren passed away earlier this year, 
but he knew the importance of raising awareness of this tax 
hike, and was committed to doing what he could to stop it.
    In closing, I want to thank the 14 cosponsors, including 
Congresswoman Lynn Jenkins, a member of this Subcommittee, as 
well as Congressman Bob Dold and Jason Smith, members of the 
full committee, and the various groups that are supporting this 
legislation, to include the AARP, Americans for Prosperity, 60-
Plus, Americans for Tax Reform, the Association of Mature 
American Citizens, and the National Taxpayer Union.
    I encourage the committee to consider my bill, and I look 
forward to working with you to protect seniors and the middle-
class Americans from this tax hike that they just cannot 
afford.
    Thank you.
    Chairman TIBERI. Thank you, Ms. McSally. You were last, but 
not least. Very good, I appreciate that. And I would like to 
thank all our colleagues for appearing before us today, and 
appreciate all the time and work you and your staff have done 
to put time into these bills.
    Last month our committee started a robust conversation 
about how we can modernize the Tax Code to deliver the high-
quality, affordable, portable health care options Americans 
deserve and expect. And I am happy we had the time to pursue 
regular order today and make a public record of efforts that 
can help us achieve that stated goal.
    Please be advised that Members will have two weeks to 
submit written questions to be answered later in writing. Those 
questions and your answers will be made part of the formal 
hearing record.
    Without objection, the subcommittee stands adjourned.
    [Whereupon, at 11:06 a.m., the subcommittee was adjourned.]
    [Member Submissions for the Record follows:]
    
    
  
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