5.9.13 The Health Insurance Fee: Impact on Small Businesses / HealthChoice

00:00

oh good morning I call this meeting to order we are joined on the dais today by our colleague congressman jim matheson from Utah who will introduce one of our witnesses mr. Matheson is a lead sponsor with congressman Charles boost on e of Louisiana of the House bill to repeal providers fee as of this week I believe that bill has over a hundred and fifty co-sponsors and I am proud to be amongst them thank you for your leadership mr. Matheson I want to welcome all of our

00:31

witnesses we look forward to your testimony special thanks to Dean Norton president of the New York Farm Bureau from elba New York which I am honored to represent today we meet to examine the health care law's new annual fee on health insurance which was included as a way to finance the health care law beginning in 2014 the law assesses a fee on health insurance providers which across the industry totals eight billion dollars and increases to fourteen point

01:01

three billion in 2018 and will continue to increase every year thereafter the nonpartisan Joint Committee on taxation estimates the fee will exceed one hundred billion dollars over the next ten years both the Joint Committee on taxation and the congressional budget office said they expect a very large portion of this fee to be passed through to the purchasers of insurance in the form of higher premiums driving up the cost of insurance for families in all regions and small businesses in all

01:34

sectors why is this a problem for small business the health care law exempts self-funded plans from the fee but it applies to fully funded ones small business owners typically do not have a large enough pool to self-insure so they face the higher premiums in a fully funded group plan precisely the plans to which this tax applies of course small business owners with more than 50 full-time equivalent employees do have the choice not to offer coverage but

02:05

then they pay the two thousand dollar per employee employer mandate penalty in fact a march 2013 study released by the National Federation of Independent Business Research Foundation estimates the fee will raise the cost of employer-sponsored insurance by two to three percent in 2014 imposing a cost of nearly two thousand dollars per family by 2020 the study also predicts the price increases caused by the fee

02:35

will reduce private sector employment by up to two hundred and sixty-two thousand jobs by 2020 with the majority of the losses falling in the small business sector we're pleased to have a witness from the nfib here today to discuss the study's findings in greater detail we will also hear from small business owners about the burden of the fee the Joint Committee on taxation has said the fee is essentially an excise tax based on the sale price of health insurance so

03:06

it is not tax-deductible the Joint Committee estimated that repealing the fee will be the effect of stopping the two to two and a half percent increase per year and eliminating the fee would reduce the average family premium in 2016 by 350 to 400 dollars which represents the increase that would otherwise occur to put this issue in context we note that according to the US Chamber of Commerce quarterly Small Business Survey the numerous

03:37

requirements of the health care law are now the biggest concern for us small businesses bumping economic uncertainty from the top spot after the past two years these are the small businesses our nation's best job creators that we are relying on to bring our still anemic economy back they are the same small businesses whom we are asking the shoulder more and more mandates taxes regulations and cost increases again I want to thank our witnesses for being

04:08

here today and I now yield to ranking member Hahn for her opening statement Thank You mr. chairman so before we deep dive into examining the possible impacts of this one part of the health care law it's important that we step back and and I think remember that the Affordable Care Act has done a lot to make health insurance more affordable more dependable and more meaningful for American families and businesses under the Affordable Care Act children can no

04:41

longer be denied coverage because of a pre-existing condition parents can keep their son or daughter on their insurance until age 26 surance companies are forbidden from canceling a policy for someone who's gotten sick or been hurt just because they had a typo on a form a decade ago if an insurance company spends too much of the money it's paid on things that aren't about quality health care it has to refund its customers the ACA empowers small businesses and the health insurance market through the exchanges and offers

05:13

significant tax credits to support health insurance for some of the smaller small businesses millions of Americans are already feeling the positive benefits of the Affordable Care Act in their health and their pocketbooks now of course I think there are ways that we can improve this law I for one think we might have to do something to bring these hospital charge master list prices into the light of day but as we move towards the implementation of some of the biggest components of ACA next year

05:43

there there may well be some things we need to do to adjust and correct issues that come along today we're examining how one component of the law the tax on health insurance companies may have an undesirable impact on consumers including small businesses in the form of increased premiums as we examine the problems this fixed fee could pose it's important to understand the original it was meant to raise 90 billion dollars from insurance companies not their customers with the insurance mandate

06:13

poised to deliver millions of new customers to insurance companies it would seem fair to ask the insurance companies to pony up some of the cost of the law that was going to give them so many more millions in customers however these companies threatened to recoup the fee from consumers to increase premiums rather than absorb the fee themselves because higher premiums present a real risk to small employers in their ability to invest and grow I'm glad we are investigating this issue we're looking for feedback to see how likely increase

06:44

premiums are due solely because of this section in the floor in the Affordable Care Act and what they would mean for our businesses but at the same time we must recognize the difficulty presented in our tasks do the number of major insurance market reforms that also become effective next year these consumer protections in conjunction with exchanges are expected to alleviate the continued rise in premiums over time market forces will have a major impact on how insurance providers react to being assessed a premium tax while also being asked

07:16

tasked with implementing other insurance reforms accordingly this hearing will not only explore the burdens of higher premiums but how also how the health insurance tax will interact with other provisions contained in the ACA like the medical loss ratio and rate review panels just as with any other legislation that brings major changes there has been much speculation about the positive and negative effects the ACA will have particularly to our small businesses for this reason it's important that we consider all aspects

07:48

of the health insurance tax before acting prematurely to eliminate it entirely at a time when we're facing budgetary burns we must work to come up with a realistic remedy the unintended consequences of the health insurance tax on small employers could affect their ability to provide affordable health insurance while also growing their business this hearing serves as a starting point to examine this issue and start a dialogue so we can address it immediately I want to thank all the witnesses for being here today I look forward to your comments and I yield

08:19

back mr. chairman thank you ranking mandir hon we've going to have votes probably at ten-thirty 1035 I think we're going to have plenty of time to get through the opening statements of our four witnesses at which time we will have to adjourn until after votes and then we will come back at that point in time and continue so I just wanted to make that clear also to explain the timing lights to our witnesses in front of you you each have five minutes to deliver your testimony and the light will start out as a green light and with

08:50

one minute remaining the light will turn yellow and finally it will turn red at the end of your five minutes and if you could try to keep your time within that we would appreciate that especially with our voting schedule coming up our first witness is William Dennis jr. who is a senior research fellow with the NFIB research foundation in Washington DC I referred to some of the studies reports in my opening comments mr. Dennis has directed the NFIB Research Foundation since 1976 welcome mr. Dennis you have five minutes

09:21

to present your opening testimony thank you very much mr. chairman I'm accompanied today by Michael chow who's a senior policy analyst with us who actually did the simulation itself so if we get too deep in the weeds why I have my technical expert with me um I also i'm going to strike some of my initial comments since you very well described what we're talking about here in that kind of thing but let me just kind of summarize what the health insurance

09:51

premium tax is has four characteristics it's large it's highly an equitable its non transparent and it cascades and so in effect what it does is raises the costs for smaller businesses it worsens their competitive position and ultimately it gives those those small business owners without health insurance another reason for not providing it to

10:21

their employees the simulation which we have is attempt to determine the economic impact we used a besom module of something called a Remi model now the Remi model is a very standard common model used by many folks to give you an example we not only use it but the AARP and EA does MIT has been a client for for a while University of Michigan the

10:54

Democratic policy penny are on the Senate side has been so it's a generally well recognized model as we proceeded with it there are lots of moving parts when you try and estimate things like this and what we attempted to do with these moving parts is to as much as possible be conservative and in their use by conservative in this case I simply mean that we try to minimize any potential extremities that would occur

11:25

use conservative assumptions for example we assume that there would be constant employee or employer offer rates that they wouldn't change that's an arguable thing but that seems to be the most reasonable thing we have and there are other similar types of things such as the constant distribution of insurance types same number of Family Policy same number individual policy plus one pulse so forth there are the question an initial question what was the what will

11:57

the tax rate actually be since it wasn't initially put into the law as a particular rate and we didn't feel we had the expertise so we relied on two sources to come up with our estimates we use the joint Tax Committee and we used Doug holtz-eakin zeeeee estimate and of course he's a former chairman of the House Budget house or congressional budget office I'll get that right yet

12:28

and so we used two point five and three percent and and simulated both those we also use different rates of premium inflation because that's a matter of dispute no one knows quite what that's going to be as time goes on some are arguing they'll be relatively well some are going to be relatively high so we use basically five percent annual increase to ten percent annual increase with increments in between these results

13:00

yielded a total estimate of 146 to 262,000 lost jobs fifty-nine percent of which would be in small business it's also a cumulative loss of up to one hundred and eighty four billion dollars in lost output so it's an it's a significant impact somewhat argue could be bigger but it certainly is significant and the numbers that I've just given you include all the feedback that comes from the reinvestment of the

13:35

money so in effect we've also included not only the jobs lost but the jobs that would be gained through healthcare and things of that nature so in some what we're doing is we are collecting and spending a hundred billion dollars of a hylian equitable tax to yield essentially a quarter of a million lost jobs and 175 billions of 202 200 billion

14:07

of lost gdp over a decade Thank You mr. chair and be happy to answer any questions that you may have Thank You mr. Dennis at this point I would like to yield to representative Matheson who will introduce our next witness well thank you chairman Collins thank you for holding this hearing it's particularly important for small business because as you know this premium tax applies to fully insured plans doesn't apply to self-insure which are more large corporations so I'm glad the committee's holding this hearing and you mentioned my role with mr. boost on e on the legislation to repeal this particular tax my purpose in being here today is

14:40

introduce a good friend and a constituent of mine and someone whose family is known mind for a number of years Ryan Thorn is a health underwriter from South Jordan Utah and there he is serviced Utah small employers for over 30 years and he is a small business owner himself he served in various capacities with the National Association of health underwriters and he is currently a vice president of that organization it's fair to say the Ryan has a great understanding of the small business market place and the mechanisms at play that affect business costs and I

15:10

think it's testimony and answers should be very important for this committee to hear as this is someone who is balancing the books for his own small business and he's also providing health insurance and consultation to other small businesses as well I've always found him to be a very forthright individual who's provided me with good information over the years to help me understand the issues I'm pleased he's here today to testify before this committee and I yield back my time mr. Thornton if you could deliver your opening remarks thank you and good morning my name is Ryan thorns mention I do own an insurance

15:41

agency in South Jordan Utah I am self-employed with one part-time employee I am here on behalf of the National Association of health underwriters or nhu I've been involved with nehu since 1993 and currently serve on the national board I help my clients purchase health insurance coverage and service their benefits all year long almost all of my clients are self-employed or have less than 25 employees I'd like to thank the house Small Business Committee for inviting me here today and for my congressman representative Jim Matheson

16:12

and also my senator Orrin Hatch is they have both sponsored bills to repeal the annual fee on health insurance premiums included in this law which will have serious financial consequences for Utah businesses and consumers while technically paid by the carriers that issue individual and fully insured coverage from 2014 on utah insurers have confirmed back to me that the tax will be passed down to consumers the direct impact on premiums will be staggering I have included Utah's data in my written

16:45

testimony at each of you but in short it averages out to be about five hundred dollars per year for families and two hundred dollars a year for individuals it disproportionately hits individuals and small business owners the people who have been hurt most by these challenging times and this tax never goes away among my clients the cost of health insurance is a huge concern in preparation for today I contacted several of them to share their thoughts one longtime client wrote we've always tried to take care of

17:16

our employees but it's becoming impossible at this rate another explained we currently pay seventy-five percent of insurance premiums for all of our employees and their families we have historically provided this degree of benefit because of our strong commitment to our most valuable asset our employees frankly Obamacare's multiple hidden taxes such as the hit scares the daylights out of us and threaten not only our ability to provide adequate insurance coverage for our employees and families but also the very existence of

17:48

our company the bottom line the ACA and its national health insurance sales tax is causing tremendous anxiety for American employers one of my clients said freedom brings happiness I just don't find happiness anymore from what the government's doing to me this tax has no purpose but to increase federal revenues it doesn't make the markets work better or target poor behavior choice such as smoking it's a huge expense for individuals and small

18:18

businesses larger than the device and pharmaceutical taxes combined the members of nehu and i believe it's inherently unfair to finance health care reform by taxing people who are doing the right thing by buying private coverage I've made my living for nearly 30 years helping people buy private health insurance so i know when prices go up people buy less or simply forgo coverage altogether I'm afraid this tax and other cost drivers will incentivize

18:49

the younger and healthier people not to buy coverage until they need medical care the resulting adverse selection will make the cost of health insurance even higher for everyone the impact of jobs will be huge another client said the activation of this law and tax will likely prevent me from hiring new employees besides not hiring employers will change jobs from full-time to part-time status since most part timers are not offered benefits of course this

19:20

is to the detriment of the employees whose hours will be cut we're simply going in the wrong direction finally on a personal note my wife my wife Robin and I spent just under five hundred dollars a month on our four thousand dollar deductible family HSA policy which is a significant expense due to other ACA pricing changes premiums will be going up an average of twenty eight percent next year for Utah families like mine that's on top of the hit tax and

19:50

other fees factoring the laws mlr requirements which by the way decreased my personal business income by thirty percent it's hard to call this law the Affordable Care Act at least in the thorn family I consider an honor to have been invited to share these thoughts with Congress today and the impact this hit tax will have on small businesses and individuals thank you very much Thank You mr. thorne I'd now like to yield to ranking mandir hon for the introduction of our next witness Thank

20:23

You mr. chairman it's my pleasure to now introduce mr. paul van de water mr. van de water is a senior fellow at the Center on Budget and Policy Priorities where he specializes in medicare social security and health coverage issues previously he worked at the Congressional Budget Office for over 18 years welcome mr. van de water thank you miss Hahn for that kind introduction the mr. chairman I'm pleased to be here with all of you this morning the Affordable

20:53

Care Act will extend health insurance coverage to 27 million people and help ensure that Americans have access to affordable coverage and it will do so in a fiscally responsible way in fact the congressional budget estimates that health reform will reduce the deficit modestly in its first ten years but substantially in the following decade to pay for this expansion of health coverage the ACA levies taxes on or reduces Medicare payments to businesses and industries that will directly

21:25

benefit from health reform the fee on health insurance providers also known as the health insurance tax falls into this category the fee does not apply to large employers that self-insure those that pay the costs of their own employees rather than purchase insurance in the commercial market this is reasonable since most large employers already offer health insurance and will be largely unaffected by health reform as with any excise tax supply and demand will determine how the taxes burden is

21:56

ultimately split between providers and purchasers insurance companies have recently turned in very strong financial results and thus are well-positioned to bear some of the texts but a portion of the tax is likely to be passed on to consumers the Joint Committee on taxation as I think another witnesses mentioned estimated premium subject of the fee will be two to two-and-a-half percent higher than they otherwise would be but that is only part of the story as congresswoman Han mentioned in her

22:27

opening statement health reform also contains many provisions that will slow the growth of premiums the new health insurance exchanges will increase competition among plans and create economies of scale standardization of benefits and prohibition of medical underwriting will reduce administrative costs the individual mandate will help bring more healthy young workers into the insurance pool premium increases of ten percent or more are subject to state or federal review and insurers must provide rebase

22:58

to their customers if they spent less than eighty percent of premiums on medical care the ACA also includes a large number of initiatives to identify and implement more efficient ways of delivering medical care services all things considered the congressional budget office estimates that health reform will slightly reduce premiums for employer-sponsored health insurance in the near term for employers with more than 50 workers CBO estimates that the law will reduce average premiums by up

23:29

to three percent in 2016 compared to what they otherwise would be for small employers the estimated change in premiums ranges from an increase of one percent to a reduction of two percent and for workers and firms that can benefit from the ACA is tax credit for small employers the cost of insurance will drop by eight to eleven percent now claims that the health insurance tax in particular or health and reform in general will kill jobs are unfounded the Congressional Budget Office foresees

24:01

only a small net reduction in labor supply primarily because some people who now work mainly to obtain health insurance will choose to retire earlier or work somewhat less not because employers will eliminate jobs and if you'd like and questioning I'd happy be happy to illustrate indicate why I think the the problems are with these study from the NFIB in conclusion the health insurance tax forms part of a carefully thought-out structure to expand health

24:31

insurance coverage and slow the growth of health care costs without adding to the budget deficit any effort to modify or repeal this tax must not enter undercut any of these three crucial objectives Thank You mr. chairman thank you dr. van de water our final witness is Dean Norton who is president of the New York Farm Bureau mr. Norton is a senior agricultural consultant with freed Mexican Battaglia a local CPA firm in the Buffalo New York western New York

25:02

area he is a constituent of New York's 27th congressional district which I'm honored to represent and his family owns a dairy farm in Elba New York he is testifying today on behalf of the New York Farm Bureau welcome mr. Norton you have five minutes to present your testimony Thank You mr. chairman I appreciate the opportunity to appear before you today and was a serious concern from my farm my neighbor's farms and those all across this great country the hit tax ultimately will hit me and my employees and our wallets and

25:34

strength to health care coverage my family's farm is able to provide I'm the fifth generation of Norton's to farm on the same plot of land in elma New York dating back to 1906 and my great-great-grandfather bloom olk orchard area encompasses 1,000 acres of cropland and we milk about 900 cows a day we also have a custom trucking operation for forage and commodity harvesting and my wife melody now I operate the mck Cattle Company which leases cows back to neighboring dairies in addition it has been my privileges have been mentioned to serve as the

26:05

president of New York farm bureau for the last four years and I also serve on the American Farm Bureau board of directors a recent congressional budget office report confirms that the hit tax would be largely passed through to the consumers in the form of higher premiums for private coverage my family's farm and countless of other small businesses will bear the brunt as consumers small businesses are the backbone of the American economy farmers are small businesses and many of us offer health care coverage for our employees most

26:36

farmers and other small businesses do not shelf ensure because we do not have a large enough pool of employees instead small family farms like myself purchase health insurance on the fully insured market which the hit text is levied on and that is why we are going to feel the full force of the hit text as the health insurers pass on the cost to family farms it is expected to cost as has been mentioned 100 billion dollars over the next 10 years that translates to four hundred dollars more

27:08

per family per year that's hit that many families cannot afford you're talking about money that could buy a month's worth of groceries and don't forget those of us in rural areas already pay a disproportional share of health care costs than those who live in urban areas keep in mind these costs are only going to make it tough for our farm to operate dairy farming by nature is highly unpredictable we have no control over the price of milk which varies greatly from year to year also the price of feed

27:38

for our cows and fuel has been rising rapidly as have the farms health costs health care costs for small businesses have doubled since 2000 imagine trying to budget with all those uncertainties every year in order to keep up with the rising expenses of employer-provided health insurance we have been forced to trim costs it was necessary for the farm to significantly change the cost structure of our insurance plan we have turned to a highly deductible policy that only covers fifty percent of the insurance costs at this time we used to

28:10

cover ninety percent and turn our employees now have to contribute a larger portion of their income when they seek medical attention and I think we could all agree that this can be a disincentive for people to seek care in some instances to compound the problem we now only cover half of our employees than we once did and keep in mind this is all before the hit tax now we have to reevaluate our health insurance coverage again do we want to offer less health care coverage absolutely not health insurance is a benefit that we need to

28:41

attract high quality dependable workers milking cows is a seven-day-a-week business 365 days a year without our hard-working employees we would have no family farm for our trucking business it runs during our very short harvest season or missing out on a single day can be the difference between profit and loss it is very important we are able to offer reasonable health insurance if we are to obtain the workers we need to stay in business just as important it is for our employees their families and our communities that we keep them healthy

29:12

the attacks will hurt the very people that it was intended to help it means that it would be harder to afford healthcare for my family my employees for farms across this country in conclusion I would encourage encourage all members of the health Small Business Committee to be sponsors of the bipartisan bill HR 763 introduced by represents bastani from Louisiana and represented Matheson from Utah this bill repeal the annual fee on health insurance providers that was enacted by the Affordable Care Act I appreciate the

29:45

opportunity to share my story and I look forward to your questions Thank You mr. Norton we'll start the questions as we watch the clock to see when we may be called out to a vote but I think from hearing the opening testimony a good opening debate comment might be concerning whether or not insurance companies will in fact attract so many more customers that their profits will skyrocket to the point they don't have to pass much if any of this tax on to the consumers which is I understand and

30:15

paraphrase dr van der waters comments was one of the reasons that this tax is levied on the private offerings that most small businesses offer because in fact they're going to get so many new customers they'll make money and to be able to absorb a large part of this so maybe I'd ask each of you to comment because I know my own observations are especially concerning the young and the healthy now that the companies cannot charge more than nine and a half percent of their w-2 wages and mr. thorne you

30:47

might comment on the fact there is no longer just a pure single policy those policies have to include the dependence of the family so we used to have single family now we've got single plus dependence which is a more costly policy and then the wife or the spouse come on board so you might speak to that my concern is just the opposite there will be fewer and fewer policies the young and the healthy will in fact understand that they can drop health insurance altogether and because there's no penalty for pre-existing conditions you know why would they have health

31:16

insurance at all and also companies are likely as I've talked to them take employees drop them to part-time so they won't get insurance which certainly would have fewer policies and then you know lastly the cost of the penalty at two thousand dollars is less than most companies pay and you might see a significant number of companies dropping health insurance again which actually would reduce the number of customers not increase them as dr. van der water testified but you know all four of you

31:47

in good open debate and that's why we're here if you could comment on some of those start with mr. Dennis first of all I think the lot of us are are operating on a good deal of speculation quite frankly because what what we have seen as time goes on is that we keep asking small business people what they're going to do and so on so forth a lot i'm really don't know what's going on yet but those that we engage and talk to

32:17

tell us indeed that of those that don't have it they're they're less likely to have it those that do are casting about for ways to get out from underneath a lot of this most of them don't want to get rid of their health insurance but i think over the longer period button come push to shove is our judgment that in all probability will decline how much I don't know Thank You mr. Dennis mr.

32:50

thorne as someone who is selling these policies we'd be interested in your comments it's interesting as I as I meet with with clients every day and and the the underlying concern is the uncertainty is was just mentioned they're literally scared to death is to the unknown I mean they're trying to do the right thing for their cut for their employees but they're looking at this huge expense going how my margins are already so thin bring on another five hundred bucks head tax sure had loved it just is not going to happen and I think

33:21

part of the problem and as I talked to the carriers in my state anyway they did indicate it will be passed on to the to the consumer to the small employer owner and and so I think we have a trickle-down effect so if that passed down to the consumer and all of a sudden we've got more people opting out because I can't afford this anymore that 500 bucks just put me over the edge you're going to have less revenues coming into the insurance carriers okay so that's going to be a trickle down problem I also see from my own

33:54

experience you've got a lot of small businesses who are looking at cutting hours the opposite of what they really want to do and instead of being able to support a full-time family and give them a good decent wage in order to fit their own budgets they're going to have to cut their own hours down so that's going to the wrong direction as well I share the concerns dr. van der water if you could comment as certainly as I said mr. Chairman I think there it does seem to be a consensus among economic analysts

34:25

that at least some of this tax will end up being passed forward to consumers the Joint Committee on taxation my cited which is Congress's nonpartisan staff agency has estimated an increase of about two to two and a half percent in premiums if one were to look at the effect of this tax by itself so i think that i think is we can take pretty much as a given but the point is there's a whole heck of a lot of stuff going on as well I was really taken by mr. Norton's

34:55

comment that his eye insurance costs have gone up by had doubled I think you said over the past ten years or so that's a huge increase in relation to that at two percent tax is pretty small and can easily be swamped by these other factors in the Affordable Care Act that I that I mentioned and that ms hon referred to as far as whether insurance companies are going to get more business i think there's there's virtually no doubt that they're going to get substantially more business again

35:28

relying on congressional budget office estimates you see huge increases and again knowing that it's going to have a fellow witness from New York I just came across a study yesterday from the state of New York about the growth of the small group and the non group market in New York and this was done by i think by the the consulting firm of Deloitte they estimate a huge increase in non group insurance in New York of the 10 10 / 10

36:00

fold and if a modest increase but it increased nonetheless in small group coverage so again I think that the the consensus there is overall there will be a very substantial increase in insurance coverage and in and in business for commercial insurers thank you dr. van der water mr. Norton yeah it's been my experience in the agriculture industry that any time a regulation or a mandate has been passed down to our suppliers or vendors that eventually I'm the one that ends up paying for that tax or

36:32

regulation so i would say that there's probably a good chance that yes we will be doing this we were all talking about the uncertainty and i would just mention that i know of at least two farmers mr. chairman in your district because the uncertainty of immigration reform because the uncertainty of the Affordable Care Act the hit tax and what does it mean to their business they have taken I would consider drastic steps and they've moved away from being a specialty crop growers and spy special crops made fruits and vegetables like

37:01

cabbage cucumbers apples and whatnot and they have made the decision that this year they're going to move away from growing those type of highly labor-intensive crops because of the uncertainty with all these rules and regulations and immigration reform and they're going to go to mechanize type of Agriculture or corn soybeans something that can be planted and harvested with machines and to me that's a loss not only to that farm but you're talking 30 employees that won't be employed by a farm you're talking about thousands and

37:33

thousands of dollars that are not going to be in the community anymore so to me this uncertainty is already of having drastic effect and what is happening in the agricultural community Thank You mr. Norton again one of the reasons for the hearing is to talk about what might happen again none of us know for sure and now that's why I think the public deserves and we're having this hearing today to hear various potential outcomes and with that I'd like to yield to rang member on for her opening question thank

38:06

you and again it's this is an important hearing that we can really analyze what some of the impacts are of the Affordable Care Act I will say I've been having in my district workshops with my small businesses specifically on ACA because there is so much misunderstanding out there and frankly I would dare say there outright lies being put out there within some of the media

38:37

outlets about really what this means so I've been holding workshops so that we can walk small businesses through what this means now in California we're ahead of the game because we're we're ready for the exchanges where we're on top of it and it's we think it's going to be valuable and beneficial to small business and let's remember less than 1% of small businesses will be under the mandate of the Affordable Care Act to provide health insurance so but that

39:09

doesn't change those of you who want to provide health insurance which I applaud and then what this new tax will mean in term in terms of higher premiums well what I want to do mr. van de water and mr. dennis is maybe talk about that huge disparity that both of you talked about in terms of job losses as a result of this I know if it was a result of ACA or result of just this tax and want to hear that and you know by the way we're

39:41

talking about job losses we've been told that sequestration will result in 750,000 job losses so you know that you know around here there there are some decisions that have been made that have resulted in job losses so let's on top of that I'm really interested to know what the big disparity is on the number of jobs you think will be lost as a result of this maybe mr. van de water you kind of said you would be willing to sure explain

40:12

the is I indicated the Congressional Budget Office has taken a look at the overall effect of the Affordable Care Act and has concluded that the effect on employment overall would be negligible and in fact the extent that there is any effect at all it would result from the fact that some people who are in effect hanging on to jobs in their older years simply to hang on to health insurance coverage would be able to you know retire earlier spend more time with their grandchildren whatever because they would have alternative sources of

40:44

health coverage available that weren't tied to their to their employment now it with regard to the NFIB study obviously the modeled with it they use is very is very complicated I can't say that I can follow all of the the the moving parts but I have a couple a couple of suspicions of what's of what's going on here first of all although mr. Dennis talks about you know the the proceeds of the tax being invest invest 'add it's not entirely clear to me that that the

41:16

the model is taking account or the assumptions that were input into the model are taking into account of all of the spending that results from the tax because of the extent that there's money that's being collected through the text but not but being spent yet not get ignored in the model you could end up with the job loss because of that I'm also concerned about what the model is it may be assuming with respect to the effective premiums on wages again you know as an economist I would you know

41:48

you know believe that to the extent that people get health insurance coverage that's part of their compensation package it's a compensation just like wages and the extent that employers are paying more compensation in the form of health insurance over the not too many years that people will end up with less cash compensation sort of the extent that compensation is unaffected by the cost of health insurance as I think it would be it's very hard for me to see

42:19

why there you know this particular model should produce anything in the way of job loss thank you it's an interesting angle to talk about the people who really only have jobs for the health insurance as being one angle man I had a friend who got married to the wrong person just so she could have health insurance so we'll also have a lot of less bad marriages as a result of this mr. Dennis explain we didn't model last before the the bad marriages I'm

42:50

sorry but yeah the first thing on the spending item yes it all is required by the law by the way the thing is constructed that you have to put it all back in you have to put it back in in the industries in which is presumed it will go into so we assume that this would be spending most part on the health care with a little bit on insurance i believe is the way we put it together so that answer is yeah there is all spending the second thing is the idea of pastors and the passwords of

43:23

these things in terms of lower compensation and so in effect we get a net wash on that and there's some truth in that there's only up and again I I can't do all the technical you know equations and all that sort of thing they got in there either but I I think there is an allowance for that and some of it goes through and some of it doesn't okay thank you thank you at this

43:56

point I'd like to yield two representative Huelskamp 45 minutes Thank You mr. chairman i didn't know we'd get the questions before we went to vote but I appreciate the opportunity gentleman thank you for being here appreciate the opportunity to visit with you and first I want to read a constituent email i have received and ask you a few questions about that and and dear Tim or dear congressman I appreciate all your efforts against the healthcare plan and now more so than ever I want to tell you my story in case

44:27

any personal stories will help you in your fight against that horrible all and this is from kathy i was recently notified by an insurance company that they will be closing the doors going out of business on December 31st of this year due to the Obamacare sledgehammer that will be coming down on everyone as of january first 2014 not only am I losing my and my children's insurance coverage I'm losing people who have become my friends and that she describes this insurance

44:59

company was with with the family throughout a a loss of her husband through cancer and I and this is just not an out one letter we received this is something I received from from many folks of that she was happy with her health insurance coverage and she has lost that and we talked about the facts and figures that are in here one thing you can't change her these stories are folks that like their health care plan congressional budget office estimates

45:28

that seven million Americans will lose their employer based health care coverage apparently even if they liked it they don't get to keep it seven million and that's an impact of what happens here at one thing I want to ask question is this one hundred billion dollar tax increase which I'm signed on to the bill to do away with that I I think the doctor here supportive of that I would guess the other three are not

45:59

but mr. dr. question I have one hundred sixteen billion dollar tax increase you support that do you think that was not high enough or just about right you're under the impression that this tax increase is good for the economy good for the health care sector and once you describe the reasons for your support of that and and what it means for Americans the the importance of the health insurance tax is as one of the ways of paying for the expansion of coverage and

46:31

health reform I personally think that it's a very important benefit it's a very exciting development that all Americans going forward will have access to health insurance coverage regardless of their health status regardless of their employment status I for one think that you know I want my children to have access to health insurance i suspect that all of us want our children and friends to have access to health insurance and I think the Affordable

47:02

Care Act will do that and that's why we have this tax along with the others in health reform not because we like anyone tax in particular no one likes taxes per se we raise taxes to raise revenues to pay for things we want to pay for and in this case we're paying for an expansion of health insurance coverage to 27 million Americans would there be alternative ways of raising that revenue of course there would and if the Congress can come up with an alternative

47:33

so be it but what do I tell Kathy who lost the plan she liked dr. it was taken away from her she had a decade-long relationship with this company and it's worked well for her and you've come in here with this law not you or the Congress and the president and says sorry that's no longer a choice you have anymore and she's very upset about it what do I tell her well there's no evidence that that that the what's happening to this company is as a result of this particular tax the law is is the

48:06

impact that caused this now I mean you can argue with Kathy and argue with her experience with her insurance company but the impact this law is the company she liked and as well seven million other Americans have health insurance covers you're going to lose that after go into a plan they don't like I mean what am I supposed to tell those folks you say hey it's a great thing enjoy paying the tax but you don't get to keep the health insurance as promised I think that the the health and the health reform law has become a convenient excuse for people to use we don't know

48:36

that this company is going out of business because of the health reform law companies of small businesses we know I'm not going to argue with with Kathy who lost her health insurance coverage and making this claim for insurance company she was happy with it this company is going out of business but it gets a statement about it because of health and yeah and I don't yell that well one thing you do not know doctor is the fact that i'll note here you you you use data from 2009 to make your claims CBO is updated many

49:07

much of this date in here the 7 million do not agree with the CBO that seven million Americans are going to lose their employer-based health care coverage you disagree with that some people will you don't you can disagree with up to 7 million Americans this is coming on the CBO I don't know a number of hand if that's the right number you might look up the latest reports because one point in here and I'm sorry miss chairman but when you come here and you use something from 2009 and say this is about this is what you're here before

49:38

this past two thousand other citations you can certainly you have the citation sir it's in your report and you talk about the invitation select insurance the the nothing I have said this based on CBO 2009 has has changed in CB o--'s view that I know of come be happy to share that with you uh sir the CBO has changed they now estimate that that the cost has doubled that's the estimate at CBO and the seven million lost seven

50:09

million figures is not new i mean this is a few months out here so i just say there's some information out there i appreciate if you chair the most up-to-date information on the sea 27 million figure i used is the most recent number and well how many will still be uninsured when this is fully implemented about the same percentage that were uninsured before we started this I yield back now absolutely thank you mr. Huelskamp voting has been called but we do have a few more minutes so in the interest of maybe cutting it a little close which is okay I'd like to yield to

50:42

mr. Schneider for his question and I'll be brief but I I've spent the bulk of my career working with small businesses I owned businesses from 97 to 2003 on the small insurance agency and I know from my experience with both personally and many of my clients the bane of looking to the future is uncertainty as you talk about the uncertainty it makes it very difficult but I also know from my experience they experienced my clients that we were seeing double-digit increases in health insurance premiums going back and as we're making choices

51:14

that was one of in my own case with my partner that was one of our greatest uncertainties every year is what was going to be the increase in health insurance and for a small business we had our peak 10 employees that was a very difficult challenge so as you look at uncertainty as we go forward what do you see and we need to get through to the other side of the complexity of health care but to provide a greater certainty once we get there once people know what they're doing do you think people will start hiring again do you think we'll start moving in the

51:46

right direction again what's the impact long-term that concerns you well are you talking about I'm certainty in the in the abstract or with with regard to the particular thing we're talking about here health care well inserting the abstract makes it hard for businesses to plan in general but specifically with health care this is once we get it set they will know what they have to look clear clearly uncertainty has been a major what can I call a drawback or dampening had a dampening effect on

52:17

small business employment it probably has also had a dampening effect on entry to although we can't prove that nearly as much um longer term one has to assume that if you reduce that uncertainty and it will take a lot to do that um that indeed employment will will be much more likely to stabilize in the sector small businesses still struggling and a good

52:47

bit of it is that rather than hiring an anticipation you know expecting certain positive things to happen and therefore I'm going to hire I it's almost the reverse happening you have to force them to hire in other words things have to be so tight that that's the only way you're going to hire and that's the feedback we've been getting for a long time now and it seems to continue all survey stuff would also show that that uncertainty is a huge right factor yeah

53:21

do you get a sense and I'll close with this question do you get any sense in your surveys that small business employers with access to exchanges with access to a more stable market will feel that they have the opportunity to hire more people down the road we don't have any survey data on at one way or another we hope to begin to start collecting some of it soon and to be able to give you a better answer round that we put it that way I'll yield my time thank you in the interest of

53:52

continuing to cut it close we'd yield to mr. Luca buyer for his question Thank You mr. chairman um with regards to the exchanges mr. Dennis the president's already waived off the competitive part of that for another year or two is that not correct can you explain a little about that you mean that there will only be one plan right right now there be one rather than three third so as a result of that where's the competition that's supposed to be driving down price well

54:22

you wouldn't necessarily have to get your your insurance for the exchange you could but you don't necessarily have to so presumably there will be other plans what kind of effect is that going to have on the small business folks trying to find insurance well it will be I mean they'll have fewer opportunities and they would wonder what was that usually mean you have fewer opportunities more expensive more times less less quality only put it on one of the things that I've talked with my small business folks

54:53

at home is that whenever they're looking in the in the the 42 150 range about how they're going with employees how they're going to be able to afford this you looking at going to part time with some of these going temps and some of these even dividing their companies and to having two separate companies to try and slip underneath this one of these people are going to go down to 28 hours of 30 hours whatever it is those people are going to find insurance on rome's then I correct yeah okay if if you're a young person that's being laid off and you're

55:26

and you're healthy mr. thorn what's your experience with young people who have to make a choice between paying rent make it a house payment paying carpet making car payments paying the rest of their insurance and now they have to figure out how they're going to for health insurance on reduced budget what's your experience with that or go on a date now go on a date and and young healthy immortals we call them mither get married like miss Hahn's friend maybe that's that's up there you go no I think that's a very real concern

56:00

and in our state of Utah we've had up to age 26 for a long time for a number of years so part of the AC I think that's a good thing I look at a lot of these young kids who are going to school the last thing in the world they can afford is health insurance be able to stand their mom and dad that's a good thing but for those young folks okay let's take let's take a single parent with what the child or to your 33rd some years old you've got a you know your wage earner and pick you pick out whatever occupation you want to but your wage earner and selling now you don't have your receptionist etta at your insurance agency for instance and

56:32

selling you get your hours cut back you've got to employees let's say now you cut them both back 28 you get part tempo a symptom don't have to supply their insurance firm what happens what's the economic effect when people have less money to spend mr. Dennis well if you have less money to spend you don't pretty Earthlings right well yeah you're going to prioritize the most okay if you have listened and if the insurance is taking more money out of your pocket and you have less money to spend that's less money to spend the rest of the economy

57:02

is it not um well someone's got it somewhere I mean though the insurance companies are going to take it out into the government so the government that's got it right exactly okay so where does it where is the economic benefit of this or it's going to be a plus or a minus I'm getting a little lost on some of this I'm sorry sir but okay my basic where I'm headed with this is the insurance costs are sucking more money our economy there's less money for the individuals and businesses to spend right and therefore is going to be less

57:34

money spent in the economy so the effect would be well I'm not known otherwise there won't maybe a less money spent it will be who is spending it and what is being spent on okay who can best spend a dollar the government or private sector I'm made a better return I'm very much bias or private sector yeah thank you for your honesty mr. Dennis um I I think that you know in the interest of time here I'll stop there so we need to go vote but again I thank you

58:05

each for being here today I appreciate your willingness to spend some time with us and give us some real world examples of some of the effects of this this tax on small business thank you uh in the interest of getting out to vote we will adjourn this briefly until we're back it could be 30 to 45 minutes there are a few more questions and I think to get those on the record we will reconvene after voting I thank you for your understanding and we'll be back as soon as we vote this meeting is temporarily adjourned Thank You mr. chairman we call the hearing back to order and in the

58:35

interest of time I'll certainly defer to minority ranking member haan for a couple of questions so she might catch your friend Hey Thank You mr. chairman so uh mr. van de water what the ACA included provisions requiring rate review panels and the medical loss ratio requirements both intended to protect consumers can you please explain the interaction between the health insurance tax and consumer protection provisions

59:07

like these yes thank you ms hon the is discussed before the the medical loss ratio provision is designed to make sure that consumers basically get good value for their insurance premium dollars that um that in the you know and the so the requirement is depending upon you know the details of the policy that either 80 or 85 percent of the premium be paid out ultimately in benefits now my recollection is that this particular tax

59:40

that we're discussing today the health insurance tax is you know it is included for purpose of meeting the medical loss ratio so that you know the extent that that's passed forward that you know the consumers still have to pay the you know can be forced to pay some of the some of the health insurance tax that is that the medical loss ratio provision doesn't protect the from having part of this tax passed

01:00:10

forward but it will provide a lot of help to consumers generally in fact you know there are a lot of consumers already receive rebates on account of them the medical loss ratio provision so that even though it doesn't protect them from the health insurance tax in particular it is a good protection generally speaking thank you yeah we actually had a witness here I think last month that actually talked about already having received $1,500 in her in a

01:00:43

rebate check that she was saying really was helping to keep afloat her her expenses at that time so she was very happy to get that yeah and of course there are a lot of other provisions of health reform which have will be affecting premiums as well during your hour intermission that was mr. thorne and I were having a good chat and we were agreeing that in the long run the most important thing that needs to be done is to control the rate of growth of

01:01:13

health care costs and that's not something that's peculiar just two public programs like Medicare or Medicaid but it applies obviously to private insurance the self and you know self-insured employers small businesses that purchase commercial products individuals and of course the ACA takes a number of steps that we hope are going to help slow the growth of health care costs in the long run although we also know that it's just the beginning and that more is going to have to be done so

01:01:44

let me one thing that we haven't talked about is the the premium tax credits that ACA has included which will provide assistance in buying health coverage and these subsidies can actually lower monthly health insurance costs for many people and despite insurance companies recouping the health insurance tax through higher premiums do you think it's possible that these premium credits will help keep premiums affordable for most people well for those companies for employees of those companies that can take advantage of them yes in my

01:02:15

prepared statement I mentioned you know the CBO estimate that for employees of that sort in firms that can take advantage of the credit that the net reduction in premiums might be on the order due to the Affordable Care Act overall might bind the order on the order of eight to nine percent now I think we all know I sure your committee is very well aware that you know because of cost considerations the reach of those small employer credits is somewhat limited it applied they apply only to

01:02:47

very small firms into those with you know quite low wage levels but for the firm's that can take advantage of them there'll be a big plus I just have a few questions to finish up and you know I again thought we were only talking about the medical device tax but in fairness tall here I do subscribe to the max baucus definition of Obamacare calling it a train wreck we don't know what we won't know until January one of 2014 but

01:03:19

I'm of the opinion frankly a hundred billion here and a hundred billion there and forty billion here and forty billion there actually is real money even for the federal government so a hundred billion the health insurance tax another hundred billion on the employer mandate another forty billion we had testimony just a few weeks ago from dr. Aiken who was saying if a small start-up medical device tax isn't profitable and they don't make two-point-three percent of a profit based on revenue they go out of business all those jobs are lost striker

01:03:50

a hundred million dollar tax on medical devices own already laid off a thousand workers cutting back on R&D their public company they need to protect their stock price and they can't absorb or pass on a hundred-million-dollar charge so again I would say with some bias I agree with Max Baucus it is a train wreck but a couple of questions maybe to finish up in mr. Dennis the NFIB is known for advocacy for small business in fact I am a member of the NFIB in all fairness do

01:04:23

you think you know I think I know the answer that the annual feed threatens small business expansion and job creation just interested in your opinion on that yeah surely whenever you get something like this why it's always something that you have to pay and the more that you have to do the less you're able to put in the investment somewhere else it is it's a matter of choices you either pay which I have to pay or don't I more

01:04:52

investor or or don't it's pretty that's pretty simple and the question is just how much thank you one other question for mr. Dennis and something that I am very concerned about I believe in competition I think competition works I don't think the government should pick winners and losers and I don't think the federal government should put small businesses at a disadvantage whether it's currently today a higher tax rate marginal tax rate for pass-through entities then we have for big corporations 39.6 percent for small

01:05:25

business thirty-five percent for big corporations the first time I know of in history that small businesses are taxed at a higher rate but this is I'm more concerned about the fact that a lot of big corporations most are self-insured you know so my worry is on the competitive impact a lot of small businesses certainly they compete product line by product line with big corporations they see a niche and they want to step in but since big corporations are not subject to this tax if they're self insured so you could argue and I think dr. van de water even

01:05:56

said it may not have a lot of impact on some of these big corporations but this tax is placed on those group plans that small businesses subscribe to so now this and whether it's small medium or large but a chunk of this health insurance tax there's unanimous agreement will be passed on in the in the form of higher premiums it seems to me it's just one more competitive cost disadvantage that the government is deliberately deliberately passing on the

01:06:27

small business which will have a chilling effect on competitiveness so again that's you know a statement and I just would like your comments mr. does well no I mean I think that that's one of the if you look at the tax per se and forget the size the tax all and stuff or the most egregious things about this particular form of tax is that it's highly discriminatory I can't imagine it being in some of our context and this one because it is so egregious and as a

01:06:58

corollary of course it's a hidden tags it's a non-transparent tax so you know and then thirdly if you want to put ad that it's a cascading tax on that is it becomes a tax on a tax because it's rolled into the premiums so it really in terms of just tax policy I can't think about tax that's probably much worse than this if you give me some time I might be able to but this kind of does a pretty good job of violating a lot of

01:07:28

important principles I think a prior witness would say that the medical device tax is right up there with us mr. thorn now this is a little bit technical but you know in peeling back the numbers I'd like to ask you as I understand it this is an excise tax so it's not tax deductible so if the insurance company has to provide call it a one dollar fee to the government as an excise tax that comes off of the bottom line for for-profit insurance companies so in

01:08:01

order to get there it's not that they're going to be passing on a dollar they have to pass on a dollar fifty so they're going to have to actually pass on to the consumers and small businesses a dollar fifty increase in order to have a dollar left because the increase in the premiums is Tex taxable event they're going to pay 50 cent syntax to the federal government which is money of going out that then leaves them with a dollar then they send that dollar to the

01:08:32

federal government as an after tax excise text so if I you know as an insurance broker I would ask am I reading this correctly that a one dollar increase a one-dollar health insurance tax equals potentially certainly for their for-profit insurance companies a dollar fifty being passed on so it's even worse I just would ask your comment on that mr. chairman you're absolutely right the bigger issue too is the fact that you're going to see a lot of insurance

01:09:03

companies who are creating or develop self-insured policies down to five to ten lives which is also a potential train wreck in and of itself to avoid this very very tax and I'm hearing stories of that happening so we do we really want to go down that road as well I think there are so many problems with this tax itself and it is district disproportionately being affected by the small employer groups if you're going to spread the taxes should be amongst everyone not just a certain population

01:09:34

and that's a concern I have my last questions are for mr. Norton and the Farm Bureau has a lot of issues I mean just next week we're marking up the five-year farm bill that was deferred should have been done last Congress but that's another comment so you have a lot of issues dairy issues insurance issues and so forth and yet you're here today saying that one of the top issues for the Farm Bureau is in fact repealing the health insurance tax and just would like your comment on on how it is you've

01:10:07

prioritized this given so many other issues well as you mentioned you have a lot of issues but this is your front and center one of them because honestly without some of the employees that we have to help us on our family farms and our family businesses we wouldn't be in business and it's imperative of us to be able to take care of them provide them health insurance so you know the hit tax you know as it's very well named is going to affect us and or they're able to have employees whether they're able

01:10:38

to provide the health insurance that we want it to them and whether you know some of our members might actually take the drastic decision to either get out of farming all the other because of it or change their model so our members felt very strongly about the Affordable Care Act we've been opposed to its mandates from the beginning and this is one of the issues that you know we're here to work on and and I'm sure you deal with the other farm presidents around the country so certainly New York is New York but could I get your

01:11:09

comments on whether your counterparts across the night it states share the same view well I'm one of 51 including Puerto Rico and as you well know we get together every year and have a meeting of delegates to decide our policy and this was one of those issues that we discussed and decided in January and we all agree that it's important that we take care of this issue and that we speak up about the cost of this mandate is having on us and what it's doing to our farms and

01:11:39

possibly driving us off of our firms and certainly the Farm Bureau is a nonpartisan bipartisan group yes nonpartisan bipartisan we work with both sides of the aisle just last week I was having a conversation with Senator Schumer on immigration reform so I'm very well aware that you and Senator Schumer and not on the same side of the aisle oh you think anyway I want to thank the witnesses and miss on I don't know if you have a couple of follow-up questions certainly well and that's much follow-up but you know I just feel like I need to go on the record to say you know it's the insurance companies who by

01:12:11

the way the last time I checked we're making huge profits CEOs of insurance companies are making millions of dollars and once again we're letting the insurance companies run healthcare I mean that's why we have the Affordable Care Act because insurance companies in this country instead of the doctors were telling people what kind of procedures they could have you know one of the reasons i ran for Congress because i had one of my best friends died of breast cancer about 20 years ago because at that time bone marrow transplants were considered experimental and her HBO did

01:12:43

not allow for a bone marrow transplant and i thought you know what i'm going to run for Congress because i want to make sure that people don't go broke in this country because they have to decide between health care for their families or paying the bills and the last time i checked these medical device folks were also making huge profits and by the way this ACA is going to probably allow for more of these medical devices to be approved because of this this insurance

01:13:15

mandate and you know with all due respect to to the member who had his constituent Kathy and I'm sorry for Kathy that she lost her insurance what insurance company is closing their doors when we are mandating in this country that everybody buys insurance they must have a pretty bad business model there's hardly any other product that we are mandating that people buy why insurance company would close their doors when more poor people in this country are going to have to buy insurance company I don't know I just felt like I need to go

01:13:46

on the record to say once again we should be angry and insurance companies not at this law there once again trying to hold people hostage and i just read where CEO of one of these medical device companies was making 25 million dollars as a bonus at the end of the year so i'm not feeling too bad for insurance companies right now or medical device companies i do want to listen to our small businesses and i need to continue to listen if there's places in this law that we need to tweak and we need to make better i will but let's direct our

01:14:17

anger where it is appropriate and that's what these big insurance companies who are still raking in huge amount of profits and millions of dollars and and leaving people like kathy to fend for themselves thank you very much okay thank you I mean we all know we can agree to disagree and in many cases we do but in you know in answer to a couple of things I have a medical device company in my district corbel and they happen to make that device that makes

01:14:47

the bed go up and down and turns the television on and off and calls the nurse now that is a medical device and the medical device tax will impact their profits in a draconian way two-point-three percent of revenue and as dr. Aiken said a couple of weeks ago a very successful company makes five percent of revenue on the bottom line that's how business works two-point-three percent is taking away half their profits therein is we know a lot of startup medical device companies

01:15:18

that's where they come from they don't make any money or they make a very small amount so there are examples of very successful medical device companies that make ten percent of revenue on profit but two-point-three percent is still wiping out twenty-five percent of their profit stock prices are based on a multiple of your profit that means the strikers and the great batches and the other companies are either going to have to see their stock price plummet by twenty-five percent or they're going to have to cut we're

01:15:50

already seeing the cuts we're already seeing the layoffs in wishing it so doesn't make it so and the idea that insurance company we have a mandate here the problem is what is a mandate you must do something well that is not what the ACA is because for $95 an individual can beg off and for two thousand dollars a company subject to the ACA can simply deny coverage the young and the healthy if they don't subsidize the sick and the old I think there's every one that understands it's the young and the

01:16:21

healthy paying into a system that subsidize the old in the the frail all of a sudden the penalties for the young and the healthy not having insurance are gone because when you think about it $95 is there penalty two thousand dollars from the employer and there is no longer a penalty for pre-existing conditions so there were folks who got insurance because they were afraid if they came down with a a condition they could lose their house they could lose this or that

01:16:51

there is no longer a penalty for pre-existing conditions there's a $95 cost to get out and if the insurance is fifteen thousand dollars I am afraid only time will tell and mr. thorn hopes this won't be the case you're going to see the young and the healthy dropping insurance like there's no tomorrow because there's no roi so to speak I've met with the American health insurance providers organization they're already seeing the young and the healthy dropped their insurance because the cost is very

01:17:21

low the risk is no longer there and all I can tell you is in my case I buy a new car i get collision insurance in case i wrecked the car now if you told me after i wrecked the car i can sign up for insurance i'm not going to get the insurance until I wrecked my car and I won't be buying collision insurance on my new vehicle and there's a big correlation with that in the ACA and we'll be seeing how this plays out but it's not as easy to use the example of insurance companies making millions

01:17:53

I can assure you in western New York that is absolutely not the case and I can absolutely ensure tell you our CEOs don't make 25 million dollars but again we'll set that aside I want to thank the witnesses for coming here today this is certainly a controversial topic we're going to see how this plays out this is just one more step in getting four great witnesses to give us input some of it we agree on some of it we'll have to see how it plays out the subcommittee will

01:18:25

continue to monitor the implementation of this health care law and the impact on small businesses I'm sure we'll have some other hearings and following this hearing I do plan to send a comment letter to the Department of the Treasury on the proposed rule they're in charge of implementing the fee so with that I ask unanimous consent that members have five legislative days to submit statements and supporting materials for the record so without objection so ordered this hearing is now adjourned thank you

5.9.13 The Health Insurance Fee: Impact on Small Businesses

Table of Contents

More in Lectorium

SMALL BUSINESS

SENIOR PRESCRIPTION COVERAGE

DENTAL COVERAGE

SENIOR VISION COVERAGE