[House Hearing, 112 Congress]
[From the U.S. Government Printing Office]
THE RECENT HEALTH CARE LAW: CONSEQUENCES FOR INDIANA FAMILIES AND
SUBCOMMITTEE ON HEALTH,
EMPLOYMENT, LABOR AND PENSIONS
COMMITTEE ON EDUCATION
AND THE WORKFORCE
U.S. House of Representatives
ONE HUNDRED TWELFTH CONGRESS
HEARING HELD IN EVANSVILLE, IN, JUNE 7, 2011
Serial No. 112-27
Printed for the use of the Committee on Education and the Workforce
Available via the World Wide Web:
Committee address: http://edworkforce.house.gov
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COMMITTEE ON EDUCATION AND THE WORKFORCE
JOHN KLINE, Minnesota, Chairman
Thomas E. Petri, Wisconsin George Miller, California,
Howard P. ``Buck'' McKeon, Senior Democratic Member
California Dale E. Kildee, Michigan
Judy Biggert, Illinois Donald M. Payne, New Jersey
Todd Russell Platts, Pennsylvania Robert E. Andrews, New Jersey
Joe Wilson, South Carolina Robert C. ``Bobby'' Scott,
Virginia Foxx, North Carolina Virginia
Bob Goodlatte, Virginia Lynn C. Woolsey, California
Duncan Hunter, California Ruben Hinojosa, Texas
David P. Roe, Tennessee Carolyn McCarthy, New York
Glenn Thompson, Pennsylvania John F. Tierney, Massachusetts
Tim Walberg, Michigan Dennis J. Kucinich, Ohio
Scott DesJarlais, Tennessee David Wu, Oregon
Richard L. Hanna, New York Rush D. Holt, New Jersey
Todd Rokita, Indiana Susan A. Davis, California
Larry Bucshon, Indiana Raul M. Grijalva, Arizona
Trey Gowdy, South Carolina Timothy H. Bishop, New York
Lou Barletta, Pennsylvania David Loebsack, Iowa
Kristi L. Noem, South Dakota Mazie K. Hirono, Hawaii
Martha Roby, Alabama
Joseph J. Heck, Nevada
Dennis A. Ross, Florida
Mike Kelly, Pennsylvania
Barrett Karr, Staff Director
Jody Calemine, Minority Staff Director
SUBCOMMITTEE ON HEALTH, EMPLOYMENT, LABOR AND PENSIONS
DAVID P. ROE, Tennessee, Chairman
Joe Wilson, South Carolina Robert E. Andrews, New Jersey
Glenn Thompson, Pennsylvania Ranking Minority Member
Tim Walberg, Michigan Dennis J. Kucinich, Ohio
Scott DesJarlais, Tennessee David Loebsack, Iowa
Richard L. Hanna, New York Dale E. Kildee, Michigan
Todd Rokita, Indiana Ruben Hinojosa, Texas
Larry Bucshon, Indiana Carolyn McCarthy, New York
Lou Barletta, Pennsylvania John F. Tierney, Massachusetts
Kristi L. Noem, South Dakota David Wu, Oregon
Martha Roby, Alabama Rush D. Holt, New Jersey
Joseph J. Heck, Nevada Robert C. ``Bobby'' Scott,
Dennis A. Ross, Florida Virginia
C O N T E N T S
Hearing held on June 7, 2011..................................... 1
Statement of Members:
Andrews, Hon. Robert E., ranking minority member,
Subcommittee on Health, Employment, Labor and Pensions,
prepared statement of...................................... 6
Bucshon, Hon. Larry, a Representative in Congress from the
State of Indiana........................................... 5
Roe, Hon. David P., Chairman, Subcommittee on Health,
Employment, Labor and Pensions............................. 1
Prepared statement of.................................... 4
Statement of Witnesses:
Carlson, David, M.D., Evansville Surgical Associates......... 16
Prepared statement of.................................... 17
Crosson, Robyn S., chief deputy commissioner, company
compliance, Indiana Department of Insurance................ 8
Prepared statement of.................................... 11
Graber, Glen S., Graber Post Buildings....................... 41
Prepared statement of.................................... 42
Hoy, Rev. George Philip, ordained minister, United Church of
Prepared statement of.................................... 36
Johnson, Denis, vice president, operations, Boston Scientific 37
Prepared statement of.................................... 40
Lang, Sherry, Womack Restaurants............................. 21
Prepared statement of.................................... 23
Messmer, Hon. Mark, member, Indiana House of Representatives;
vice president, Messmer Mechanical, Inc.................... 31
Prepared statement of.................................... 33
Wilson, Elizabeth, Franklin, IN.............................. 18
Prepared statement of.................................... 20
Blankenship, Elmer, president, Indiana Alliance for
Retired Americans, prepared statement of............... 51
Letter, dated May 13, 2011, to Hon. Kathleen Sebelius,
Secretary, U.S. Department of Health and Human
Services, from Stephen W. Robertson, commissioner,
Indiana Department of Insurance........................ 53
Letter, dated April 15, 2011, to Verlon Johnson,
Associate Regional Administrator, Division of Medicaid
and Children's Health, from Michael A. Gargano,
secretary, Indiana Family & Social Services
Letter, dated January 14, 2011, to Secretary Sebelius,
from Hon. Mitchell E. Daniels, Jr., Governor, State of
State of Indiana Executive Order 11-01................... 70
Letter, dated April 30, 2010, to Secretary Sebelius, from
Gov. Daniels........................................... 72
THE RECENT HEALTH CARE LAW:
CONSEQUENCES FOR INDIANA
FAMILIES AND WORKERS
Tuesday, June 7, 2011
U.S. House of Representatives
Subcommittee on Health, Employment, Labor and Pensions
Committee on Education and the Workforce
The subcommittee met, pursuant to call, at 9:00 a.m., in
room 301, Vanderburgh County Civic Center, 1 Martin Luther
King, Jr. Boulevard, Evansville, Indiana, Hon. Phil Roe
[chairman of the subcommittee] presiding.
Present: Representatives Roe and Bucshon.
Staff Present: Casey Buboltz, Coalitions and Member
Services Coordinator; Benjamin Hoog, Legislative Assistant;
Brian Newell, Deputy Communications Director; Ken Serafin,
Workforce Policy Counsel; and Megan O'Reilly, Minority General
Chairman Roe [presiding]. The committee rule 7(c), all
committee members will be permitted to submit written
statements to be included in the permanent hearing record.
Without objection, the hearing record will remain open for
14 days to allow statements, questions for the record, and
other extraneous material referenced during the hearing to be
submitted in the official hearing record.
And good morning everyone and thank you all for being here.
And I want to thank our witnesses for being with us today. We
recognize that you all have busy schedules and we appreciate
the opportunity to hear your thoughts and experiences on the
very important issues of health care.
And second, I would like to thank all you all in the
audience in Evansville for your hospitality, for hosting the
first field hearing of the Subcommittee on Health, Employment,
Labor, and Pensions.
And before we go on, I am just going to tell you a little
bit about who I am. My name is Phil Roe. I am a physician. I
practiced ob-gyn in Johnson City, Tennessee for 31 years and 2
years ago was elected to the Congress. And I found out that
when you deliver your own voters, it worked out pretty well for
me, having delivered almost 5,000 babies. [Laughter.]
So it worked out pretty well. And every time a junior high
class--I am really nice to them because that is another voter
that may be coming along.
But I wanted to tell you a little bit about myself. I grew
up really not that far from here near Clarksville, Tennessee,
about a 2-hour drive, and I am very familiar with your
Evansville Purple Aces who routinely beat my Austin Peay
Governors in basketball, so I am very familiar with this area.
When I looked and went to Washington, D.C., I went there. I
am a veteran and I was mayor of our local community and still
practiced medicine. And I saw in my patients that health care
was getting more and more and more expensive. It was too
expensive to come to the doctor, and it was too expensive to go
to the hospital.
And secondly, we had a group of people in our community, at
least where I live in rural east Tennessee in Appalachia where
I live, that didn't have access to affordable health coverage.
What I meant by that is let's say you were a carpenter and you
didn't have full-time employment, but you worked and made
$20,000, $25,000, $30,000 in a year, and maybe your wife worked
at a local diner. And together, you got along okay, but you
couldn't afford $1,000 a month for health insurance coverage.
So we had that group of people who didn't have coverage.
And thirdly, we have a liability crisis in this country.
When you have a liability crisis which is causing costs to go
up with unnecessary testing and so on, that is an issue. The
health care plan ahead of us today that we are going to talk
about today I think did nothing to help control the costs, and
it does nothing for liability. It does expand coverage through
Medicaid and some other ways to do it which we will talk about,
but it doesn't take care of the major problem which is it costs
too much money.
As our first field hearing, there are few topics more
relevant to our economy and challenges facing our families and
small businesses than health care. Each year the cost of care
goes up, placing even greater strains on budgets already
stretched thin by a very difficult economy. Some patients
refuse care simply because they can't afford it. Employers
often choose between ending coverage or hiring new workers, and
the burden imposed on taxpayers becomes even greater as
Government programs expand and health care services grow more
expensive and more unsustainable.
We know there are a number of factors forcing health care
costs to rise such as an aging population, more advanced
treatments, and greater use of health care services, coupled
with fewer providers.
However, as is often the case, too much intervention by the
Federal Government can make an already problematic situation
worse. Instead of allowing choice and competition to encourage
innovation and lower costs, a Washington knows best mentality
can often discourage processes and lead to a one-size-fits-all
approach that simply cannot work for a country as vast and
diverse as ours.
That is why I, along with a strong majority of the American
people, reject the Government takeover of health care that was
imposed on the Nation last year. Any effort to reduce costs for
America's workers and job creators was abandoned along the road
of reform by Democratic leaders who favored a massive expansion
of the Federal Government's role in health care.
For the first time in our Nation's history, private
individuals will be required to buy health care or pay a
penalty, the so-called mandate. And the case will be heard
tomorrow in the Court of Appeals in Atlanta, Georgia, the
Eleventh Court of Appeals, on the individual mandate. It has
been ruled on. And 26 States are enjoined in this lawsuit.
In a few short years, businesses with more than 50
employees will be mandated by law to provide Government-
approved health care for workers or pay a fine, regardless of
the difficulties these businesses may be facing just to keep
their doors open. Proponents of the law say it includes relief
for small businesses. Well, unfortunately, that relief is not
only limited and temporary, but according to one analysis, it
actually penalizes certain businesses for raising wages or
hiring new workers. Can anyone seriously argue this is a good
thing for an economy that has been plagued with high
unemployment for nearly 3 years? Will this help the more than
13 million unemployed Americans who are searching for work?
A number of the law's provisions will not take effect until
2014, but already we are hearing from business leaders troubled
by the uncertainty the law has created. This is unacceptable,
especially at a time when certainty is needed to restore
confidence and foster economic growth.
A 2,700-page health care law, which I have read in its
entirety--and I can probably say not that many in Congress
have. I don't know what it says about my intelligence, but I
read the entire 2,700 pages. And it has led to more than 6,600
pages of new Federal rules and regulations, and that is just
what the administration has accomplished in the first 14 months
since the bill was signed into law. That is a difficult maze of
bureaucratic red tape for businesses to navigate at a time when
they should be focused on expanding their operations and
creating new jobs.
As a doctor and a former mayor and a lawmaker, addressing
these challenges remains at the forefront of my efforts serving
the people of the 1st District of Tennessee, and as the
chairman of the House Subcommittee on Health, Employment,
Labor, and Pensions, it is clear the status quo is failing our
families, workers, and job creators.
We appreciate the work of our witnesses who are helping us
to chart a better course, one that will harness the creativity
of the American people to lower the costs of health care for
I want to note that another Indiana colleague of mine and
subcommittee member, Todd Rokita, could not be here because of
a previous commitment, but I know he too is committed to
creating affordable health care for American businesses and
repealing the onerous mandates created by the Affordable Care
Three things I like about southern Indiana.
One is Central Standard Time. You guys got it here. I like
Number two, basketball. I love that.
And number three, I appreciate that you elected someone as
competent as Dr. Larry Bucshon. He has really hit the ground
running. There was essentially no learning curve for him. I
know when I first got there, the first thing I was interested
in was trying to find out where the bathrooms were. I mean,
they don't tell you any of the important things when you get
there. But Dr. Bucshon has gotten there, hit the ground
running, and has been a tremendous asset to our Committee on
Education and the Workforce and on the subcommittee that I
So without objection, I now yield to my friend, Dr.
Bucshon, a fellow physician, for any opening remarks he may
wish to make.
[The statement of Chairman Roe follows:]
Prepared Statement of Hon. David P. Roe, Chairman,
Subcommittee on Health, Employment, Labor and Pensions
Good morning everyone. First, allow me to take a moment to thank
our witnesses for being with us today. We recognize you all have busy
schedules, and we appreciate the opportunity to hear your thoughts and
experiences on the very important issue of health care. Second, I would
like to thank the people of Evansville, Indiana for their hospitality
and for hosting the first field hearing of the Subcommittee on Health,
Employment, Labor, and Pensions.
As our first field hearing, there are few topics more relevant to
our economy and the challenges facings our families and small
businesses than health care. Each year the cost of care goes up,
placing even greater strain on budgets already stretched thin by a
difficult economy. Some patients refuse care simply because they cannot
afford it. Employers often choose between ending coverage and hiring
new workers. And the burden imposed on taxpayers becomes even greater
as government programs expand and health care services grow more
expensive and more unsustainable.
We know there are a number of factors forcing health care costs to
rise, such as an aging population, more advanced treatments, and
greater use of health care services coupled with fewer providers.
However, as is often the case, too much intervention by the federal
government can make an already problematic situation worse. Instead of
allowing choice and competition to encourage innovation and lower
costs, a Washington-knows-best mentality can often discourage progress
and lead to a one-size-fits-all approach that simply cannot work for a
country as vast and diverse as ours.
That is why I, along with a strong majority of the American people,
rejected the government takeover of health care that was imposed on the
nation last year. Any effort to reduce costs for America's workers and
job creators was abandoned along the road to reform by Democrat leaders
who favored a massive expansion of the federal government's role in
For the first time in our nation's history, private individuals
will be required to buy health care or pay a penalty. In a few short
years, businesses with more than 50 employees will be mandated by law
to provide government-approved health care to workers or pay a fine,
regardless of the difficulties these businesses may be facing just to
keep their doors open. Proponents of the law say it includes relief for
small businesses. Well, unfortunately, that relief is not only limited
and temporary, but according to one analysis it actually penalizes
certain businesses for raising wages or hiring new workers.
Can anyone seriously argue this is a good thing for an economy that
has been plagued with high unemployment for nearly three years? Will
this help the more than 13 million unemployed Americans who are
searching for work?
A number of the law's provisions will not take effect until 2014,
but already we are hearing from business leaders troubled by the
uncertainty the law is creating. This is unacceptable, especially at a
time when certainty is needed to restore confidence and foster economic
growth. A 2,700 page health care law has led to more than 6,600 pages
of new federal rules and regulations--and that is just what the
administration has accomplished in the first 14 months since the bill
was signed into law. That is a difficult maze of bureaucratic red-tape
for businesses to navigate at a time when they should be focused on
expanding their operations and creating new jobs.
As a doctor and a lawmaker, addressing these challenges remains at
the forefront of my efforts serving the people of the first district in
Tennessee, and as chairman of the House Subcommittee of Health,
Employment, Labor, and Pensions. It is clear the status quo is failing
our families, workers, and job creators. We appreciate the work of our
witnesses who are helping us to chart a better course, one that will
harness the creativity of the American people to lower the cost of
health care for the nation.
I want to note that another Indiana colleague and subcommittee
member, Todd Rokita, could not be here today because of a previous
commitment, but I know he too is committed to creating affordable
health care for American businesses and repealing the onerous mandates
created by the Affordable Care Act.
I will now recognize Dr. Larry Bucshon, a friend, colleague, and
fellow physician for any remarks he wishes to make.
Mr. Bucshon. Thank you, Chairman Roe, for that gracious
On behalf of the people of Evansville, please allow me to
extend a warm welcome and offer our sincere appreciation for
convening this hearing today. I think that, Chairman Roe, you
will discover that people in Indiana have a profound love for
their country and a lot of good ideas about how we can move
this Nation forward. That is ultimately a goal we all share and
one that we are really committed to.
These last few years have been a difficult time and promise
for our great State because of what has happened in Washington,
D.C. A tough economy has levied many hard choices on our
families, workers, businesses, and State leaders. We have tried
to meet these challenges head on through hard work and
sacrifice. We have made progress but realize more work lies
ahead. We must ensure the progress that has been made is not
undone by bad policies out of Washington, D.C., which brings us
to the reason for the hearing today.
At a time when businesses continue to struggle, millions of
workers remain on the hunt for a job, and families are
experiencing greater pain at the pump, our country now faces
the consequences of the policies that are in place in
Washington, D.C., including last year's Government takeover of
our health care system with passage of the Affordable Care Act.
I was not in public office at the time when the health care
legislation passed through the Congress. However, a strong
majority of Americans joined the public debate in opposition to
the Affordable Care Act, and in fact, the opposition to the
Affordable Care Act has only increased since its passage. That
is one of the few times that has ever happened with a policy
that has been passed in Washington, D.C.
Last year, I had the great privilege of traveling around
the district listening to local business owners, family
farmers, and others expressing their concerns about the
direction Washington, D.C. is taking our country. It is deeply
unfortunate that the majority of people out there voices were
being ignored at the time by the leaders in Washington in our
This law includes thousands of pages of new mandates, some
of which fall on job creators. It includes numerous tax
increases, including a $20 billion tax on businesses that
develop medical devices, and this is very important to Indiana
since we have a very large medical device business in our
State, as many as 20,000 employees. Those businesses employ,
like I said, 20,000 or so Hoosiers, and they take a direct hit
with a new tax based on the Affordable Care Act.
The administration has proposed more than 6,600 pages of
regulations over the last year in an effort to implement and
enforce the law. At a time when our economy and workforce needs
certainty about the future, the regulatory environment simply
creates confusion and anxiety and our workers and families are
paying the price. Not only is the law piling additional burdens
on job creators, many of whom are struggling to meet their
payroll, it is placing a greater strain on the taxpayers.
Despite raising taxes by more than $500 billion and costing an
estimated $1.4 trillion, the price tag for taxpayers continues
to go up.
Here in Indiana, new insurance mandates will drive up
health care costs for employers and workers. Also, our Governor
estimates the expansion of the Medicaid program may cost the
State upwards of $3 billion a year, a cost on the backs of
Indiana taxpayers. Speaking as a fellow Hoosier, this is a
Government takeover our State simply cannot afford.
It is clear we need a better approach to health care, one
that reflects our national values of personal responsibility, a
limited Government, an approach that encourages innovation and
job creation. We cannot assume the best answers come from
Washington, D.C. I am confident, with the help of our
witnesses, we can identify real solutions that will lower the
cost of health care and protect and create the jobs our
Nation's workers desperately need.
Again, I would like to thank Chairman Phil Roe for coming
to Evansville and for his leadership as the chairman of this
subcommittee and for holding this important hearing today to
hear what the people of Indiana have to say.
So with that, thank you, Chairman Roe.
Chairman Roe. I thank the gentleman.
And I would like to include in the record the senior
Democratic leader on the Subcommittee on Health, Employment,
Labor, and Pensions who could not be here, Rob Andrews. Without
objection, I will include his statement for the record.
[The statement of Mr. Andrews follows:]
Prepared Statement of Hon. Robert E. Andrews, Ranking Minority Member,
Subcommittee on Health, Employment, Labor and Pensions
Last week's unemployment report reinforces the urgent need for the
Congress to have a laser-like focus on jobs. Unfortunately, the
committee has not taken up a single piece oof jobs legislation this
year. Instead, today's hearing continues fighting the battles of thee
past, with the fourth hearing this year attacking the Affordable Care
This health care reform law gives American families new protections
against the worst abuses of the insurance industry. In the coming
years, it will extend access to affordable, quality health care to
those without it. And it contains critical measures to keep rising
health care costs under control, without rationing care. Getting a
handle on out-of-control health care costs is one of the keys to our
long-term economic ggrowth.
The Affordable Care Act became law over a year ago. While it takes
multiple years to implement, it has already begun to deliver positive
results for Indiana families, children, and small and large employers.
Because of the Affordable Care Act, nearly 90,000 Hoosier seniors
who hit the Medicare prescription drug donut hole paid less for their
medications last year. Each received a $250 rebate check for a total
savings of $22.4 million dollars. This year seniors who hit the donut
hole are saving an average of $800.
One million seniors in Indiana may receive free preventive services
and an annuaal wellness visit.
More than 80,000 small employers in Indiana may pay lower health
care costs as a result of the law's small business tax credit.
Nearly four million Indiana residents are now protected against
lifetime limit caps on their coverage and 3.5 million are protected
against restrictive annual limit caps.
Nearly 300,000 Hoosiers are now protected against having their
insurance company drop their health coverage when they need it the
More than 20,000 young adults in the state may now have coverage
through their parent's health plan.
More than 200 employers and their employees are paying less for
retiree health care by joining the Early Retiree Reinsurance Program.
The law has also been good for Indiana's economy by infusing
millions of dollars in grant money to help the state strengthen its
health care system. Indiana has received funding to develop a health
insurance exchange, strengthen and potentially construct new community
health centers, support prevention and health programs and invest in
groundbreaking biomedical research.
Specifically, the state has received:
More than $7 million toward the state's development of the
health insurance exchange. The health insurance exchanges are a
cornerstone of the Affordable Care Act that will allow consumers to
shop for quality affordable health care of their choice.
More than $550,000 for community and clinical prevention
Nearly $1 million for primary care training to expand the
state's primary care workforce.
More than $10 million to support 46 projects in the state
that show potential in producing new and cost-saving therapies. These
grants and tax credit also support good jobs and increase U.S.
Repeal of the Affordable Care Act would repeal all of these
protections for individuals, families, and employers. It would repeal
economic benefits for Indiana. And it would return inordinate power
over our health care to the health insurance companies.
My Republican colleagues have not just proposed repeal of these
benefits. They have an additional proposal these days: ending Medicare.
The Republican plan will force seniors to pay more for health care
coverage and prescription medications and jeopardize their right to
long-term care benefits.
Under the Republican plan to end Medicare, an Indiana senior would
be forced to pay more than $6,000 in higher annual health care costs in
2022 and $12,000 more by 2032, as well as an additional $9,800 in
prescription drug costs over the next decade. For seniors and those
with disabilities in Indiana's 8th congressional district, the
Republican plan could increase preventive care costs by $293 million
over the next decade. In addition, the more than 3,000 residents in
nursing homes whose expenses are paid by Medicaid would be left without
the care they need.
The Republican plan will have a devastating impact not only on
seniors but also on young people right now who will no longer be able
to depend on Medicare or a dignified retirement.
To cover the additional health care costs under the Republican
plan, a 54-year-old today will need to save more than $180,000 by the
time she retires. That is over and above what she should already be
trying to save for a normal retirement.
And for those who are younger, the costs are even higher. A 25-year
old will need more than half a million dollars in additional retirement
savings to pay for their health care under the Republican plan.
The Affordable Care Act has now been debated for nearly three
years. Re-litigating past fights will not move this country forward.
The middle class has been under a decades-long squeeze. The last thing
working families need right now is to have hard-won health care rights,
like the guarantee of Medicare or the protections of the Affordable
Care Act, taken from them.
There are better ways to spend our time in Congress, such as
working together to grow and strengthen, rather than weaken, the middle
class. Our focus should be on creating good jobs here in America.
Chairman Roe. Thank you.
And we have two distinguished panels today, and I would
like to recognize Dr. Bucshon to introduce our first panel. I
yield to Mr. Bucshon.
Mr. Bucshon. Thank you, Mr. Chairman. It is a pleasure to
introduce our first panel.
First of all, Robyn Crosson serves as Deputy Commissioner
for Company Compliance Services with the Indiana Department of
Insurance in Indianapolis. In that capacity, she reviews
insurance policies and premiums to ensure compliance with
Federal and State laws. She also serves on the Governor's
Health Care Reform Team. Prior to her service in State
government, she was an attorney in private practice.
Dr. David Carlson is a general surgeon with Evansville
Surgical Associates which provides state-of-the-art general
laparoscopic, thoracic, and peripheral vascular surgery
services to patients in the tri-State area. Dr. Carlson joined
the practice in 1997 and is certified by the American Board of
Surgery and a fellow of the American College of Surgeons. He
also serves on the active staff in the Department of Surgery at
Deaconess Hospital and St. Mary's Medical Center both here in
Evansville. Also, I would like to say Dr. Carlson has served
his country in the Army Reserve Medical Corps and spent 3
months in Iraq serving his country in the recent conflict.
Elizabeth Wilson joins us today from Franklin, Indiana. She
currently is employed at the retail store, Elder-Beerman, as
she saves for graduate school, and also provides voice lessons
and is a nursery attendant for the First Presbyterian Church in
Franklin. Ms. Wilson graduated from Butler University in
December 2010 with a bachelor of arts degree in applied music.
She is with us today to share her personal story about the
impact that the Affordable Care Act has had on her and her
Finally, Sherry Lang joins us today from Terre Haute,
Indiana. Ms. Lang is a human resources director for Womack
Restaurants, a member of the IHOP restaurant chain. Womack
operates restaurants in Indiana and Ohio, employing nearly
1,000 full-time and part-time workers in 12 IHOP restaurants.
Ms. Lang has a master's degree in human resource development
and serves at the executive management level at Womack
Restaurants. Since joining Womack in 2005, she has helped to
grow the company from 3 to 12 restaurants.
So, welcome, panelists.
Chairman Roe. Thank you all.
Before we get started, I want to go over this lighting
system that we have. It is there mainly to make sure that the
Congressmen don't talk too long. But the way this works is you
have 5 minutes to give your statements, and we will have 5
minutes to question. There may be a second round of questioning
if we don't get through. The green light will come on. The
amber light will mean you have a minute left, and the red light
means that you need to start wrapping up your comments. We are
not going to cut you off in mid-sentence. You can continue your
thought, but just try to be cognizant of the lights.
So if you would, Ms. Crosson, you are first.
STATEMENT OF ROBYN CROSSON, CHIEF DEPUTY COMMISSIONER, COMPANY
COMPLIANCE, INDIANA DEPARTMENT OF INSURANCE
Ms. Crosson. Thank you, Mr. Chairman, and thank you,
Representative Bucshon. It is a pleasure to be here, members of
My name is Robyn Crosson, and I am the Chief Deputy
Commissioner at the Department of Insurance.
And before I go on, I just wanted to kind of explain a
little bit of what the Department of Insurance does. A lot of
people didn't even know Indiana had a Department of Insurance.
Actually all States and territories in the U.S. have
departments of insurance or some sort of commission.
The primary thing we do is protect consumers. We have a
consumer services division that answers all complaints brought
by citizens and also by providers when they have issues. We
regulate insurance companies. We don't regulate providers. And
we also review all of the rates and contract language. That
puts a heavy burden on us, particularly in company compliance
for implementing the Affordable Care Act in addition to any
State laws and regulations that we have.
By statutory authority, our legislature has deemed and
ordered us to review all rates, premium costs before they are
implemented and contracts before the State of Indiana or all
health insurance, long-term care, Medicare, any sort of health
pact policy. It also includes--all, in some way, shape, or form
have been affected by the Affordable Care Act.
We are required to make sure that the premiums are
reasonable in relation to the benefits that are provided and we
do have actuarial reviews that perform those functions.
Currently in Indiana, we have approximately in each
market--and when I say ``market,'' I mean individual market
where you can go out and buy a policy on your own--or a small
group market, which is companies that have less than 50
employees, 2 to 50 in Indiana, and then the large group market
is over 50, 51 and over. In three markets, we have
approximately at any given time about 60 carriers that are
actively marketing, although I will tell you that this number
is dwindling. Currently we have experienced approximately 10
percent of the market has withdrawn, meaning either they have
pulled out completely and will no longer do any business in
Indiana or they will not do business with particular segments.
Particularly the individual market and in some cases the small
group market are being most severely affected, or they are just
saying we are not going to currently going to actively market.
We are going to see if we can stay alive until 2014, and then
if we can, we will try to come back in on the exchanges if we
can do that.
Particularly we are seeing this in smaller companies. The
problem is these are smaller domestic Indiana companies. In a
lot of cases, these are provider-owned in some cases insurance
companies that serve niche markets within the State, have very
good consumer services. We don't get a lot of complaints on
them. They control their costs and they have good wellness
programs. We have a lot of insurance companies throughout this
State that operate that way, and really right now we are seeing
them really rethink whether they can do business at all. So
that is just kind of to give you a picture.
We have a healthy domestic insurance industry here in
Indiana, and insurance employs a lot of Hoosiers. Just to give
you an example, the top five insurance carriers--we just did a
quick count--employ 5,600 people, just the carrier themselves.
We have 44,944 resident agents licensed to sell accident and
health. These are your neighbors. These are small business
owners. We have 4,152 resident agencies that play a large role
in the community, and we have grave concerns about what is
going to happen to those people.
To give you an idea and a picture of who is impacted by
this, the Affordable Care Act affects not only fully insured
but also affects self-insure. You see self-insure in large
corporations or large, usually over 100-150 people, where they
bear all the costs and risk and just pay someone who administer
their claims. But this affects both in most cases.
And to give you a picture of who we are talking about, the
full insured market--the estimate--comprises about 30 percent
of the State. So in the individual market, that is 192,376
people. The small group market is 288,461 people, and the large
group market, 456,867 individuals. And then for the self-
funded, the other 70 percent that are affected by this--and I
am not talking about Medicaid. I am not talking about
Medicare--there are another 2.1 million Hoosiers approximately
affected by this, not to mention employers and everything else
in the State. These are just the people who are covered by this
I have two main themes and main side effects that we are
seeing right now actively in trying to deal with and combat.
The first one is that premiums are going up. The second one is
the market is in chaos. Neither one benefits employers or
The first one--just what we are seeing in the department
and as the Congressman indicated, $3.1 billion was the high
estimate right now for what we are seeing. We are not done with
the regulations that are coming out. There are always more that
could be coming out, and those add oftentimes additional costs
and burdens upon the State taxpayers, upon the companies, upon
individuals, and upon employers. There are increased reporting
responsibilities and we don't know what the exchanges are going
to look like either. All these things are unknown. This is what
we are estimating with now, $2.6 billion to $3.1 billion is
what the Governor's current estimates are.
Effective on September 23rd of 2010, there were a series of
market reforms, including expanding the dependent age to age
26, a prohibition on preexisting conditions for children under
19, among others, removing the lifetime limits on policies, and
limiting the annual limit and phasing out annual limits
completely over the next 3 years or 4 years, I guess, till
As a result, the early estimates we saw from carriers
before these even took effect was that premiums were going to
go up between 2 and 4 percent. But in some cases and in plans
especially in the small employer arena and the individual
market where people have limited drug benefits--maybe they were
limited to $100,000 and $50,000 and $350,000--we saw increases
as high as 35 percent where they were requesting these rates
and getting all reviewed. I am not saying that they were
definitely approved. But we are requesting these because of the
removal of the limits in drug utilization, especially in the
market. And so removing these limits has prohibited insurance
companies and employers from capping costs.
There is discouragement on consumerism in the $2,000
And then basically I just want to say the market is in
total flux. There are so many things out there. The agents are
not sure whether they are going to have jobs. Employers are
cutting benefits. In general, there is not a lot of incentive
to--there is no incentive to control costs and there is no
ability for employers to predict what their medical costs are
going to be, especially with the removal of a lot of these
limits in going forward. The medical loss ratio carriers are
laying people off, cutting their costs, reducing compensation
across the board to try, again, to survive until 2014, which is
[The statement of Ms. Crosson follows:]
Prepared Statement of Robyn S. Crosson, Chief Deputy Commissioner,
Company Compliance, Indiana Department of Insurance
Chairman Roe, Representative Bucshon, Members of the Committee, it
is an honor to appear before you today to offer guidance on our
nation's recent health care reforms.
On March 23, 2010, President Obama signed into law the Patient
Protection and Affordable Care Act (ACA). This legislation institutes
numerous modifications to the regulation of private health insurance
companies and the structure of health insurance policies.
The Indiana Department of Insurance (IDOI) supports Indiana
Attorney General Zoeller's effort to overturn or repeal ACA on the
grounds that it is unconstitutional to mandate citizens to purchase
health insurance or pay a penalty. However, this litigation is
presently pending, and will likely remain pending for quite some time.
In the interim, IDOI diligently prepares for the onslaught of ACA's new
requirements. First and foremost, IDOI continually examines the law in
an effort to minimize adverse effects to the nearly 1 million Hoosiers
with fully insured coverage.
As of July 1, 2010, Governor Daniels formed an interagency task
force to analyze the various components of ACA. The task force includes
representatives from the Governor's Office, the Indiana Family and
Social Services Administration (FSSA),IDOI, and the Indiana State
Department of Health and State Personnel. Indiana continually attends
meetings with the U.S. Department of Health and Human Services (HHS),
the National Association of Insurance Commissioners (NAIC), consumer
representatives, industry representatives, other regulators and
insurers. Indiana carefully reviews each newly promulgated regulation
that implements ACA's provisions and provides policy feedback to the
government and other interested parties regarding how the provisions
should operate or to warn of the consequences. In addition, Indiana has
been awarded federal grants to assist with the implementation of health
care reform. The State has conducted a financial analysis of the ACA's
impact to the State budget and estimates indicate Indiana will have to
pay between $2.6 and $3.1 billion over the next ten years to support
The following is a summarized timeline of some of the more
significant changes with a focus on the effect on Indiana families and
High Risk Pools
Within 90 days of ACA's March 2010 enactment, states were required
to establish a high risk health insurance program, or instead defer to
the federal government's Pre-existing Condition Insurance Plan (PCIP).
On April 22, 2010, the Chief Actuary of the Centers for Medicare and
Medicaid Services (CMS) reported that an estimated 375,000 individuals
across the U.S. would enroll in the PCIP by the end of 2010.\1\ So far
that has not been the case. As of March 31, 2011, the number of
Hoosiers enrolled in PCIP was 177, and the total across all states was
(posted May 6, 2011).
The strict eligibility requirements are one reason for the low
enrollment. According to PCIP's own website, ``You must have been
without health coverage for at least the last 6 months. Please note
that if you currently have insurance coverage that doesn't cover your
medical condition or are enrolled in a state high risk pool, you are
not eligible for the Pre-Existing Condition Insurance Plan.'' \3\ Since
Indiana's high risk pool, ICHIA, does not require a waiting period,
most Hoosiers are forced to enroll in this program instead. Although a
small portion of costs are funded through premiums, the bulk of the
cost is covered through assessments and taxes. Insurers are assessed
for 25% of the costs, while Hoosier tax payers fund the remaining 75%.
Approximately 7,000 people are enrolled in this program that incurred
approximately $110 million in claims during the 2009 calendar year. The
establishment of PCIP may be intended to assist the uninsured and high
risk, but the six month requirement stunts PCIP's potential to be of
Changes to Annual and Lifetime Limits
Several of ACA's changes became effective September 23, 2010,
including new rules controlling how health insurance companies can use
annual and lifetime limits. ACA generally prohibits these limits, or in
some cases restricts the amounts as part of a transitional period
leading into 2014 when limits become fully prohibited. Limits enable
insurers to properly estimate future costs, which facilitates
appropriate pricing. Limits help ensure that companies remain solvent.
Similarly, employers who are self-funded are less able to predict their
annual medical costs because they are also subject to the annual and
lifetime limits prohibition. Generally, health insurance costs are the
second largest budget item for employers. Less certainty and fewer ways
to control costs creates an incentive to discontinue offering health
insurance. Insurance companies have reacted to this legislation by
Mandatory Preventive Health Services Coverage and Essential Benefits
Effective September 23, 2010 under ACA, health insurance companies
generally must cover preventive health services as defined by the
federal government. The justification for this change in the law is
that more Americans will visit providers earlier to use such services,
decreasing the chance they will incur a costly illness later, thereby
decreasing costs to insurers and therefore decreasing premium. However,
the practical reality is different. Having additional preventive
services paid for by insurance has generally not been enough to
incentivize Americans to become healthier or get checked out for health
problems more often. Instead, the legislation has merely caused
insurance companies to change their accounting and increase premiums to
cover the new costs of the mandated services. In addition, beginning
January 1, 2014, plans offered by small group and individual insurers
must include essential health benefits package characteristics,
including cost sharing limitations as eligible. In cases where existing
insurance plans do not cover an essential benefit, those plans must
adjust by adding the benefit and likely will increase the premium to
cover its costs. At this time we do not know what these benefits are.
This adds additional uncertainty to the market and limits our ability
to assess the impact of ACA.
Dependent Age Increased to 26
Effective September 23, 2010, insurers are generally required to
continue coverage of a dependent up to the age of 26. This change was
designed to reduce the number of younger dependents getting kicked off
their parents' plan and foregoing coverage. While the intent was
positive, it has led to a situation where certain employers, who
budgeted for covering dependents for a lesser amount of time, now have
to react to the change. Insurers and employers with self-funded
insurance have generally reacted by increasing premiums to cover the
extra years of cost.
Indiana previously required dependent coverage for children up to
age 24. For policies effective after September 23, 2010 or at renewal
subsequent to that date, coverage must be extended to children under
age 26. Notice to parents of dependents who were previously removed
must be provided and children must be added at the next open enrollment
if they aged off. Although a child may be underwritten when he or she
is reenrolled, the child cannot be required to pay more for coverage
than similarly situated individuals who did not lose coverage by reason
of cessation of dependent status. Dependent coverage is extended to age
26 for individual and group products with an exception for
grandfathered group products. For this purpose, any difference in
benefits or cost-sharing requirements constitutes a different benefit
package when it falls outside a federally established threshold. Prior
to January 1, 2014, if a young adult has the option of coverage through
their employer, the parent's employer, if the plan is grandfathered,
does not have to cover the young adult as a dependent on the parent's
plan. Employers have suggested that extension of coverage will increase
costs and have concerns about adverse selective tendencies since young
adults can choose to stay on their parents' plans rather than take
their employer plan, especially after January 1, 2014. This requirement
imposes additional previously unanticipated risk upon employers who
offer dependent coverage through their plans. Depending on the level of
adverse selection, the result of this legislation may be that employers
stop offering dependent coverage. Currently, there is a movement by
employers to penalize employees whose spouses are covered as dependents
on employer A's plan instead of receiving coverage through their own
employer B. Usually, the penalty is an increased premium percentage or
no employer contribution for the spouse's coverage.
Guaranteed Issue, Coverage, and Renewability
Effective September 23, 2010, insurers can no longer exclude
benefits or limit coverage based on a preexisting condition for an
individual under the age of 19. For plan years following January 1,
2014, this restriction applies to everyone. Also, beginning 2014
insurers selling new insurance can no longer discriminate on the basis
of health status, medical history or claims experience. Moreover,
beginning 2014, insurers must accept everyone that applies for coverage
during open enrollment, the limited time period during each year
determined by insurers when someone can sign up to an insurance plan.
For plan years beginning January 1, 2014, all non-grandfathered, fully-
insured plans must renew coverage or continue it in force at the option
of the insured.
Currently, and within statutory limits, Indiana insurance carriers
are permitted to exclude coverage temporarily for preexisting
conditions. This enables carriers to insure for fortuitous rather than
planned or known medical costs. ACA prohibits this practice for
children under 19 currently and for all others in 2014. Indiana's small
group market has had guaranteed issue for several years and will not be
significantly affected by this, but the individual market will
experience significant increases. Some carriers have suggested
increases in the 50% range. We are currently evaluating the inclusion
of the high risk pool members into the individual market and the
increase associated with such inclusion. One of the consequences
experienced in Indiana as a result of this legislation was that
carriers stopped writing child-only policies. Carriers claimed that the
law led to adverse selection, a fiscal situation that arises when a
given pool of insured individuals is skewed, in that there is not an
economically stable proportion of sick to healthy individuals in the
pool, because healthy individuals leave, causing premiums to rapidly
escalate for those remaining sick people. In an effort to curb this
practice the government tried to limit plan-switching by restricting
the time to switch, or the time in which to enroll, to only open
enrollment periods, thereby preventing young individuals from waiting
until they got sick to enroll. Indiana drafted Bulletin 181, requiring
carriers wishing to sell child-only policies to do the following: 1.
Hold an open enrollment period that must last at least 30 continuous
days; 2. Designate that enrollment period; 3. Notify IDOI no later than
December 1, 2010 of when the open enrollment period will occur so that
IDOI may post on its website; 4. Post the open enrollment period on the
insurer's website; and 5. Effect coverage within a reasonable period of
time from enrollment. Despite IDOI's efforts, IDOI is aware of only one
company offering child-only policies in Indiana. Generally, children
under 19 are left with the option of CHIP, PCIP and ICHIA to the extent
they qualify. IDOI is currently exploring options to continue to
encourage carriers to re-enter the market. However, the consequence of
the law thus far is that consumer choice has narrowed and premiums have
ACA allows for plans in effect on March 23, 2010 to be considered
grandfathered. This affects the application of some of the September
23, 2010 market reforms. For example, the following do not apply to
grandfathered health plans: mandated coverage for preventative
services, mandated patient protections (i.e., OBGYN referral
prohibition, in-network pediatrician considered child's primary care
provider (PCP) and emergency services costs are the same for in-network
vs. out-of-network), guaranteed availability and renewability of
coverage, mandated cost-sharing limits, no discrimination based on
health status and mandated coverage for clinical trials. Additionally,
grandfathered plans will not be subject to the 2014 pricing
restrictions. This means that the actuarial review process for
insurance premiums at renewal will be split between grandfathered and
non-grandfathered plans. In addition to increased and tiered actuarial
duties, it has been suggested that IDOI will be the first arbiter of
the grandfathering determination. This means increased reporting for
carriers and additional rate and form review responsibilities for
Compliance. Several insurers have reacted by requiring employers to
provide coverage that is consistent with the new ACA reforms, rather
than allowing employers to choose. Instead of increasing employer
choices, which the law touted, employers' options are constrained.
International Statistical Classification of Diseases and Related Health
ICD-10 provides codes to classify diseases and a wide variety of
signs, symptoms, abnormal findings, complaints, social circumstances
and external causes of injury or disease. Under ICD-10, every health
condition can be assigned to a unique category and given a code. On
August 21, 2008, HHS proposed new code sets to be used for reporting
diagnoses and procedures on health care transactions. Under the
proposal, the ICD-9-CM code sets would be replaced with the ICD-10 code
sets, effective October 1, 2013.
Although this may lead to improved health data tracking and
positive healthcare outcomes, it carries a significant price tag for
insurers. ICD-10 is sufficiently detailed to describe complex medical
procedures, which becomes increasingly important when assessing and
tracking the quality of medical processes and outcomes. The goal of
such tracking is to improve patient outcome and quality of care. IDOI
recognized this significant conversion cost in a letter submitted to
the National Association of Insurance Commissioners (NAIC). This is the
organization that was tasked by HHS with defining the medical loss
ratio rebate calculation. In that letter, IDOI stated in pertinent
part: ``Such conversion costs, although significant, will be short-
lived and therefore, affect the medical loss ratio calculation for a
brief period, but leave lasting quality improvement potential. Given
the benefits to patient care, ICD-10 conversion costs should be
included as a health care improvement cost and included in the claims
numerator.'' The final model adopted by the NAIC did not allow the
inclusion of ICD-10 costs in the medical loss ratio (MLR) numerator as
part of Quality Improvement Costs. Therefore, carriers must bear the
cost of this conversion as part of their 15-20% administrative costs.
Smaller carriers will likely be more significantly affected, since
larger carriers can spread the cost over multiple companies.
Changes to the External Review Process
As of 2010, states must have internal and external review
standards. The federal law requires strict compliance with certain
provisions published in an HHS regulation, 42 USC Sec. 300gg-19(b),
that largely comported with the NAIC Model Act on External Review.
Indiana's own external review statutes are highly analogous to the
federal requirements, but it was determined through correspondence that
Indiana was not in exact compliance. The State was able to get Senate
Bill 461 passed and successfully amend Indiana's external review laws
to be in compliance with the federal requirements. However, even with
these changes, HHS has not yet confirmed that Indiana is in compliance.
This is leading to uncertainty in the insurance market because insurers
cannot determine their own compliance with Indiana Code. Sadly, this
type of back and forth with HHS has been typical of the health care
reform process thus far; chaotic, frenetic and rushed implementations.
All of these issues combine together to create an uncertain insurance
market, causing insurers to hesitate before participating or continuing
to participate in Indiana's insurance market, reducing consumer choice
Other Changes with Lesser or Unclear Impact
September 23, 2010: plans that provide for emergency
services cannot require prior authorization. Any cost-sharing
requirement for emergency services provided out of network cannot
exceed cost sharing requirements for in network emergency services.
Beginning in 2014, insurers may not discriminate against
providers operating within the scope of their practice.
Annual HSA contributions are limited and there are
deductible limits on small employer plans that may limit participation
in popular high deductible health plans.
States must track trends in increasing premiums and report
this information to HHS. Such tracking and reporting may be funded
initially in the form of grants, but long term the costs will be passed
to the states.
Waiting periods cannot be greater than 90 days.
Carriers requesting a rate increase greater than 10% must
file with both the state regulator as well as the federal government.
Some insurers in certain states may be subject to a dual review process
unless a state has an adequate review process. IDOI has requested that
HHS recognize that it has an effective rate review process to avoid
this dual review.
ACA provisions related to insurance increase the coverage
requirements, mandate previously uncovered costs of individuals and
dramatically increase reporting and administrative requirements. All
result in increased costs that will likely be passed to consumers in
the form of premium increases.
ACA mandates that over the course of the next few years, states
must implement a health care exchange or the federal government will
create one for each state. On January 14, 2011, Governor Daniels issued
an Executive Order directing FSSA to work with IDOI and other
applicable state agencies to conditionally establish and operate a
health benefit Exchange, as a not-for-profit entity. The Order provides
that a State-based exchange protects Hoosiers from undue federal
regulation, maintains the existing free market and ensures that
Hoosiers retain coverage choices. The Executive Order stops short of
committing to the Exchange, as there is little guidance at this point
in time from the federal government regarding how the Exchange should
operate. Nor do we have any information on how the federal Exchange
will operate. The Order does allow the State to move forward in its
planning and allows the State to prepare for the Exchange should we
decide that it is in Hoosiers' best interests to commit. Indiana has
received a federal exchange planning grant and a Level 1 establishment
grant. We are using those funds to study the Exchange, which includes
an information technology gap assessment, a study of the uninsured in
Indiana and potential users of the Exchange, Exchange design options,
and actuarial modeling. Our more recent funding will be used to
identify the high and detailed level requirements, the information
technology needs and design of an Exchange, and to identify the
operating costs of an Exchange. In addition, on September 15, 2010,
Indiana released The Affordable Care Act Stakeholder Questionnaire and
collected responses through September 30. 478 responses were received
and 409 responses were used in the analysis. All respondents indicated
they were concerned about the cost of the legislation to their
respective industries and businesses, and 80% indicated they were
concerned about the health care system's ability to cope with the pent-
up demand. Additionally, there was very little stakeholder support for
a federally administered Exchange. Insurers preferred a State
administered Exchange and businesses preferred a not-for-profit
administered Exchange. The State released a questionnaire on Exchange
design issues in March 2011where 2,600 responses were received. The
survey mainly covered technical issues and market regulations, however,
the write-in comments received from all respondents showed
dissatisfaction with the Exchange. Respondents desired the guarantee of
greater transparency and personal responsibility in the health care
market place and they felt the ACA did not provide for these needs. In
terms of design and Exchange goals, over half of the respondents
supported making the Exchange a competitive environment for insurers--
ensuring that the Exchange drives quality improvement and cost
containment--and creating an Exchange that increases the portability
and continuity of health care coverage. Finally, 95 employers responded
to the question of whether they would continue to offer health
insurance, of which 66% said they would maintain coverage, 3% would
drop coverage, and 31% were undecided.
Medical Loss Ratio Limitations and Rebates
Under the law, no later than January 1, 2011, insurers of group
health plans must report to the United States Department of Health and
Human Services (HHS) regarding medical loss ratios (MLR) and must offer
a premium rebate to participants if the loss ratio is below 85%. The
federal government is redesigning MLR, a longstanding equation for
determining whether an insurance company is properly paying out a
sufficient amount in claims in relation to its revenue from premiums.
Generally, a loss ratio is the amount of claims paid divided by premium
collected, although the equation is significantly more complex under
the law and considers several other criteria. What the law is saying
here, essentially, is that certain insurers have to pay out 85% of
their revenue from selling insurance. If the insurers do not end up
paying out that much, then at the end of the year, they have to issue
rebates, which are like refunds, to insured individuals. Furthermore,
there are several situations where insurers operating in various states
enjoy significantly different MLR thresholds, or use a different
calculus in determining MLR. Indiana has historically followed the MLR
model published by the National Association of Insurance Commissioners
that established a baseline MLR of 55% with higher amounts for certain
insurance. With this new law, insurers have to plan to pay more in
claims either to initially meet the threshold or pay a rebate for not
meeting it. Consequently, insurance companies are busy recalculating
profit margins and using this new law to justify increasing premiums.
ACA requires that individual and small group insurers have an annual
medical loss ratio of 80% and 85% for large group insurers. The annual
medical loss ratio involves a more complicated calculation than the
traditional lifetime loss ratios utilized for the purposes of rate
review. The simplest example of the annual medical loss ratio for the
purposes of rebate calculation is the equation below:
Claims + Health Quality Expenses / Premium - Taxes (except for taxes on
investment income/capital gains)
Although it has not been indicated through regulation, it appears
that the intention is to place the burden for reviewing the rebate
calculation on IDOI, similar to the rebate calculation for Medicare
supplemental products that IDOI's actuary currently reviews. This new
responsibility is in addition to the increased rate filing requirements
for small and large group products. Currently, IDOI is reviewing
whether applying the 80%/85% will disrupt the market if applied to all
insurers in 2011. In particular, smaller domestic insurance companies
may be at an increased risk for insolvency and insurers that offer high
deductible/HSA plans may have difficulty meeting this as well, which
could affect the consumer-driven product market. Thus far, nearly 10%
of the insurers operating in Indiana's individual market have
withdrawn, and many others are threatening withdrawal in the near
future. The private market's reaction to even these early requirements
is ominous. 2014 is steadfastly approaching. Consumer choice is
dwindling. Health insurance premiums are rising. In an effort to
promote consumer choice and protect the insurance market, Indiana has
applied for a waiver from the federal MLR requirements. This way
Indiana can continue to apply its own criteria when reviewing rates for
compliance, as IDOI and other regulators have the best knowledge of the
market and will do what is best for Hoosiers. Obtaining the waiver will
allow IDOI to have more autonomous control over its insurance market so
that it can continue pursuing its top priority of protecting Hoosiers'
interests and health care options in the face of ACA's churning sea of
legislative amendments and its resulting economic fallout.
Chairman Roe. Thank you.
STATEMENT OF DAVID CARLSON, M.D., GENERAL SURGEON, EVANSVILLE
Dr. Carlson. Mr. Chairman, Representative Bucshon, thank
you very much for the opportunity to testify before the
Subcommittee on Health, Employment, Labor, and Pensions.
I am President of Evansville Surgical Associates and have
been practicing general surgery in Evansville for over 30
I am not a health care policy expert, and I am definitely
not an expert on this law. I am a health care provider. My
limited time this morning permits me to comment on only a few
aspects of this bill. My comments are derived from personal
experience, from discussions with many of my colleagues over
the last year since passage of the Affordable Care Act, from
attempts at reading and trying to understand portions of this
bill, and unlike Representative Roe, I have not read the entire
bill. And I have also studied commentaries made by experts on
all sides of the political spectrum.
I think very few of us would find fault with the intent of
the new health care law, which is to provide health care
coverage for those Americans presently uninsured and, among
other things, to prohibit insurance companies from canceling
policies without due cause, and to eliminate preexisting
conditions as a basis for exclusion from insurance coverage,
while at the same time reducing health care costs.
This bill is very complex and it is full of many new
regulations, huge new bureaucratic entities, and what I think
are many disincentives to small businesses to begin or continue
providing health care for their employees. Despite the
predictions by the administration that health care costs will
be controlled and reduced, no one who has practiced medicine in
the era of Medicare, which is heading toward insolvency, and
Medicaid, which is straining the budgets of most States, should
and can seriously believe that this massive new Government
program can possibly control the cost of health care without
rationing care or adding significant new taxes to the American
The point has already been made that the expansion of
Medicaid is estimated to cost $3 billion to $4 billion over the
next decade for the State of Indiana. Indiana is one of the few
States in relatively stable financial condition, but it simply
cannot afford this price tag without a significant increase in
taxes or reduction in services, which will obviously affect
every Hoosier worker and employer in a negative way.
Indiana has been a leader in medical tort reform, and
malpractice rates for physicians in this State are considered
reasonable by most. The health care law is completely silent on
medical liability tort reform. Logical and reasonable
nationwide tort reform is certain to help lower medical costs.
Unless protected by real tort reform, Indiana physicians and
physicians throughout the country will have no choice but to
continue protecting themselves from medical liability by
ordering unnecessary tests, thereby fueling skyrocketing health
The employer mandate requires most small businesses to
provide insurance to their employees or pay penalties or both.
My surgical practice, which is a small business, has about 70
full-time employees and we provide them with excellent
comprehensive health care insurance. Under the law, most of our
employees would be eligible for Government subsidies for the
purchase of health insurance because their household income is
less than $88,000 for a family of four, which is 400 percent of
the Federal poverty line. My company, therefore, faces a
penalty equal to the lesser of $3,000 per subsidized employee,
those eligible for the subsidy, which would total about
$200,000 or $2,000 per employee if we don't offer health care
insurance. So basically whichever we choose, this law is going
to cost my company an additional $120,000 a year if we continue
to provide our current health care insurance to our employees.
Many small businesses, when faced with this type situation, are
simply going to drop employee coverage, absorb the penalty, and
let the Government provide Medicaid-style health care for their
Finally, let me say a few words about access to health
care. I cannot speak for all physicians. Evansville Surgical
Associates accepts all patients regardless of insurance or lack
thereof because of the nature of the services we provide, which
is often acute care and emergency surgery. I know from
discussions with my primary care colleagues that a sudden
increase in the number of Medicaid patients seeking medical
attention simply would overwhelm them and the system. There are
not enough physicians to see these patients and most practices
cannot survive on Medicaid reimbursement. As presently
designed, this new law, while providing health coverage, does
not offer a tenable solution to the problem of access to the
health care system.
This concludes my remarks. Again, let me express my
appreciation for the privilege of testifying before the
[The statement of Dr. Carlson follows:]
Prepared Statement of David Carlson, M.D., Evansville Surgical
Thank you for the opportunity to testify before the Sub Committee
on Health, Employment, Labor, and Pensions.
I am President of Evansville Surgical Associates and have been
practicing general surgery in Evansville for over 30 years. My group
includes 17 surgeons and we employ over 70 individuals. We are by
definition a small business.
I am not a healthcare policy expert and I definitely am not an
expert on this law. I am a healthcare provider. My limited time this
morning permits me to comment on only a few aspects of this bill. My
comments are derived from personal experience, from discussions with
many of my colleagues over the last year since passage of the Patient
Protection and Affordable Care Act, from attempts at reading and trying
to understand portions of this bill, and from commentaries made by
experts on all sides of the political spectrum.
Very few of us would find fault with the intent of the new
healthcare law, which is to provide health care coverage for those
Americans presently uninsured and, among other things, to prohibit
insurance companies from canceling policies without due cause, and to
eliminate pre-existing conditions as a basis for exclusion from
insurance coverage, while at the same time reducing healthcare costs.
This bill is very complex and full of new regulations, huge new
bureaucratic entities, and many disincentives to small businesses to
begin or continue providing health care for their employees. Despite
the predictions by the administration that healthcare costs will be
controlled and reduced, no one who has practiced medicine in the era of
Medicare, which is heading toward insolvency in the future, and
Medicaid, which is straining the budgets of most states, can seriously
believe that this massive new government program can possibly control
the cost of healthcare without rationing care or adding significant new
taxes to the American public.
The expansion of Medicaid will cover one in four Hoosiers, and is
estimated to cost the state between $3.1 billion to $3.9 billion over
the next decade, according to an actuarial analysis by Milliman, Inc.
of Indianapolis. Indiana is one of the few states in stable financial
condition, but it simply can't afford this price tag without a
significant increase in state taxes or a reduction in state provided
services, which will affect every Hoosier worker and employer in a
Indiana has been a leader in medical tort reform and malpractice
rates for physicians are considered reasonable by most. The new
healthcare law is completely silent on medical liability tort reform.
Logical and reasonable nationwide tort reform is certain to help lower
medical costs. Unless protected by real tort reform, Indiana physicians
will have no choice but to continue protecting themselves from medical
liability by ordering unnecessary tests, thereby fueling skyrocketing
The Employer Mandate requires most small businesses to provide
insurance to their employees, or pay penalties, or both. My surgical
practice, which in essence is a small business, has about 70 full-time
employees and we provide them with excellent comprehensive healthcare
insurance. Under the new law, most of our employees would be eligible
for government subsidies for the purchase of health insurance because
their household income is less than $88,000 for a family of four, which
is 400% of the federal poverty line. My company therefore faces a
penalty equal to the lesser of $3000 per subsidized employee, which
totals $210,000, or $2000 per employee, which totals $120,000. So this
law would cost Evansville Surgical Associates an additional $120,000
per year to continue providing our current health coverage to our
employees. Many small businesses, when faced with this situation, will
simply drop employee coverage, absorb the financial penalty, and let
the government provide Medicaid style health care for their employees.
Finally, let me say a few words about access to health care. I
cannot speak for all physicians. Evansville Surgical Associates accepts
all patients regardless of insurance or lack thereof because of the
nature of the services we provide, which is often acute care and
emergency surgery. I know from discussions with my primary care
colleagues that a sudden increase in the number of Medicaid patients
seeking medical attention simply would overwhelm them and the system.
There are not enough physicians to see these patients and most
practices could not survive on Medicaid reimbursement. As presently
designed, this new law, while providing health coverage, does not offer
a tenable solution to the problem of access to the health care system.
This concludes my remarks. Again let me express my appreciation for
the privilege of testifying before this Committee.
Chairman Roe. Thank you, Dr. Carlson.
STATEMENT OF ELIZABETH WILSON, FRANKLIN, IN
Ms. Wilson. Chairman Roe, Representative Bucshon, and
members of the subcommittee, thank you so much for the
opportunity to testify today on this important topic. I am
honored to appear before you.
I would also like to thank Ranking Member Andrews and Young
Invincibles for helping to give me the opportunity to share my
My name is Elizabeth Wilson and I live in Franklin,
Indiana, just south of Indianapolis. I am a prime example of
how the Affordable Care Act has benefitted young people and
their families in Indiana. Starting the year I turned 21, my
health deteriorated for reasons that are still not completely
clear. Coping with this sickness forced me to leave school for
what should have been my senior year of college at Butler
University. In the past 3 years, I have had four surgeries, a
lot of tests and procedures, and I have had two
hospitalizations for complications from chronic pancreatitis.
On my 23rd birthday, while I was in the hospital for acute
pancreatitis, I aged out of my mother's insurance. Luckily, my
family had access to COBRA and my mother was allowed to
maintain coverage for me for a brief period at my family's
expense. As you might expect, the high premium put a heavy
financial burden on my family and me. Without the Federal
dependent coverage extension and considering the long string of
health challenges I faced over the past few years, I could have
seen dire financial and health outcomes.
I could not have continued to pay the mounting health care
bills to the hospital, my primary care physician, or the
various specialists that I had seen for the past few years if I
were not able to reenroll on my mother's health plan in January
of 2011 because of the Affordable Care Act. Now that young
adults can stay on their parents' insurance until the age of
26, I have good coverage to help pay for ongoing doctors'
visits and medical issues that I face. I can't tell you how
good it feels to be insured when, for a while, I thought that I
wouldn't be at this point, saving for grad school while
working, and trying to put my best foot forward and deal with
my ongoing condition.
I wish I could tell you that my health problems were
resolved, but unfortunately they are not. I finally did get a
diagnosis of sorts this past year. It is a condition called
undifferentiated connective tissue disease. It is an autoimmune
disorder and that means I will probably be dependent on drugs,
doctors' visits, testing, and therapies for the rest of my life
to manage my symptoms and obtain a quality of life that all
young Americans hope for. Well, a diagnosis of undifferentiated
connective tissue disease doesn't necessarily give a patient a
lot of guidelines to expect from what will happen. My doctors
in my case are concerned that my symptoms signal the start of a
more serious disease like Lupus, and so I do have to have
ongoing testing to confirm that I do not have Lupus or that I
do, which is difficult to do with that disease.
Luckily, I do know that any insurance that I have can't put
a lifetime cap on what they will cover for my condition and
can't kick me off just for being sick, even if my condition
worsens. So this knowledge brings me some peace of mind.
My litany of health problems also means that I will have
the dreaded preexisting condition, but just after I age off my
mom's plan, discrimination based on preexisting conditions will
be prohibited and insurance companies won't be able to
discriminate against me anymore for something beyond my
control. It is difficult enough to start out as a recent
graduate and try to make it these days. To do that with the
extra burden of severe health problems, plus the full financial
burden of treating them, is just too much.
I am certainly not alone in my struggles with health care
or coverage. In fact, both my younger brother and my best
friend went without coverage for more than a year. My best
friend had some routine health screens that came back abnormal
during that time and was unable to seek out specialist care to
deal with them. And my family friend is now in a nursing home
because she could not afford the newer drugs for multiple
sclerosis which potentially could have slowed the progress of
her condition. She is less than 45. She had to leave her two
young children in the care of an 18-year-old relative.
Over the next few years, reform will help to address much
of the circumstances for these problems, along with expanded
affordable insurance options and access to preventive care.
Those are the consequences of the recent health care law for
Indiana workers and families.
I am now 24 years old, and I have finally graduated from
college. After spending another year out of school to deal with
my medical problems, I will be starting at grad school within
the next academic year. Fingers crossed. I have to get accepted
first. My health care problems have caused me to start 2 years
later than I had originally planned, but thanks to the health
care I have received and will continue to receive because of
the Affordable Care Act, I will at least have the opportunity
to start at all.
I have learned that we are all vulnerable to unexpected
illness and injury regardless of our age. And my story could
have ended more tragically for both me and for my family. That
more tragic tale was prevented by the recent health care law.
[The statement of Ms. Wilson follows:]
Prepared Statement of Elizabeth Wilson, Franklin, IN
Chairman Roe, Ranking Member Andrews, and members of the
subcommittee. Thank you for the opportunity to testify today on this
important topic. I am honored to appear before you today. I would also
like to thank Young Invincibles for helping to give me the opportunity
to share my story.
My name is Elizabeth Wilson, and I live in Franklin, Indiana. I am
a prime example of how the Affordable Care Act has benefited young
people and their families in Indiana. Since the year I turned 21, my
health deteriorated for no known reason. Coping with this sickness
forced me to leave school for what should have been my senior year of
college at Butler University.
On my 23rd birthday, while I was in the hospital for acute
pancreatitis, I aged out of my mother's insurance. Luckily, my family
had access to COBRA, and my mother was allowed to maintain coverage for
me for a brief period, at my family's expense. As you might expect, the
high premium put a heavy financial burden on my family and me. Without
the federal dependent coverage extension, and considering the long
string of health challenges that I've faced over the past few years, I
could have seen dire financial and health outcomes.
I could not have continued to pay the mounting healthcare bills to
the hospital, my primary care physician, or the various specialists
that I had been seeing for the past few years if I were not able to
reenroll in my mother's health plan in January 2011 because of the
Affordable Care Act. Now that young adults can stay on their parent's
insurance until the age of 26, I have good coverage to help pay for the
ongoing doctors' visits and medical issues that I face. I can't tell
you how good it feels to be insured, saving for grad school, and trying
to put my best foot forward and deal with my condition.
I wish that I could tell you that my health problems were solved,
but unfortunately, they're not. I finally got a diagnosis this past
year, with a condition called Undifferentiated Connective Tissue
Disease. It is an autoimmune disorder, and that means I will be
dependent upon on drugs, doctors' visits, testing, and therapies for
the rest of my life to manage my symptoms and obtain a quality of life
that all young Americans hope for. What is more worrisome is my
doctors' concern that my condition is caused by the early stages of a
more serious disease like Lupus or rheumatoid arthritis. Luckily, I
know that any insurance that I have can't put a lifetime cap on what
they will cover for my condition. They also can't kick me off just for
being sick, even if my condition worsens. This knowledge brings me some
peace of mind.
My litany of health problems also means that I'll have the dreaded
``pre-existing condition.'' But just after I age off my mom's plan,
discrimination based on pre-existing conditions will be prohibited, and
insurance companies won't be able to discriminate against me anymore
for something that I can't control. It's difficult enough to start out
as a recent graduate and try to make it these days. To do that with the
extra burden of severe health problems, plus the full financial burden
of treating them, is just too much.
I'm certainly not alone in my struggles with health care or
coverage. In fact, both my younger brother and my best friend went
without coverage for more than a year, and a family friend is now in a
nursing home because she had no access drugs that could have slowed the
progress of her multiple sclerosis, forcing her leaving her two
children with an 18-year old relative. Over the next few years, reform
will help address all of that, with expanded affordable insurance
options, and access to preventive care: those are the consequences of
the recent health care law for Indiana workers and families.
I am now 24 years old. I have finally graduated from college. After
spending another year out of school to deal with my medical problems, I
will be starting at graduate school within the next academic year.
Because of my health problems, I will be starting two years later than
I'd originally planned. But thanks to the health care I have received
and will continue to receive because of the Affordable Care Act, I will
at least have the opportunity to start at all.
We are all vulnerable to unexpected illness or injury, regardless
of our age. My story is far too common a reality that could have ended
in a more tragic tale. That tale was prevented by the recent health
Chairman Roe. Thank you, Ms. Wilson.
STATEMENT OF SHERRY LANG, H.R. DIRECTOR,
Ms. Lang. My name is Sherry Lang, and I am the Director of
Human Resources for Womack Restaurants. We are a 12-unit IHOP
franchisee based in Indiana with restaurants in Ohio. I am here
today to represent my company and the restaurant industry and
I have a master's degree in human resource development and
over 17 years' experience in corporate HR. I spent the last 12
years at the executive level, and so I have been involved in
all areas of business management.
I started with Womack Restaurants in 2005 and helped grow
this company from 3 IHOP restaurants to the current 12. We
currently have an expansion plan in place to build an
additional 13 IHOP's.
I guess I am here today to share my experience and my
understanding of how this health care law will affect our
company and similar companies in Indiana.
The restaurant business is unique. It is really built on a
small business model and profit margins are commonly only 5 to
7 percent. We are the most labor-intensive of any industry. We
rank dead last in revenue per employee at $58,000. If you
compare this to the next closest industries, hotels are about
$107,000 in revenue per employee, retail at $170,000, banks at
$443,000, and oil refineries whose revenue is about $4 million
per employee. Again, restaurants are $58,000.
The cost to employers of this health care law is
completely, 100 percent dependent on how many employees you
have, regardless of your revenue and regardless of your ability
to pay. We conservatively estimate with our company the cost of
buying health care insurance will be over 50 percent more than
our company's earnings. And our company is very profitable.
It is a one-size-fits-all law for employers and this
industry doesn't fit. Though some restaurant companies
currently offer coverage now, most of those are mini-med plans.
They are very limited coverage plans and they are designed
specifically for employers like retail and restaurants. Even
those plans will not qualify to meet the definitions of
mandates in 2014.
The only viable alternative for our industry is to pay the
$2,000 per employee penalty, and that is not tax deductible.
That means, first, we have to earn that $2,000, and then we
have to pay taxes on it. And so the true cost of that is about
$2,800 per employee.
A quick study of public restaurant companies shows that
many didn't earn enough in 2010 to pay the penalties, and they
simply will not survive. These penalties equal 60 percent of
our earnings, and gain, by restaurant industry standards, we
are a very profitable company.
Restaurants are also facing many, many challenges. We have
rising commodity prices, State and local taxes, unemployment
taxes, energy prices, and so on. And yet, restaurants--we
cannot raise prices in this economy. Our only alternative is to
cut costs. Cutting costs means cutting staff, reducing hours,
making a lot more people part-time. It is going to be trimming
services that are provided by other small business that are
directly supported by the restaurant industry such as food
suppliers and equipment suppliers.
In addition, we have considered stopping our new restaurant
development and may even forfeit the agreement we are already
invested in. And that agreement was about $360,000. This future
development would equal about $22 million in construction and
development spending, and at least 260 full-time jobs. I would
also like to point out that the restaurant equipment industry
is one of the uniquely American manufacturing industries, and
it has already been devastated in this economy.
The restaurant industry has such an important role in this
economy. We employ 12.7 million people. Restaurants are often a
first opportunity for young or unskilled workers and a place
where they can actually turn that part-time job into a career.
50 percent of the managers in our company were promoted from
within and started out with us as hourly staff. My first job
was in a restaurant. The owner of my company started in a
restaurant. It is also a unique industry in that it offers a
lot of second chances for people starting over. It is an
opportunity for those reentering society after incarceration.
It is a second job for those digging out of a financial hole.
We need this industry, but it cannot support this health care
mandate and continue to thrive.
Furthermore, our lenders, as required by regulators,
require us to maintain certain levels of profitability via our
loan covenants. Our mortgages, our leases, our franchise
agreements--these things are often 15 to 20 years long. We have
major obligations that we cannot walk away from in 2014. Profit
equals development. If there is little or no profit, there will
be no development.
On a related note, I am really seriously concerned that we
are not going to be able to continue offering the health care
plan that we offer now to our management and our office staff,
based on the changes in who we must provide coverage for, as
well as the compensation rules.
In summary, the goal of providing health insurance to
everyone is noble and good. In theory, we support it, but this
industry cannot afford to pay this bill. It comes down to basic
math. At $58,000 in revenue per employee, $3,000 of that is
profit. The cost of health care per employee is about $10,000.
That leaves a $7,000 debt. Our only option is to pay the
penalties. But even that, simply paying the penalties is going
to be devastating for most of us in this industry.
[The statement of Ms. Lang follows:]
Prepared Statement of Sherry Lang, Womack Restaurants
My name is Sherry Lang. I am the Director of Human Resources for
Womack Restaurants, a 12 unit IHOP Franchisee in Indiana and Ohio. I am
here today to represent my company, the restaurant industry and small
businesses. I have a Master's degree in Human Resource Development and
over 17 years' experience. I have spent the last the last 12 years at
the executive management level where I have been involved in all areas
of business and business decisions. I started with Womack Restaurants
in 2005 and have helped grow this company from 3 restaurants to the
current 12 restaurants. We have an expansion plan to build 13 more
IHOPS. I am here to share my experience and understanding of how the
new healthcare law will affect our company and impact our future
The restaurant business is built on a small business model, with
profit margins commonly of only 5 to 7%. We are the most labor
intensive of any industry, ranking dead last in revenue per employee at
$58,000 per employee.\1\ Compare this to the next closest industries,
Hotels, at $107,000 per employee, Retail at $170,000, Banks at
$443,000, and Oil Refineries at over $4 million per employee. The cost
to employers of new healthcare law is completely dependent on the
number of employees, regardless of ability to pay. We conservatively
estimate the cost of purchasing health insurance to be over 50% greater
than our company's earnings. And our company is very profitable by
\1\ CNN/Money's Fortune 500 Report, 2009
The law is one-size-fits-all for employers, and our industry
doesn't fit. Though some restaurant companies offer coverage now, many
are ``mini-med'' plans which are limited coverage plans for employers
like retail and restaurants. Many will not meet the mandates by 2014.
The only viable alternative for our industry is to pay the $2000 per
employee penalty, which is not tax deductible. We have to earn that
$2000 dollars first and then pay taxes on it, bringing the actual cost
of the penalty to about $2800 for each employee. A quick study of
public restaurant companies shows that many did not earn enough in 2010
to pay the penalties and will not survive. For my company, these
penalties amount to 60% of our earnings, and again, our company is very
profitable by industry standards.
Restaurants are already facing many challenges, rising commodity
prices, rising state and local taxes and unemployment taxes, rising
energy prices and so on. Restaurants are unable to raise prices in this
economy. Our only alternative is to cut costs. Cutting costs means
cutting staff and reducing hours worked, putting more employees into
part time status, and trimming services provided by other small
businesses that are supported directly by this industry such as food
suppliers and equipment suppliers.
Additionally, we will be forced to cease new restaurant development
and may forfeit the development agreement we invested in. That
agreement cost $360,000. This future development would amount to
$22,000,000 in construction and development spending, and at least 260
full time restaurant jobs. I would like to also point out that the
restaurant equipment industry is a uniquely American manufacturing
industry. That industry has already been devastated by the economy.
The restaurant industry serves an important role in our economy,
employing 12.7 million people.\2\ It is a source of 1st opportunities
for young or unskilled workers who can turn a part-time job into a
career. 50% of our Managers were promoted from hourly staff. My first
job was in a restaurant. The owner of my Company started in restaurants
as well. It's an industry of 2nd chances for people starting over: re-
entering society after incarceration, or a 2nd job for those digging
out of a financial hole. We need this industry but it cannot support
this healthcare mandate and continue to thrive.
\2\ National Restaurant Association
Furthermore, our lenders, as required by regulators, require us to
maintain certainly levels of profitability via loan covenants. Our
mortgages, leases, and franchise agreements are commonly 15 to 20 years
long. We have major obligations that we cannot walk away from in 2014.
Profits equal development and if there is little to no profit, there
will be no development and growth.
On a related note, I have serious concerns that we will not be able
to continue to offer the coverage we currently offer to my management
and office staff, based on changes in who we must provide coverage for
as well as the compensation rules.
In summary, the goal of providing health insurance to everyone is
noble and good, in theory we support it, but the restaurant industry
can't afford to pay the bill. In comes down to basic mathematics. At
58k in revenue per employee, we average $3000 in profit. The estimated
cost of healthcare will be $10,000 leaving a $7000 per employee gap.
Our only option is to pay the penalties. Simply paying the penalties
will be devastating for most of us in this industry.
Chairman Roe. I thank all of the panelists.
I am going to start with making a statement, and then I
will ask some questions.
First, Ms. Wilson to you, you cannot write a 2,700-page
bill and not have some good things in there. I personally liked
the 26-year-old--it is going to cost money and you understand
that all the testing you have required costs a lot of money and
somebody has to pay for that. So that is going to run the costs
up. But that part of the bill I actually like. I like it.
I had three kids. When they got out of college, none of
them had health insurance coverage. I had to buy them an
individual policy on the individual market, which is not tax
And one of the things we could do very simply--the year I
ran for Congress to make my health insurance cheaper was to
treat me like a large corporation. I got no tax break. I had to
go out on the individual market and buy that insurance which
made it much more. If I had worked for a big company, it would
have been tax deductible and made it much cheaper for me. So
that part I like.
A couple or three things that were mentioned by the panel
that we need to discuss work on--there was no question about
preexisting conditions. I dealt with it in my patients who had
breast cancer, which I saw most frequently, and other problems.
Rescission by the insurance companies. That is a situation that
needs to be dealt with. So there is no question there are some
good things in here.
The problem with this is is anytime you have a massive,
almost incomprehensible bill--and I have this. If any of you
all would like to have it--I have a four-page summary--we will
be glad to email it to any of you. It is a little simpler
language. You can see when these things come into play. And I
will be glad to make those available. We get your email. We
will make sure the staff emails this to you.
When we start looking at costs, let me give you a little
history lesson. We will start with Medicare. The Congressional
Budget Office first said this bill was budget neutral. Well,
how they got to budget neutrality was taking $500 billion out
of an underfunded Medicare program. Right now it is
underfunded, and right now under current estimates in 11 years,
it is broke. I mean, in 13 years it is broke, 2024. So we took
$500 billion out of that. We took money out of a class act. We
use student loans to pay for this. We use taxes on business to
pay for this bill.
If you go back and look at Medicare when it came into play
in 1965 and started in 1966, it was a $3 billion program. The
Government estimators--there was no Congressional Budget
Office--estimated this would be a $15 billion program in 25
years. The actual number was over $100 billion. They missed it
by seven times.
Our experience in the State of Tennessee. We started with a
program called TennCare to help control health care costs,
exactly the things we were talking about in 1993: access and
affordability. That is what we are talking about. That is what
you were talking about, Ms. Wilson, is access you would lose if
you didn't have your health insurance coverage. We reformed
Medicaid in our State. It was a $2.6 billion program. In 2004,
10 budget years later, it was an $8.5 billion program. It took
up every new dollar that the State of Tennessee took in.
And what we were finding was less and less and less
physicians were accepting it. And why is that? Dr. Carlson
In our State--I don't know about Indiana, but in our State
TennCare or Medicaid there pays about 60 percent of the cost of
actually providing the care. Medicare pays about 90 percent of
the costs. So how are those costs made up? Well, they are
shifted to the private insurers. I mean, the hospitals have to
pay their personnel and buy the new equipment that we use. So
that cost-shifting also forced the costs up, not only this bill
did with its requirements.
And also remember that you as a person no longer get to
pick which insurance. The Government will decide what an
essential benefits package is, not you as an individual. And
when that happens, then the costs will go up when someone else
other than you decides.
Health care decisions in my opinion should be made between
physicians and their patients, not insurance companies and
certainly not the Federal Government.
And there are a lot of onerous things we may not have time
to go into about the current bill.
I want to know from the standpoint--and something that you
all ought to read is some testimony we had in front of the
Lockton Group about a month or so ago. I mean, we are business,
and the restaurant/entertainment business--this particular bill
is devastating for your business. Could you go into that, Ms.
Lang, in a little more detail?
Ms. Lang. Well, you know, one of the common things in the
restaurant industry--and this plays into a little bit--is that
turnover averages about 125 percent in casual dining. We are
very good. We are about 84 percent. But if you think about
that, 84 out of every 100 employees turns over within a 1-year
time. That is just one other piece beside the fact that at a
very profitable level a company in this industry averages about
$3,000 in profit. So we either have a $7,000 gap if we are
going to provide coverage. Well, that is impossible. Now we are
out of business. Or we give up two-thirds of our profit. The
penalty is $2,000. We are averaging $3,000 in profit. Nobody is
going to stay in this industry and continue to develop
restaurants. Why would you? They are literally going to take
two-thirds of our profit.
The administrative burden of the constant turnover and how
would we do that. I mean, it would simply be impossible. We
would not offer coverage. It is not an option.
And many restaurants, especially large restaurant groups
that have numerous restaurants, have separate groups of
employees. And so for our professional staff, our managers and
our administrative staff, we offer coverage, full-blown health
package, 401(k), you know, the whole deal. We will probably
have to eliminate that coverage. So I think the default, the
accidental impact of this is that they are going to take away
coverage for people that already have it.
Chairman Roe. Let me just finish and I will yield to Mr.
In this HR report, one of the things that also is brought
out is that in the exchange, this Federal exchange that is yet
to be determined--by the way, we are spending $14 billion--that
is with a B--to set up these exchanges around the country, not
to provide care for patients or if I write a prescription to
care for that patient to get a prescription, but set up some
more bureaucracy. Let's say you drop your coverage. And we
provided health insurance coverage for our employees since 1968
in our practice. If they go into the exchange, the subsidy the
Government gives them won't be as much as the subsidy I am
paying right now for them.
And secondly, that subsidy--what they have to pay extra is
not tax deductible to them. So their coverage is actually going
to go up if they are forced into the exchange, and you are
going to be forced to drop coverage because you can't afford
it. And therefore, it forces the cost even higher. I think that
is the unintended consequences that nobody figured out before
they passed this bill.
Ms. Lang. Absolutely. I think the unintended consequences
is that and that you are going to have all these people in the
exchange. They will probably have lesser coverage. A lot of it
is going to be politically defined rather than defined by
people who know and understand health care.
Chairman Roe. Dr. Bucshon?
Mr. Bucshon. Ms. Crosson, I want to ask you the first
question. In regards to the exchanges, what are some of the
issues and concerns about establishing the exchanges and how
the State of Indiana is going to be able to manage the
exchange? And do you have any idea from what you are seeing now
how many more people may be on the exchanges higher than the
estimate that the Federal Government has said will go onto the
exchange? In my view, that is going to be a serious problem for
Ms. Crosson. Thank you. That is a very good question.
The first answer--I end up saying this a lot whenever I
talk about health care reform--is I don't know, which is very
frustrating. The biggest concern I have is you don't know. We
don't know essential benefits. We don't know what it is going
to look like, and when we ask, when we are trying to compare
whether and decide whether to run a State exchange or whether
the Federal Government would, one thing you would want to know
is what I am comparing. What is the Federal Government version
going to look like versus the State? The Federal Government
tells us we don't know. We will be flexible. Then I get a phone
call and they said--it is going to be unique to each State is
what you need. And then I get a phone call from someone in the
Budget Office for HHS referring to the Federal exchange meaning
across multi-State, meaning one-size-fits-all. So I don't know
I do know that they are estimating about 500,000 new
Medicaid participants. The challenges and concerns are why as a
small business would you go to into and offer insurance at all,
especially if you have a narrow profit margin. Who is going to
pay for it? How is it going to be sustainable? We are spending
billions of dollars to set these up, but they have to be
sustainable if you set it up on the State being at least a year
of setting up. So somebody will have to pay for the
administration, the reviews, the reporting requirements, the
technology, and we don't know what any of that is going to look
And finally, we don't know who is going to be around to
participate on what insurance carriers. What about our small
dental carriers? That is going to be--we heard for the
essential benefits. So are vision carriers going to be able to
participate on the exchange? Are they just going to go out of
business because of major health insurance is going to take
over that as part of their coverage? Are they going to partner
Those are just a few. The big one is we just don't know. We
don't have the regs. We don't have the information.
Mr. Bucshon. So overall, with all the new mandates on the
insurance industry, in aggregate do you think these mandates
are going to raise the cost of insurance in the State of
Ms. Crosson. Absolutely. Our insurers have been telling us
in the individual market a minimum of 50 percent by 2014. We
are hearing estimates ranging from 50 to 90 percent, and that
is in the individual market. This is where your family or you--
you purchase for your child. And then in the small group, at
least 10 to 30. And again, we still don't have all the regs
out. We have only got 6,600 pages.
Mr. Bucshon. Chairman Roe?
Chairman Roe. One of the things--we are going to have a
second round if it is okay--of questions and just briefly. And
let talk a little bit or ask again a little, Ms. Crosson, about
the individual mandate, how you see that affecting costs in the
State. Then I will give you a personal example of how I think
it would affect me.
Ms. Crosson. The individual mandate--I had the privilege to
speak with the Governor about it and talk with his task force
about it and really the average citizen. And the best way I can
explain it is this. Even if it is upheld, which Indiana is part
of the 26-State litigation and the Governor's office in the
State of Indiana and the Department of Insurance is--but even
if it is upheld, it is ineffective. It is a great thing to get
more people into the pool. It spreads the risk and that is a
fundamental, basic concept of insurance.
But here is the problem. It is fear money. You have a
choice between paying--especially for 19- to 25-year-olds,
their premiums are going to go for maybe $100-$120 a month to
probably $400 to $500 because they had only paid a third of the
price of the highest charge. So now you are faced with $400-
something a month when you were paying $128, or you wait until
you get sick, you purchase coverage when you need it, and then
you pay a $95 penalty that is prorated by the number of months
you are covered. You are 19 to 25. What are your priorities and
you are healthy? It is nothing. And you have a choice. $400-
something is rent or a tuition payment or, or. And that is what
you are looking at.
And even though the costs go up year after year, and when
you are prorating and you just go in when you need it, as far
as premium costs, what is going to happen is you don't have
those young folks you want in to spread the risk who are
healthy and don't need to utilize the services as often. If you
are healthy, people are going to choose to stay out anyway
until they really need it, and that is going to drive costs to
Chairman Roe. Here is another issue that many people are
not aware of is that since 1986, there is a law that is called
MTALA. For instance, if I am on call at the emergency room, it
is illegal for me not to see someone regardless of whether they
are legally in this country or whether they can pay or not. If
I am a doctor in the emergency room and somebody needs care, I
am going to see you. So that is the law of the land now.
And what has happened in Massachusetts where they have an
individual mandate and where they have no preexisting
conditions and no deniability--and you are exactly right. What
has happened there is--we thought that the emergency room
visits would go down because everybody had a primary care
doctor. That is not what happened. What happened was the
Massachusetts care actually pays about what Medicaid or less
does, so less doctors are seen. The emergency room visits have
not gone down. I just read an article in either JAMA or the New
England Journal of Medicine the other day about that.
And secondly, people wait until they get sick, and then
they can't be denied. So they buy the insurance coverage.
Harvard Pilgrim Health Care Plan had that experience, and their
experience was about six times per month cost for those people
because they waited until they got sick, couldn't be denied,
bought the insurance, when they got well, dropped it and paid
the penalty because it is a lot less.
Now, I mean, I wouldn't do that. I would go ahead and buy
the insurance because I think you ought to be covered. But that
is happening right now in Massachusetts. Indeed, they hold
But again, back to the first premise that we have had. Have
costs been held down? And the answer is no. They have the
highest insurance costs in America.
Dr. Carlson, one of the things that I am concerned about--
and I wanted to hear your take on it--is the biggest concern I
have when I would have a Medicare patient or a TennCare
patient, was finding a primary care doctor for them. And I
would operate on them, and then I would go try to find someone.
I am extremely worried about this in access because if you
can't get access to the physicians, the quality of your care
Have you noticed that here where Medicare patients are
having a harder time finding a primary care doctor?
Dr. Carlson. We have noticed that. A number of primary care
physicians are not accepting any new patients and some who are
accepting patients will definitely limit the number of Medicare
patients they see. So our office is tasked many times with
trying to assist the patient in finding a primary care
physician, and it is tough. We have a list of physicians, and
there are not many that we rely on to take these patients.
So access is a problem, and the reason is--several reasons.
One is just the number of patients the individual doctor can
see, and number two is the rate of reimbursement. You have to
run your practice. You have to make a profit to pay your
employees, and you can't do that if you see a great deal of
Medicare or Medicaid patients. It is very difficult to do that.
Chairman Roe. Dr. Bucshon?
Mr. Bucshon. Yes. Dr. Carlson, I also wanted to comment on
how defensive medicine--how you see it affecting the overall
cost of the health care system. There is some debate on that in
Washington, D.C., and some say that that is not actually a
significant percentage of the health care cost. But can you
comment on your experience?
Dr. Carlson. I don't know exactly what the figures are, but
it definitely contributes to health care costs. I will just
give you an example. We cover the trauma programs in
Evansville. We see lots of patients come to the emergency room
with trauma, some major trauma, some minor trauma, but once a
patient is designated a trauma patient, regardless of how minor
the injury seems to be on a quick examination, virtually all
those patients get CT scans of the head, the neck, the chest,
the abdomen, and the pelvis, thousands of dollars worth of
tests. They are not medically necessary many times, but you
certainly don't want to be caught missing something. And so
everybody gets this. That is just one example of the cost that
is unnecessary but physicians order it. They don't want to get
Chairman Roe. Will the gentleman yield?
Mr. Bucshon. I will yield.
Chairman Roe. I use the example of when I was in residency,
we didn't make much money. I mean, I made $280 a month,
probably about what you made. Both of us may have been
overpaid, but anyway that is about how much money I made. And I
remember I moonlighted in some of the emergency rooms. If you
would go to the emergency room and a patient would come in and
they had some right lower quadrant pain, you would press--press
on them, you would get a blood count, which is $15-$20,
whatever it was then. And you would say I don't think have--
your temperature is 99, white count is 10,000, probably not
anything. You are probably okay. Once you go home, if it gets
worse, why don't you come back and we will take a peak at you.
And if you vomit, you know, just come on back if the symptoms
get worse. That is how we did it 30 years ago.
Today--you are absolutely right--you are going to glow in
the dark when you leave the emergency room. [Laughter.]
And the reason you are is because that has now become the
standard of care, unfortunately. It is not the standard of
And so those are the kinds of things I think that suddenly
add to the cost that is out there that you can't calculate what
it is, but I know it and you know it. You can examine a
patient's abdomen. I can guarantee you a skilled surgeon as you
are and not needing a lot of the testing that is done, but you
may get that test to protect yourself in case the 1 in 1,000, 1
in 100, whatever it may be, because if you do, you just get
your pen out and start writing zeroes and commas and the check.
So it does add to the cost and doesn't add to the quality.
And I think that is one of the things we have to address and we
are not addressing it Washington. And quite frankly, I don't
know what we wouldn't mess it up in Washington. It may best be
left to the State level where you can do that.
I think I finished my questioning of this panel. I really
appreciate your being here and taking your time to come and
prepare your testimony. It has been very helpful, and I think
we need to do more of this around the country and less of it in
Washington. Thanks very much for being here.
We now would like to have our second panel come in.
Thank you all. [Applause.]
Thank you all for your attention, and I would like to take
this opportunity to welcome our second panel. Dr. Bucshon, I
will now yield to you for introduction of our second
Mr. Bucshon. Thank you, Chairman Roe.
Again, it is a pleasure to introduce this panel, and thank
you all for coming and being willing to testify.
First is Representative Mark Messmer who serves the people
of the 63rd district in the Indiana House of Representatives.
Mr. Messmer is also a mechanical engineer and co-owns Messmer
Mechanical, a plumbing and heating contracting business founded
by his mother and father. Messmer Mechanical is based in
Jasper, Indiana, and has 47 employees.
The Reverend George Philip Hoy formerly represented the
77th district in the Indiana House of Representatives. He is a
resident of Evansville and a retired ordained minister of the
United Church of Christ. He is now serving as the interim
pastor of Zion United Church of Christ in Henderson, Kentucky.
He serves as the religious co-chair of Tri-State Jobs with
Justice and chaplain of the Central Labor Council and is
testifying today on their behalf.
Denis Johnson serves as the Vice President of Operations
for Boston Scientific's Spencer, Indiana plant. Boston
Scientific has about 15,000 employees in the United States and
about 1,000 of those employees are located in Spencer, Indiana,
which is in the 8th congressional district, where they produce
2.2 million less invasive medical devices every year.
Mr. Glen Graber is the President of Graber Post Buildings
in Odon, Indiana which manufactures and distributes materials
for post frame structure and metal roofing projects. Graber
Post employs approximately 210 workers.
Thank you all for being here.
Chairman Roe. Thank you all, and let me explain the lights
again for you all that weren't here. It is 5 minutes per
testimony, and the red light will go on at the end of the 5
minutes. The amber light in the middle means you have 1 more
minute to complete your testimony. If you are in the middle of
a thought, please go ahead and finish it. We are not going to
cut the sound off.
So with that, Mr. Messmer, you may begin.
STATEMENT OF HON. MARK MESSMER, INDIANA HOUSE OF
REPRESENTATIVES; MESSMER MECHANICAL
Mr. Messmer. Hello, my name is Mark Messmer, and I am the
Vice President and co-owner of Messmer Mechanical. We are a
family-owned contracting business with 47 employees. There are
32 of those that are members of the Local 136 plumbers and
pipefitters. 12 are full-time non-union employees, and 3 part-
We pay 100 percent of the health insurance costs for our
employees. The union members' insurance costs our company $5.95
per hour. If the nonunion employees need family coverage, they
pay the difference between the cost of the employee coverage
and the family plan.
Our health insurance premiums have paced well beyond the
rate of inflation for a long time. In 2009, our rates went up
28 percent; in 2010, another 26 percent; and in 2011, after
implementation of the Patient Protection and Affordable Care
Act, otherwise known as Obamacare, they went up a whopping 44
percent. So much for affordable.
Rising medical insurance costs have made it impossible for
us to provide any raises during the 2009-2010 recession, and it
made it extremely difficult to reinvest in our business.
We have exhausted all the easy fixes to our rising medical
insurance costs. We raised the deductible in 2009 from $500 to
$1,000 per person, and in 2011, we had to raise the maximum out
of pocket from $3,000 to $4,000 per individual and $8,000 per
family. The employees that are buying family plans in 2011 were
allowed to raise their deductible to $3,500 per person or
$10,500 per family just to hold their costs to the 14 percent
increase. These changes are only shifting the cost of medical
procedures to the patient, not cost containment.
We bid out our insurance every year to various insurance
carriers around the area, and a 44 percent rate increase was
the lowest we could get. Our rate increases are not due to
history of our group. I confirmed from our agent that the major
factor driving our rates through the roof is the impact of
Obamacare on the medical insurance industry, and our small
group pool--he said about half of the underwriters have dropped
out of providing coverage in Indiana. Less competition means
The temporary small business tax credit is very
counterproductive to the very idea of growing your business.
Businesses that grow will be penalized for that success. How
stupid is that? When the institutional attitude of Congress is
one that looks to punish businesses for being successful, our
American economy and our individual liberty are in great
I see nothing in Obamacare that will help in lowering the
cost of providing insurance for my employees. We were told that
cost containment was the goal of the new law. The problem with
our current system is I pay in premiums to an insurance carrier
who pays for procedures to doctors and hospitals to services
provided to a third party person. It is a vicious cycle with
the end consumer of the service having no connection to the
cost. They have no skin in the game. The system is forcing me
to the point of dumping my coverage and just saying the heck
with it. Let the Government take it over, but we are all in
trouble when that happens.
Looking ahead, I see nothing but more trouble ahead for
businesses of all sizes. The taxing on private insurers, which
is going to happen in 2014, will only be passed on through to
the small businesses who purchase those plans like myself. The
$100 billion they are projected to generate will punish the
small businesses that Congress was supposedly protecting with
the small business tax credit. What a joke. Congress tells you
they are going to help you with one hand and nail you with the
Plus, the requirement for those over 50 employees to insure
part-time workers, jobs creation is going to be almost
impossible. We are at 47 employees now. Do you think we are
going to let our company grow to 50 without repercussions? When
insurance is required for part-time employees, I will have to
fire my part-time workers. I cannot afford to keep them. It
will be almost impossible for an entrepreneur to get a new
The individual and company penalties for not providing or
buying insurance are obviously set artificially low now to
encourage me as a business owner to drop my coverage. When I
compare a $2,000 fine versus the $10,000 to $15,000 that these
plans are headed toward, it will be much easier just to pay the
fine. It is blatantly obvious to me that as soon as the
Government sees the millions of new uninsured people that these
low fines are encouraging, those fines will escalate
dramatically. They will come down like a hammer on small and
large employers alike and be another crushing blow to jobs
creation in this country.
Where in any of this debate has there been an attempt to
promote programs like HSA's that put the consumer directly into
the decision-making process of their health care dollars? Why
was there no attempt to implement malpractice reform like the
State of Indiana has adopted? Why not change the rules that
would allow me to buy insurance across State lines to bring
more competition and more carriers into our markets?
If cost containment was the goal, then why was everything
that has been implemented under Obamacare destined to raise the
overall health care cost and, in turn, my insurance costs?
If Obamacare is so great, why has the Health and Human
Services Secretary written 1,372 waivers so far? Putting it
bluntly, that is a bunch of crap. If it is good enough for me
and my business, it is good enough for you and it is good
enough for every other employer in this country.
[The statement of Mr. Messmer follows:]
Prepared Statement of Hon. Mark Messmer, Member, Indiana House of
Representatives; Vice President, Messmer Mechanical, Inc.
Hello, my name is Mark Messmer. I would like to thank Congressman
Bucshon for inviting me to be here today. I am Vice President and co-
owner of Messmer Mechanical, Inc in Jasper, IN. We are a family owned
plumbing and heating contracting business that was founded by my father
and mother, Gerald and Linda Messmer, in 1970. We are long time members
of the National Federation of Independent Businesses. We have 47
employees. There are 32 that are union members of Local 136 plumbers
and pipefitters, 12 full time nonunion and 3 part time employees. Of
our union employees 9 are building trade journeyman, 18 are residential
journeyman and 5 are apprentices.
We pay 100% of the health insurance costs for our employees. The
union members' insurance costs our company $5.95 per hour. The building
trade members have that insurance fee paid to the local 136 medical
insurance fund. The residential journeyman and apprentices receive that
amount in cash, which they can use to go out and buy a private
insurance plan on their own, or buy the same insurance that we provide
to the nonunion employees. If our nonunion employees need family
coverage, they pay the difference between the cost of the employee
coverage and the cost of the family plan.
Our health insurance premiums have historically increased well
beyond the rate of inflation, which is typical for most small employers
trying to provide insurance for their employees. In 2009 alone our
rates went up 28%, in 2010 another 26%, and in 2011, after the
implementation of the Patient Protection and Affordable Care Act, they
went up a whopping 44%. The new law ignores the rising cost of health
insurance. In fact, the mandates, coverage requirements and taxes
exacerbate the affordability problem. The out of control cost of our
employee medical insurance is quickly becoming a prohibitive expense
for our small business and other small businesses throughout the
The recession we are still dealing with has compounded the problem.
During 2009 and 2010 when our company struggled to break even due to
the recession's impact on the construction industry, it became very
difficult to justify continuing to cover medical insurance benefits for
our employees. Rising medical insurance costs made it impossible to
provide any raises during that time frame, and made it extremely
difficult to reinvest in our business.
We have exhausted all the ``easy'' fixes to our rising medical
insurance. We raised the deductible from $500 to $1,000 in 2009 to hold
the increase at 28%. In 2011 we had to raise the maximum out of pocket
from $3,000 to $4,000 per individual and $8,000 per family to hold the
increase to 44%. The employees that were buying family plans were
allowed to raise their deductible to $3,500 per person and $10,500 per
family to limit the increase in those plans to 14%. These changes are
only shifting the cost of the medical procedures to our employees, not
cost containment. Further cost shifting is inevitable if the law is
enacted as written, increasing costs for individuals, employers and the
We bid out our insurance every year and did again this year and the
44% increase was the lowest rate we could get. We have been with SIHO
for 4 years and were with Anthem for 3-4 years before that. I confirmed
with our insurance agent that our rate increases were not due to the
medical history of our group. We have a relatively young pool and have
had almost no change in the amount of claims in our group for several
years and have no high risk cases in our group. I also confirmed from
our agent that the one major factor driving our rates through the roof
is the impact of the new law on the medical insurance industry. He
confirmed over the last year that the rate increase is largely due to
raising the dependant coverage age to 26, no pre-existing condition
exclusions for children, no lifetime benefit limits, no rescissions,
and no cost sharing for preventative services have all impacted our
rates. He also said one of the biggest causes for the increased costs
is the fact that about half of the underwriters have dropped out of
providing medical insurance in Indiana, and with less competition means
higher prices. While these early provisions are popular, they all have
only one impact on costs and that is to drive them higher.
The supposed small business tax credit is very counterproductive to
the very idea of growing your business. The tax credit is temporary and
so targeted that very few small businesses will be able to take
advantage of it. Businesses that are successful and should be
encouraged to continue to provide coverage are penalized for that
success because they are ineligible for the credit. The same can be
said of the insurance companies that are successful. Instead of being
looked at as good businesses that provided great customer satisfaction,
they have been demonized and targeted.
I see nothing in the new law that will help in lowering my cost of
providing or health insurance to my employees, only policy that will
move the costs upward in the wrong direction. We were told that cost
containment was the goal of the new law. The whole idea of public buy-
in on $10 prescription co-pays and $25 office co-pays have no
connection with what those things actually cost. The problem with our
current system is that I pay a premium to an insurance carrier, who
pays hospitals and doctors for services used by a third person. It is a
vicious cycle with the end consumer of the service having NO connection
to the cost. The consumer of the service has no skin in the game. As
the consumer is further removed from the interaction, as mandated by
the new law, they are encouraged to utilize more medical services. The
cost pressures in the current system will force me to the point of
dumping my coverage instead of promoting flexibility and encouraging me
to keep coverage. I fear that day for all of us.
Looking ahead I see nothing but more trouble for businesses of all
size. The taxing on private insurers in 2014 will only be passed
through to all purchasers of insurance. Those purchasers are me, the
small business owner. This is an $8 billion tax in 2014, growing to
over $14 billion in 2018. The $100 billion it is proposed to
``generate'' over the next ten years will be born on the backs of the
small business owner and vastly outweigh any savings from the small
business tax credit. Advocates for the law tell you they are helping
you in one hand but this tax will nail you with the other. This small
business health insurance tax, or HIT, will once again punish the 2
million small business owners and their employees, effecting 26 million
people covered under these plans. Additional coverage mandates, removal
of all annual and lifetime limits, guaranteed issue and renewal, and
restrictions in underwriting factors will continue to drive up my
costs. The requirement for employers with over 50 employees to insure
part time and seasonal workers provides strong disincentives toward job
creation. When insurance is required for part time employees, I will be
unable hire another part time worker. It will be almost impossible for
an entrepreneur to start a new business and hire.
The fines and penalties on individuals and companies for not buying
or providing government-approved insurance are set so artificially low
that the incentives encourage me as a business owner to drop coverage.
When I compare a $2,000 fine verse the $10,000-$15,000 that these
policies are headed toward, it won't take much longer for me to be
forced to pay the fine. The low individual penalty along with the
elimination of pre-existing condition exclusions encourages individuals
to wait until they get sick to buy a policy. It is blatantly obvious to
me that as soon as the government sees millions of new uninsured people
in this country that the low penalties are encouraging, those penalties
will escalate dramatically, by five or ten fold. The new law cannot be
paid for as shown by the current projections. The inevitable increase
in the penalty and fine costs will come down like a hammer on small and
large employers alike, kill job creation, and be another crushing blow
to our individual freedom and liberty.
Where in any of this debate has there been any attempt to promote
affordable options like HSA's that put the consumer directly into the
decision making mode of how their health care dollars get spent? Why
was there no attempt to implement malpractice reform like the State of
Indiana has adopted? Why not change rules that would allow me to buy
health insurance across state lines to bring more competition and more
carriers into our markets? By removing lifetime limits from insurance
policies, do you not think that hospitals will be encouraged to charge
more for services they provide and raise overall costs? I think that
seems obvious. If cost containment is the goal, then why was everything
that was implemented in the law destined to raise overall costs, and
thereby, my insurance costs?
I would like to thank you once again for the invitation to be here
today and would be happy to answer any of your questions.
Chairman Roe. Thank you, Mr. Messmer.
STATEMENT OF REV. GEORGE PHILIP HOY, RET.,
UNITED CHURCH OF CHRIST
Rev. Hoy. My name is George Philip Hoy. I have been an
ordained minister in the United Church of Christ for more than
50 years. I am now retired and serving as interim pastor of
Zion United Church of Christ in Henderson, Kentucky. However, I
am a lifelong Indiana resident and have lived in my current
home in downtown Evansville for 29 years.
I am also Religion Co-Chair of Tri-State Jobs with Justice
and Chaplain of the Central Labor Council. I have also been an
elected official. I served on the Vanderburgh County Council
for 12 years and in the Indiana House of Representatives for 4
I speak in support of the Affordable Health Care Act. Why?
I am a firm believer in a single payer health care system. The
legislation that is now law offers numerous benefits to the
State of Indiana and its citizens.
There are 28 definable benefits achieved in 2010, 19
definable benefits in 2011. From personal and professional
experience, I wish to address a few of those benefits.
During the past few years, I have had open heart surgery
and my wife has been treated for breast cancer. Yet, we count
ourselves among the more fortunate citizens of the United
States. If not for Medicare and the insurance we have through
my denomination's pension board, we would be facing bankruptcy.
Last Sunday, Paul, a member of our church who is now
undergoing chemotherapy, said he couldn't wait until his last
chemotherapy session in December. After his final treatment, he
will have to file for bankruptcy. His medical debt, as of
Sunday, was $300,000. He has a job but no health insurance.
When he asked the hospital for help, he was offered a 10
The Affordable Health Care Act has a number of provisions
for the less fortunate. It gives immediate access to affordable
health care for uninsured individuals with preexisting
conditions. We have 17, soon to be 19 grandchildren. Four of
our grandchildren have preexisting health conditions. I am
grateful that our grandchildren will be assured of coverage
because of the Health Care Act.
Extending dependent coverage is also important to our
family. One of our grandsons, an honors college graduate, is
still awaiting an opening as a school teacher. He is single,
living at home, and working as a substitute teacher. Thank God,
he is covered by his parents' insurance due to the provisions
of the Health Care Act.
Closing the so-called ``donut hole'' for those on Medicare
is another important provision of this act. Fortunately, my
denomination offers my wife and me the excellent prescription
coverage. However, I have watched less fortunate retirees
forced to visit food pantries because they could not afford
both groceries and medicine. Or worse, I have seen cases of
people cutting back on needed medicines without consulting
their physicians because they couldn't pay their bills.
Mandating the coverage of preventive screenings and
immunizations is, in popular parlance, a ``no-brainer.'' Just
think about the cost and, more importantly, the prevention of
suffering that flu shots alone ensure.
In Indiana, the increased funding for community health
centers will nearly double the number of patients seen over the
next 5 years. For those whose main interest is in dollars and
cents, these increased health services can only contribute to a
stronger economy in the form of a healthier workforce.
The act provides for more doctors where people need them,
especially in low population rural areas. It provides funding
for the National Health Service Corps for scholarships and loan
repayments for doctors, nurses, and other health care
providers. In Indiana, this will help the 8 percent of our
population who live in an underserved area of our State.
Some 84,400 small businesses can be helped by the new small
business tax credit that will make it easier to provide
coverage to their workers.
The act will give consumers some protections from negative
policies of the insurance industry. Lifetime limits will not be
placed on the coverage individuals receive. Insurance companies
will no longer be able to drop people from coverage when they
get sick. An appeals process will be required. Patient's choice
of physicians will be protected.
In my opinion as a Christian pastor, adequate health care
in the richest country in the world is a human right and a
moral necessity. The Affordable Health Care Act moves us closer
to achieving something very important as it relates to a term
not used often enough in our political discussions. That term
is ``the common good.''
The nations of what is called the developed world have all
embraced national health care plans. The time is way past for
us to catch up with them. The Affordable Health Care Act is not
perfect, but it is a good giant step forward.
Tweaking the Affordable Health Care Act to make it better
is one thing. Repealing it would be an unconscionable act by an
unfeeling legislature. Repealing it in my estimation would be
Thank you for holding this hearing and thank you for
allowing me this opportunity to testify.
[The statement of Rev. Hoy follows:]
Prepared Statement of Rev. George Philip Hoy, Ordained Minister,
United Church of Christ
My name is George Philip Hoy. I have been an ordained minister in
the United Church of Christ for more than 50 years. I am now retired
and serving as Interim Pastor of Zion United Church of Christ in
Henderson, KY. However, I am a lifelong Indiana resident and have lived
at my current home in downtown Evansville for 29 years.
I am Religion Co-Chair of Tri-State Jobs With Justice and Chaplain
of the Central Labor Council. I also have been an elected official. I
served on the Vanderburgh County Council for 12 years and in the
Indiana House of Representatives for four years.
I speak in support of the Affordable Health Care Act. While I am a
firm believer in a single payer health care system, the legislation
that is now law offers numerous benefits to the State of Indiana and
There are 28 definable benefits achieved in 2010 and 19 definable
benefits in 2011. From personal and professional experience I wish to
address a few of those benefits.
During the past few years, I have had open heart surgery, and my
wife has been treated for breast cancer. Yet we count ourselves among
the more fortunate citizens of the United States. If not for Medicare
and the insurance we have through my denomination's pension board, we
would be facing bankruptcy.
On Sunday, Paul, a member of our church who is now undergoing
chemotherapy, said he couldn't wait until his last chemotherapy session
in December. He added that immediately after his final treatment he
will file for bankruptcy. He has a job but no health insurance. His
medical debt, as of Sunday, was $300,000. When he asked the hospital
for help, he was offered a 10 percent discount.
The Affordable Health Care Act has a number of provisions for the
less fortunate. It gives immediate access to affordable health care for
uninsured individuals with pre-existing conditions. It also eliminates
pre-existing conditions that exclude covering children. We have 17,
soon to be 19 grandchildren. Four of our grandchildren have pre-
existing health conditions. I am grateful that our grandchildren will
be assured of coverage because of the Affordable Health Care Act.
Extending Dependent Coverage is also important to our family. One
of our grandsons, an honors college graduate and one of the four
grandchildren with a pre-existing health condition, is still awaiting
an opening as a school teacher. He is single, living at home, and
working as a substitute teacher. Thank God he is covered by his
parents' insurance due to the provisions of the Affordable Health Care
Act. We also have several nieces and nephews who benefit from the
extended coverage for young adults.
Closing the so-called ``donut hole'' for those on Medicare is
another important provision of the Affordable Health Care Act.
Fortunately, my denomination offers my wife and me excellent
prescription coverage. However, I have watched less fortunate retirees
forced to visit food pantries because they could not afford both
groceries and medicine. Or worse, I have seen cases of people cutting
back on needed medicines without consulting their physicians because
they couldn't pay their bills. Now, in addition to the $250 payment
they received and the new provisions of the law, they will not have to
choose between buying groceries, paying utility bills, and paying for
the medicines that they need.
Mandating the coverage of preventive screenings and immunizations
is, in popular parlance, a ``no-brainer.'' Just think about the cost
and, more importantly, the prevention of suffering that flu shots alone
In Indiana, the increased funding for Community Health Centers will
nearly double the number of patients seen over the next five years. For
those whose main interest is in dollars and cents, these increased
health services can only contribute to a stronger economy in the form
of a healthier workforce.
The Act provides for more doctors where people need them,
especially in low population rural areas. It provides funding for the
National Health Service Corps for scholarships and loan repayments for
doctors, nurses, and other health care providers. In Indiana this will
help the eight percent of our population who live in an underserved
area of our state.
Some 84,400 small businesses can be helped by the new small
business tax credit that will make it easier to provide coverage to
The Act will give consumers some protections from negative policies
of the insurance industry. Lifetime limits will not be placed on the
coverage individuals receive. Insurance companies will no longer be
able to drop people from coverage when they get sick. As mentioned
before, children with pre-existing conditions cannot be excluded. An
appeals process will be required. Patient's choice of physicians will
Some 28 reforms took place in 2010 and another 19 reforms are
taking place this year. In subsequent years other reforms and benefits
will accrue. It will take some time to live into all of the benefits.
In my opinion as a Christian pastor, adequate health care in the
richest country in the world is a human right and a moral necessity.
The Affordable Health Care Act moves us closer to achieving something
very important as it relates to a term not used often enough in our
political discussions. That term is ``the common good.''
The nations of what is called the developed world have all embraced
national health plans. The time is way past for us to catch up with
them. The Affordable Health Care Act is not perfect, but it is a good
giant step forward.
Tweaking the Affordable Health Care Act to make it better is one
thing. Repealing it would be an unconscionable act by an unfeeling
legislature. Repealing it would be immoral.
Thank you for holding this hearing and thank you for allowing me
this opportunity to testify.
Chairman Roe. Thank you, Rev. Hoy.
STATEMENT OF DENIS JOHNSON, VICE PRESIDENT OF OPERATIONS,
Mr. Johnson. Chairman Roe, Dr. Bucshon, thank you very much
for inviting me today to testify on the impact of the Patient
Protection and Affordable Care Act on Indiana's medical device
My name is Denis Johnson and I am the Vice President of
Operations at Boston Scientific manufacturing facility in
Boston Scientific is one of the world's largest medical
device companies dedicated to less-invasive medicine. Our
company's mission is to improve the quality of patient care and
the productivity of health care delivery through the
development and advocacy of less-invasive medical devices and
procedures. We accomplish this by continually refining our
existing products and developing new technologies that are
designed to reduce risk, trauma, cost, and procedure time.
Boston Scientific has 15,000 employees in the U.S. and
invests $1 billion each year in research and development to
develop new products.
In Spencer, we have over 1,000 employees who produce 2.2
million less-invasive medical devices every year. Their average
salary and benefits package is significantly higher than the
State average. Nearly half of our employees live right in Owen
County, so our impact on this rural part of the State is
significant and growing. We are good community partners as
well. Boston Scientific contributes nearly $150,000 a year to
local charities and hundreds of volunteer hours for worthy
causes such as Christmas for Kids, Hoosiers Outrun Cancer,
local schools, and various other health-related events. Because
of our significant impact in America's heartland, Spencer was
highlighted in a recent ad campaign that showed the impact and
opportunity companies like ours have for our workers, their
families, and the community.
The medical device industry is a uniquely American success
story, both for patients and for our economy. The United States
is the world leader in manufacturing lifesaving and life-
enhancing treatments for patients. At the same time, the
medical technology industry has become an important engine for
economic growth, especially in Indiana.
Our industry employs more than 400,000 workers nationwide.
In Indiana alone, there are nearly 20,000 Hoosiers working at
more than 300 FDA-registered medical device manufacturers, with
an annual payroll of $1.1 billion. The industry has grown by
nearly 30 percent in recent years and provides high-quality
jobs that pay 40 percent more than the average wage in Indiana.
Nationwide, the industry is fueled by small businesses and
entrepreneurs providing high-quality jobs: 62 percent of the
firms have less than 20 employees and only 2 percent more than
500. Additionally, the medical device industry is a net
exporter, totaling more than $33 billion annually and has
consistently enjoyed a favorable balance of trade. With the
aging of U.S. and foreign populations and the accelerating pace
of biomedical discovery, the growth potential for this industry
Boston Scientific strongly supported health care reforms
that improve quality by advancing the cause of the evidence-
based medicine as part of the debate on the Affordable Care
Act. We strongly advocated for the creation of a comparative
effectiveness research institute to help clinicians and
patients better understand the benefits of alternative
treatments. This research could pave the way for more
personalized medicine and better care by learning what works
best for different populations.
We advocated for the reforms to encourage greater
coordination among health providers and called for greater
emphasis on individual patient responsibility, prevention and
wellness. We also highlighted the potential of remote
monitoring technologies to improve care by better tracking and
managing patients with costly chronic diseases.
While we are very proud of the progress we have made in
improving patient care and see immense future opportunities to
provide jobs and contribute to long-term economic growth in the
United States, we are very concerned about the burden of the
medical device tax on the industry. The new health law imposes
a 2.3 percent excise tax on most types of medical devices. The
excise tax is based on revenue, not profit, and begins in 2013.
This harmful new tax is expected to collectively increase
Federal taxes on medical device companies by $20 billion
through 2019 and will cost Boston Scientific alone more than
$100 million a year in additional taxes. Such a severe increase
in tax liability will undoubtedly force us to cut critical R&D
funding and inhibit job creation and retention.
Contrary to the stated goals of the President's reform
efforts, the medical device tax will actually increase health
care costs and undermine another of the White House's important
objectives: promoting innovation. The U.S. Congress should
embrace the value of the medical technology industry to our
economy and our health care system by repealing this onerous
tax. It will stifle innovation, destroy jobs, and thwart
patient access to breakthrough technologies that have saved and
enhanced millions of lives.
The medical device tax should be repealed for three
First, this tax will stifle innovation and cost thousands
of high-paying jobs. It will dramatically increase the
effective tax rate for medical technology companies, severely
reducing financial resources that should be used for R&D,
clinical trials, and investments in manufacturing. This impact
will be especially hard on smaller companies.
Second, this new tax will increase health care costs, not
contain them, as much of the 2.3 percent increase will be
passed on to consumers either directly or indirectly.
Third, there is no device industry windfall for the health
care reform. Unlike other industries that may benefit from
expanded coverage, that has not been seen in Massachusetts
where health care reform law became law and the basis for the
new Federal law. There was no device windfall.
Conclusion. The bottom line is the regressive tax would
undermine America's and Indiana's global leadership position in
product innovation, clinical research, and patient care. In
this challenging economic environment, this tax will most
assuredly hinder the development of the next generation of
Again, thank you for inviting me to testify on the
Affordable Care Act impact on the medical device industry. I
look forward to answering your questions.
[The statement of Mr. Johnson follows:]
Prepared Statement of Denis Johnson, Vice President, Operations,
Thank you for inviting me to testify today on the impact of the
Patient Protection and Affordable Care Act (PPACA) on Indiana's medical
Boston Scientific is one of the world's largest medical device
companies dedicated to less-invasive medicine. The company's mission is
to improve the quality of patient care and the productivity of health
care delivery through the development and advocacy of less-invasive
medical devices and procedures. We accomplish this by continually
refining our existing products and developing new technologies that are
designed to reduce risk, trauma, cost, and procedure time. Boston
Scientific has 15,000 employees in the U.S. and invests $1 billion each
year in research and development.
In Spencer we have nearly 1,000 employees who produce 2.2 million
less-invasive medical devices every year. Their average salary and
benefits package is significantly higher than the state average. Nearly
half of our employees live right in Owen County, so our impact on this
rural part of the state is significant, and growing. We are good
community partners as well. Boston Scientific contributes nearly
$150,000 a year to local charities and hundreds of volunteer hours for
worthy causes such as Christmas for Kids, Hoosiers Outrun Cancer, local
schools and various other health related events. Because of our
significant impact in America's heartland, Spencer was highlighted in a
recent ad campaign that showed the impact and opportunity companies
like ours have for our workers, their families and our community.
The US and Indiana Medical Technology Industry
The medical device industry is a uniquely American success story--
both for patients and for our economy. The United States is the world
leader in manufacturing life-saving and life-enhancing treatments for
patients. At the same time, the medical technology industry has become
an important engine for economic growth, especially in Indiana.
Our industry employs more than 400,000 workers nationwide. In
Indiana alone, there are nearly 20,000 Hoosiers working at more than
300 FDA registered medical device manufacturers, with an annual payroll
of $1.1 billion. The industry has grown by nearly 30% in recent years
and provides high-quality jobs that pay 40 percent more than the
average wage in Indiana.
Nationwide, the industry is fueled by small businesses and
entrepreneurs providing high-quality jobs: 62% of firms have less than
20 employees and only 2% have more than 500. Additionally, the medical
device industry is a net exporter, totaling more than $33B annually,
and has consistently enjoyed a favorable balance of trade. With the
aging of US and foreign populations and the accelerating pace of
biomedical discovery, the growth potential for this industry strong.
Impact of the Patient Protection and Affordable Care Act (PPACA) on
Indiana's Medical Device Industry
Boston Scientific strongly supported health care reforms that
improve quality by advancing the cause of evidence-based medicine. As
part of the debate on PPACA, we help clinicians and patients better
understand the benefits of alternative treatments. This research can
pave for the way for more personalized medicine and better care by
learning what works best for different populations.
We advocated for reforms to encourage greater coordination among
health providers and called for greater emphasis on individual patient
responsibility, prevention and wellness. We also highlighted the
potential of remote monitoring technologies to improve care by better
tracking and managing patients with costly chronic diseases.
Medical Device Tax Will Impede Innovation and Patient Access to Medical
While we are very proud of the progress we have made in improving
patient care and see immense future opportunities to provide jobs and
contribute to long-term economic growth in the United States, we are
very concerned about the burden of the medical device tax on the
industry. The new health law imposed a 2.3% excise tax on most types of
medical devices. The excise tax is based on revenue, not profit, and
begins in 2013. This harmful new tax is expected to collectively
increase federal taxes on medical device companies by $20 billion
through 2019, and will cost Boston Scientific alone more than $100M a
year in additional taxes. Such a severe increase in tax liability will
undoubtedly force us to cut critical R&D funding and inhibit job
creation and retention.
Contrary to the stated goals of the president's reform efforts, the
medical device tax will actually increase health care costs and
undermine another of the White House's important objectives--promoting
innovation. The US Congress should embrace the value of the medical
technology industry to our economy and to our health care system by
repealing this onerous tax. It will inevitably stifle innovation,
destroy jobs, and thwart patient access to breakthrough technologies
that have saved and enhanced millions of lives.
The Medical Device Tax Should be Repealed for Three Important Reasons:
First, this tax will stifle innovation and cost thousands of high-
paying jobs. It will dramatically increase the effective tax rate for
medical technology companies--severely reducing financial resources
that should be used for R&D, clinical trials and investments in
manufacturing. The impact will be especially hard on smaller companies
whose innovations are not immediately profitable.
Second, this new tax will increase health care costs, not contain
them, as much of the 2.3% increase will be passed on to consumers
either directly or indirectly.
Third, there is no device industry ``windfall'' from healthcare
reform. Unlike other industries that may benefit from expanded
coverage, a majority of device-intensive medical procedures are
performed on patients that are older and already have private insurance
or Medicare coverage. In Massachusetts, which passed a healthcare
reform law which became the basis for the new federal law, there has
been no device ``windfall'' despite the addition of 400,000 covered
lives. The lack of a windfall is Conclusion The bottom line is this
regressive tax would undermine America's, and Indiana's global
leadership position in product innovation, clinical research and
patient care. In this challenging economic environment, this tax will
most assuredly hinder the development of the next generation of
breakthrough treatments. Again, thank you for inviting me to testify on
the impact of PPACA on the medical device industry. I look forward to
answering your questions.
Chairman Roe. Thank you, Mr. Johnson.
STATEMENT OF GLEN GRABER, PRESIDENT,
GRABER POST BUILDINGS
Mr. Graber. Hi. My name is Glen Graber and thanks for
inviting us to come up.
I started the company in 1973 with three men in the Odon,
Indiana area. We build post frame buildings which you used to
call them pole barns because they use round posts for them. But
anyway, we manufacture wood roof trusses up to a 100-foot clear
span and roll form our own metal and build buildings all over
four or five States and have wholesale customers in provinces
in Canada and probably about 25 States in the U.S.
But our company has 210 employees. We have 180 employees in
Odon, Indiana, and then the other 30 are over in Versailles,
Missouri at a sister company.
But we started doing health care, I think, in '01,
somewhere thereabouts, and it cost about 50 cents an hour back
then. Now I think we're up to about $2.25 an hour thereabouts,
just under $1 million for a year's worth of health care for
everybody. And it just keeps increasing.
I didn't tell you about my education. I went to school 8
years in grade school, and my dad taught me most of what I
know. He taught me to work. He made me work and he almost made
me like it. [Laughter.]
Anyway, this health care thing. It's just going to keep
going up and keep getting more expensive. I think our health
care went up about 30 percent last year or I guess you would
say this year. I think they quoted a year ahead. But I can't
see it doing anything but just keep going up.
And most of the technical things that they all talked
about, there is really no reason for me to reiterate on that.
But we just can't afford it. There is just no way. I can see it
doubling in the next 2 or 3 years for Graber Post. Right now,
it is about 1 percent of our total gross sales is what it is
costing us. But profit margins just keep getting smaller and
smaller also in the industry.
We just got to get more business people in Washington, D.C.
and let a few of the lawyers go home. [Applause.]
This country is worth saving and we got to work on it.
Thank you for having me.
[The statement of Mr. Graber follows:]
Prepared Statement of Glen S. Graber, Graber Post Buildings
My name is Glen Graber and I am the President of Graber Post
Building and Martin Metals. I started Graber Post in 1973 as a 3-man
Amish building crew that built post frame buildings. In 1987, I
invested in a computerized roll former, which allowed Graber Post to
purchase truckloads of steel coils and then roll our own steel siding
panels according to its customers' specification. Over the past few
years, our company has grown and we've added a new $1 million state of
the art facility in 2007 to house the company's office, showroom and
We employ a total of 210 employees and currently offer a group
health insurance plan to every employee. When we began offering health
care to our employees in 2001, our total cost was $.50 per hour per
employee, based on 2000 hours of work. Currently, our cost per hour per
employee is $2.25; a $1.75 per hour per employee increase over a ten
year period including a 30% increase from 2010 to 2011. Our current
total cost is $945,000, and if the increase from this last year is any
indication, I believe it will only continue to rise.
The rising cost of medical care and health insurance is impacting
the livelihood of many Americans. The inability to pay for necessary
medical care not longer affects only the uninsured, but is increasingly
becoming a problem for those with health insurance. Over the past
several years, the premiums that we have paid have more than doubled,
as I previously indicated. As an employer, the more my costs for
insurance goes up, the less money is available to invest in the
company--expanding a customer base, upgrading technology or even
increasing wages. The recent healthcare law has forced us to re-
evaluate our plan benefits and shift some of the healthcare costs to
the employees by raising deductibles and co-pays in order to sustain
our healthcare plan.
The new mandated changes to health insurance--no lifetime benefit
limits and restricted annual limits, no cost sharing for specific
preventive services, no pre-existing condition exclusions for children,
dependents covered through age 26--are good for employees. As an
employer, I have to wonder how much premiums will be affected by the
mandated increase of plan benefits. The average annual premium increase
is currently about 10% to 12%. However, our company is experiencing
increases well above that average. Our company is working with our
insurance agent to come up with creative ideas that allow us to keep
our current plan design and to control the costs passed onto the
employees. We want to be engaged in promoting the health of our
employees and their dependents while at the same time protecting our
Chairman Roe. Mr. Graber, a couple of comments. One, it was
the burley tobacco patch that convinced me chemistry wasn't
that hard. That is where I grew up. It was in a tobacco patch
in Tennessee. It convinced me if I studied chemistry, I
wouldn't have to raise tobacco.
And secondly, we have 15 doctors in the Congress and about
240 lawyers, and we finally have them outnumbered. [Laughter.]
You all have opened a tremendous number of questions and
issues with your testimony. Let me go back. It is an extremely
complicated--the American health care system started out as a
mom and pop business for one doctor, and it expanded. I can
think back to my medical career. In 1970, when I graduated from
the University of Tennessee College of Medicine, we had five
antihypertensives, five high blood pressure medicines. There
probably are 50 or 100 now.
Mr. Johnson, I have used much of the Boston Scientific new
technology to help make things better for my patients. I don't
want to see that stop. Our cancer survival rates are going up
and up and up.
And I remember at St. Jude's Children's Hospital, when I
was medical student there, 80 percent of the children died.
Today 80 percent of the children live. We have seen incredible
advances. We do not want to see that stop.
The challenge how do we make this more affordable. That is
what I think I heard this panel talking about was how do we
I am going to tell you a story of a person that Dr. Bucshon
and I had a conversation with a week ago tomorrow. And this
particular person said that he sort of understood consumer-
driven health care where the consumers were responsible for the
first dollar of coverage. He sort of got that. He said he had a
rash on his back and he went to his dermatologist and they gave
him some medicine. His co-pay was $10. And he was out on the
campaign trail and he forgot his medicine and his prescription
card. So he had to go buy it and it was $400. And he said,
well, you know, I am not itching that bad. [Laughter.]
So he made a consumer decision based on that. But he said,
you know, you can't make consumer-driven choices in health care
because my daughter was 3 months old and she got meningitis and
had to go into the hospital. And he was absolutely right. You
can't make a consumer-driven choice when your family has that
kind of issue.
That person was the President of the United States. That is
who we had the conversation with last Wednesday morning, and
that is exactly what he said.
And to hold the cost down--after this is over, I want to
meet with some of you all because I have some ideas. Let me
give you an example of how some companies--a health savings
account. I have one. This is a debit card right here. I had to
go to the hospital and get some biopsies myself. And one of my
friends I went to medical school was doing the surgery. I
didn't call the insurance company. My doctor said I needed to
have it done. That was a doctor-patient decision. He said,
Phil, you need to have this done.
I went down to the outpatient clinic and I said, look, I
don't want your most expensive thing. You are going to get your
money in a millisecond. So they gave me a 35 percent discount.
Rev. Hoy, if we can't get a 50 percent discount for that
person, I will be shocked. They gave me a 35 percent discount.
They then said now 45 percent is what they will give you for a
cash customer. I go in. I get my biopsy. I go home. I have had
John Deere corporation uses a health savings account,
consumer-driven health care. They have had no or minimal health
care premium increase in 5 years.
We also have to do disease management. 75 percent of all
the money we spend on health care today is chronic disease
management. It is high blood pressure, diabetes, smoking
cessation. In this country, unfortunately, obesity has become a
real problem and type 2 diabetes.
One company, AFG, which is a company at home--Holston
Munitions--everything that boils up, just about, in a war we
make it in east Tennessee. And they have a program there of
wellness. For instance, if you come in and you have high blood
pressure, diabetes, hypertension, smoking, you are a train
wreck waiting to happen. They pay you to correct those things.
They pay for good incentives, not bad ones, not pay you to be
sick, pay you to be well. And they have had a minimum health
increase in 5 years. We could do that for the country without
this incredibly complicated system that we have devised.
And, Rev. Hoy, you bring up some good issues. There are
people out there who are uninsured. Those folks are tough. And
what I would recommend we do for someone like him is a high
risk pool that the taxpayers subsidize in the State. So he
could have insurance affordable like anyone else. I think that
is a group that have these preexisting conditions that maybe
are uninsurable. You absolutely can do that.
So I want to hear Mr. Messmer again. I think you made some
great points in your business of 47 people about why you are
not going to go to 50. Why would that be?
Mr. Messmer. Well, the price of mandated part-time
coverage--in the summer, we like to employ a lot of the college
kids or people who are retired who want part-time work. And at
50, the mandated provisions that are going to kick in--to me
that is going to be an impediment to growing my business past
50. At that point, we are going to mandate additional coverages
and mandate more provisions on those companies. And so anybody
who is at that growth point in their business, we are going to
say at 49 you are a good company and we are going to give you
some breaks on the 50 or 51. And all of a sudden, you are just
going to expose your company millions of dollars more cost. So
it is going to be prohibitive for any company to want to make
that growth step.
Chairman Roe. Dr. Bucshon?
Mr. Bucshon. Thank you, Chairman Roe.
Mr. Johnson, a lot of attention has been focused on this
medical device tax and it is onerous for Indiana's, like you
said, 20,000 employees. How is your company going to handle
that tax? What do you think that is going to mean for the
consumers of health care?
Mr. Johnson. It is causing consternation within the company
and it is under consideration currently. Having recently walked
into Indiana University Hospital up in Indianapolis and seen an
improved device kit used, my theory is that it will stifle
innovation because some of that money will have to come from
When we talk about preexisting conditions, we talk about
the standard of care and we talk about procedures that
everybody wants access to, many of which weren't available 5,
10, 20 years ago. And I think it is real important for our kids
and for our families that we continue to develop those
technologies so there will be better treatment for them in the
Mr. Bucshon. The other question is in regards to regulation
in our country. I mean, the FDA is, obviously, important to
you. Where does Boston Scientific stand on FDA reform and
streamlining the approval process?
Mr. Johnson. Well, innovation is critical and we see many
companies starting to focus their development and launching new
products 2, 3, or more years ahead of U.S. in Europe and other
countries. And so procedures and treatments are available
overseas that are not available right now because of the
timeline it takes to get a product approved.
Mr. Bucshon. And I want to comment on that as far as
regulation goes. The FDA is one of the organizations right now
that is in my view stifling innovation, and it is true that
around the world, based on what the European Union and others
are doing, people are getting ahead of us here in the United
States because of what the Federal Government is doing to
businesses like yours and small businesses around this country.
So we are taking a serious look at reform in Washington, D.C.
as it regards regulation, and that is not only through the FDA,
but that is through all the other regulatory agencies which we
really haven't touched on too much today about what is
happening right now with job creation in our country.
But I do have serious concerns going forward. Since I was a
heart surgeon and being in medicine, I understand that if we
want to stay at least equal with or ahead of other countries,
as far as research and development goes and innovation, this
type of taxing on American employers and American businesses
has to stop because other countries are getting ahead of us.
So thank you for your testimony. I yield back.
Chairman Roe. Just to tag team right quickly, a friend of
mine is a hospital administrator on regulations. OSHA came in
to examine where a handicap rail was in the handicap bathroom.
So they said, no, it is in the wrong place. It needs to be up
here. So he moves it and puts up there. The TOSHA, the
Tennessee State Occupational Safety Administration, came in and
said that rail is in the wrong place. It needs to be down here.
I told him there is a simple solution. Just put bracket and
when TOSHA comes, put it one place, when OSHA comes, put it in
The problem with that is it is expensive. It costs. It is
funny. Who pays for that? We do when we go to the hospital. It
is very frustrating to see these kinds of regulations that one
agency does just the opposite of another, and they both think
they are following the rules.
We had Secretary Sebelius, as you all are, in front of our
committee the other day. She is the Secretary of Health and
Human Services which oversees Medicare and Medicaid. And I
asked Secretary Sebelius, how many people do you think the
Affordable Care Act is going to increase coverage to? And she
around 30 million people.
I said, well, we have 2,700 pages. You have read it and I
have read it. Let me explain how I can do almost all of that in
two paragraphs. And she said, how is that? And I said, well,
your own actuary at the Centers for Medicaid and Medicare
Services said we are going to expand Medicaid by 24.7 million
people. If you do that, that is almost 25 million of them.
About 6 million, as you heard me say a minute ago--I like the
26 and under provision of the plan. Those two things cover
almost 30 million people. 10 million people that are uninsured
in this country are illegally in the country. We have 15
million people who are eligible who haven't signed up currently
for Medicaid. So you have programs available already.
And, Mr. Messmer, in your comment, one of the things that
disturbed me--for a low-income worker, the most important thing
is to make more money, to have a higher income. If you are
required, when that requirement comes to buy insurance, as
their salary goes up, their subsidy goes down. It is exactly
the opposite of what you should be doing because they can't
afford it now.
So I think we got to step back and take a look at the
single biggest issue in America today is to get our people back
to work. If you have a job, a lot of these problems go away. My
father worked in a factory making shoe heels. He was a union
member and worked in a factory and lost his job to Mexico when
I was in the Army in Korea near the DMZ in 1973 and 1974. I
know something about that. And that is by far and away the most
important thing because if you have got money and a job, you
can afford to buy some things.
So I mention that simply out of frustration because they
have made this bill--well-intended. I don't mean that the
intention is bad--incredibly expensive and complex.
And we have invited the President to meet with the
physicians, the Doctors Caucus.
And another frustration I have, there were nine of us M.D.s
just practicing doctors out there with decades of experience.
Not one of us was asked a thing about this Affordable Care Act.
Not one about this. Now, why would you have that expertise
available to you and never ask a question to them? Dr. Roe,
what do you think about this? And I would have had some
suggestions through the 20 years' experience almost I have had
with TennCare and certainly with taking care of patients and so
forth, just as you have, Mr. Messmer, and you, Mr. Graber, in
your business that you have.
So if I sound frustrated, I am. And it is something I hope
that works, but I hope that we can overturn it and start over.
And how do you make it more affordable? How do you do that?
Well, you allow your business to get in business with him and
share those costs. You put thousands of small businesses
together. You go and partner up with some folks in Tennessee
and maybe instead of 47 people you are insuring, you got 47,000
you are insuring. Why we don't do that is beyond me. Why we
don't go across State lines and allow your businesses to get
We have two hospital systems in my district. Mountain
States Health Alliance with all their hospitals have 9,000
employees. Welmont has 6,000. They can't get together and have
15,000 people as one group. They are not allowed to by law now.
And so unless we start doing some smart business things, as you
point out, Mr. Graber, get some people up there like myself
that have run a small business for 30 years or helped run one
for 30 years, we can help lower these costs.
Before we have our final closing comments, I want to yield
to Dr. Bucshon for any further questions.
Mr. Bucshon. Thank you, Chairman Roe.
Mr. Graber, first of all, you are the American dream. That
is why this country is the greatest country on earth. And it is
commendable what you have done with your business. I hope that
we don't get in your way in Washington, D.C. That is as a first
What actions do you think you are going to have to take in
your business as far as your employees go as it relates to the
Affordable Care Act? What are you talking about with your board
and with the other members that run your company?
Mr. Graber. Well, the big thing is I am the same as
everybody else here. We have no clue what the real total bottom
line rules are going to be. It is just a big confusion mess. We
don't know if it is going to double in the next 2 years--the
cost. At some point, it is not going to be affordable, but I
don't know what the penalties are. I heard different penalty
figures here if you don't comply. But we have never laid
anybody off at our company. We work full-time even if it is in
the wintertime. We cut back hours, but we work a lot of
overtime in the summer. And we have been able to provide this
health care and take care of our employees. They are the best
asset we have.
Mr. Bucshon. Thank you, Chairman Roe. I don't have any
further comments as far as questions go.
Chairman Roe. Let me finish up and just give you a couple
of examples, Mr. Graber. We started our practice with four
doctors and 12 employees. We have been very blessed and we were
able to grow that. I think we have 84 doctors now and 350
employees. And we have provided health insurance since 1968,
retirement benefits, and we want to continue to do that.
We have about 300 people who get insurance through our
practice right now. And it is about $6,000 per insured person.
If one person goes to the exchange, we can drop all of our
employees into the exchange and pay a $2,000 fine. And you
multiply $2,000, or even with the taxes $2,800, times 300, you
get a number. It is $600,000-$700,000. if you take the $4,000
we save and multiply it times 300, you get $1.2 million we
could put to our bottom line. I have talked to a business in
west Tennessee that said we are happy with our insurance as it
is. We like the way our insurance is. If we have this essential
benefits package, it will cost our business $40 million. If
they drop them to the exchange, it will save that business $40
million. And as the testimony we had the other day from Lockton
Group, is that we are not going to be the first to drop our
health insurance in the exchange. We are not going to be third
either because it is going to put you at a disadvantage as a
company. So that is why people are looking at this because they
can see--and especially the restaurant industry and the
entertainment industry. They have such thin margins that they
I want to say one other thing about Medicare. You have
heard a lot about it in the last couple weeks. If you haven't
been on Twitter--that is a joke. [Laughter.]
I am old enough not to know how to Twitter, so I keep out
of trouble. [Laughter.]
If you look at Medicare, Rev. Hoy, right now my mother is
88 years old and lives on a Social Security check. We live in
the same house we lived in for 50 years and a small pension and
what I help her with. She pays the same essentially that Warren
Buffet does who is a billionaire. So I think there is a little
If you look at what has been recommended, one of the things
that has been recommended in Congress is if you are 55 years
and older, nothing changes in your health care. If you are 54
and younger, you will be offered exactly the same health
insurance plan that a Congressman has, exactly what I would
have until last year when I turned 65. I have Medicare Part A
now myself. I would have rather stayed on what I had, but I
can't. I am on Medicare. So at 54, you have that.
You are offered premium support, and what does that mean?
That means when you turn 65, that your premium will be
negotiated by the Federal Government just like they do now for
the 12 or so plans that I have an option to pick from, that Dr.
Bucshon has an option to pick from. They negotiate with the
insurance companies the best price, spreading this risk over
lots of people. The voucher is where we send you a piece of
paper and you go have to do that. This is not a voucher system.
Also, a higher income senior like myself will have to pay
more for their insurance when they are 65 because they will be
indexed because of your amount of money that you make. If you
are a lower-income senior or like your friend who has a
preexisting condition, they will pay less. And I think this is
a way that you can balance it as opposed to the way Medicare is
today, which my mother, who has a $1,100 Social Security check
per month, plus a small pension, plus what I give her, pays the
same as Warren Buffet. We can fix that.
And the reason we are even talking about it is because, as
every business person has said here, the current system is
unsustainable as it is. Not making a decision is not a choice.
We have to do that. We have to do that to save these programs
for future generations.
The Hoy family is much more prolific than the Roe family. I
only have two grandchildren, but I want to make sure that my
grandchildren have the opportunity to have the same kind of
life that I had.
The witnesses have been terrific. You all are amazing to
sit out there for 2 hours and listen to politicians talk. I
thank you for that, and we will be around afterwards if you
would like to talk. I will make sure that any of this
information that I have--you are certainly welcome to it.
This has been very helpful to me and I want to continue to
go. I live in northeast Tennessee in Johnson City, which is up
in the mountains of east Tennessee. Maybe many of you know
where the Bristol Motor Speedway is. That is where my home is.
A very similar area, agricultural area, rural area, biggest
town in my district, 60,000 people. So we are not in a big
urban area in other words. But we rely on small businesses like
Mr. Graber's and like Mr. Messmer's, and we rely on big
companies like Mr. Johnson's to provide the technology I used
in the operating room. I think we can do better.
The other thing that I want to bring up before we leave,
which is very disturbing to me--and actually this is an article
in the New England Journal of Medicine. I know probably most of
you all don't go to sleep reading that. I still do. But it is
an article about a plan that is current law right now I want
explain to you all before we leave here. It is very important
because I will be testifying next Tuesday in front of the
Energy and Commerce Committee about this. We have 125
cosponsors, including Democrats right now.
The Independent Payment Advisory Board is a
bureaucratically appointed board by the administration. And I
don't care if it is a Republican or a Democrat. I don't want
either one of them doing it. And I've never understood for the
life of me why health care is a Republican or a Democratic
issue. I have never seen a Republican or Democrat heart attack
in my life, and I have never operated on a Republican or a
Democrat cancer. They are just cancers and just heart attacks.
I guarantee you Dr. Bucshon has never done a bypass operation
on a Republican or a Democrat. We may have delivered a few
Republican babies in my area. I will say that. [Laughter.]
Where I am going with this is IPAB is a 15-person board
that will make decisions for Medicare based on strictly costs.
We are spending $550 billion this year on Medicare. If we spent
$600 billion--the Congress has given up its, I think,
constitutional authority to decide how those dollars are spent.
That bill says you have to cut that spending. The CMS, the
Centers for Medicaid and Medicare Services, says you have to
cut that spending.
Well, here is the news flash. $500 billion less in Medicare
and we are adding, me being one of them, 3 million new seniors
per year when the boomers hit. So we are going to have in the
next 10 years 35 million more people seeking care. And that is
one of the ways the President wants to hold it down. And what
you will have is if you have more services chasing fewer
dollars, you are going to create weights. And if you do that,
you create quality issues and you create cost issues. And this
is on the back of our senior citizens.
I am going to do the best I can. I know some of you all out
there are on Medicare. I am going to go down swinging for you
to get rid of this. And this is Republicans and Democrats.
And to let you know that this was not in the House version
of the bill. When it didn't pass, it got stuck in the Senate
version of the bill. And I have a letter right here in my
package signed by some really conservative people, Barney
Frank, Henry Waxman, and others who oppose this also.
And Congressman Neal actually penned this back last year.
So this is going to come up. And if you would do me a
favor, if you don't want your care rationed--and I am not going
to use the term ``death panels'' and all that. It is just going
to be rationing of care. You are going to have more services
chasing fewer dollars. And I believe that Congress--that is me
that is beholding to you who elect me--ought to be the one to
make those decisions, not a bunch of bureaucrats, half of whom
can't be health care people that are going to be making those
So I am very passionate about that because I can see that
as a way to ration care for our senior citizens. And that is on
the books now. Follow the bill that I have out there, and I am
going to try to remove that if I possibly can.
So these two panels have been absolutely fantastic. I have
had a wonderful time here in Indianapolis, and I want to do
this more and get among you all.
Mr. Bucshon. Evansville.
Chairman Roe. Evansville. Sorry. [Laughter.]
I was thinking about Butler in the final four. I got to see
them play. I watched them play in Indianapolis. I was there.
But thank you all, the panel. You were terrific. Thank you
for the audience. You all have been terrific. And we will hang
around. Dr. Bucshon and I will hang around if you have got
Do you have any closing comments?
Mr. Bucshon. I am just going to make a few comments and say
thank you, Mr. Chairman, for coming to Evansville because Phil
Roe, when it comes to health care issues is a really hard act
to follow. He understands the issues very in-depth. He
practiced himself for over 30 years. He embodies the same thing
that I think all of us try to do in health care, that the
bottom line is it is about the patient. And everything that we
do and try to do in Congress is about taking care of people,
making sure that American citizens have access to quality
medical care for all Americans at a cost that we can all afford
In my view, the Affordable Care Act doesn't make that
happen. It is big Government really I think at its worst. It
places mandates on individuals to buy health insurance which I
think is unconstitutional. It expands the Medicaid program in
the States which is an unfunded mandate which will cause all of
Hoosiers' taxes to go up. It creates a subsidized exchange
which no one knows how to set up, and ultimately the default is
that the Department of Health and Human Services in Washington,
D.C. will tell us in Indiana how to establish our exchanges. We
don't want that. We want to maintain our individuality here as
a State and not have a one-size-fits-all exchange program.
The other thing is I think from what you have heard today
from small business and large business owners is that
ultimately in my view most people are eventually going to be
forced onto a Government health care program in the future
based on the Affordable Care Act.
Businesses, large and small, as you heard today, have a
very difficult time complying with the law because, first of
all, the law is very complicated, and you don't necessarily
know what you have to do.
Secondly, it is just onerous on employers, and it is much
cheaper in the long run for people just to jettison their
private health insurance for their employees, and that will
force people onto exchanges or Medicaid.
In my estimation, the Affordable Care Act underestimates
the number of people that that will happen to. And I think when
we see the bottom line results, we are going to see that the
Federal Government's budget as it relates to subsidizing health
exchanges and Medicaid is going to go through the roof in a
time right now when we are already in a critical budgetary
crisis in Washington, D.C. because of what Washington, D.C. has
been doing with our money really for decades.
And Chairman Roe and myself are there right now also trying
to deal with the larger issue of what do we do----
Mr. Bucshon [continuing]. Price that all of us can afford.
So, again, Chairman Roe, thank you for coming to
Evansville. You have become a great friend. I know you know
this inside and out and are a wealth of information.
I look forward to meeting with the President, with you, and
the Doctors Caucus. We have extended that invitation and
President Obama told Chairman Roe and myself directly last
Wednesday face to face that he would do that and talk about
these issues and I take him at his word. So I look forward to
that, and I look forward to moving forward again with a goal of
providing quality health care at a reasonable cost for all
Americans and that is what my concern is.
Chairman Roe. Thank you.
Before we close the hearing out, I serve on the Veterans
Affairs Committee, and being a veteran, if you are a veteran
out there, I want you to just hold your hand up so I can thank
you personally for your service to our Nation. [Applause.]
If I can ever be of any service to you. I know Dr. Bucshon
feels the same way. We would not be a free Nation without these
veterans sitting in this room. We have got a lot of young
people. I have been to Afghanistan. I am going back in the near
future and hopefully Dr. Bucshon will be going with us to visit
and put boots on the ground. These are brave young men and
women. They make me proud.
And I had one of the greatest compliments I have ever had
in my life, and it probably won't be what you think it is, but
it was a young man that I met the other day that I delivered
and then got to nominate him to the Naval Academy. That was a
true honor to do that. He served his first year there, and I
look at these great young men and women that are serving our
Nation now. I just thank you so much for the service to our
We will keep this record open for 14 days for comments.
[An additional submission of Mr. Andrews follows:]
Prepared Statement of Elmer Blankenship, President,
Indiana Alliance for Retired Americans
My name is Elmer Blankenship, President of the Indiana Alliance for
Retired Americans. Our members wish to thank Chairman Phil Roe and
Ranking Member Robert Andrews for the opportunity to send a statement
on this important concern for Hoosiers. Thanks also to Indiana's 8th
District Congressman Larry Bucshon for securing space for the hearing.
The Affordable Care Act became law last year and already millions
of Americans are benefitting from its provisions. Seniors are saving
money on prescription drugs and receiving free preventive care through
Medicare. Insurance companies are no longer allowed to discriminate
against children and others who are sick. Small businesses are
receiving billions of dollars in tax credits to provide health care for
The Affordable Care Law reduces our nation's debt by eliminating
waste, fraud and abuse in the health care system, reducing the growth
of health care costs, and preventing excessive profit-taking by private
insurers. According to the Congressional Budget Office, this will
reduce the deficit by over $200 billion over the next ten years and by
more than a trillion dollars in the decade after that.
There are important consequences for Indiana families and workers.
The Affordable Care Law affects families, workers and seniors in the
8th District of Indiana which includes Evansville. This year the
Affordable Care Law provides a 50% discount for prescription drugs for
Medicare beneficiaries who enter the Medicare Part D ``donut hole'' and
lose coverage for their drug expenses. The discount increases each year
until 2020, when the donut hole is eliminated. There are 10,000
Medicare beneficiaries in the 8th District who are expected to save
money and be better able to afford needed prescriptions with the
elimination of the donut hole. Medicare is also improved for the
117,000 beneficiaries in the 8th District by providing free preventive
and wellness care, improving primary and coordinated care, and
enhancing nursing home care. The new law strengthens the Medicare trust
fund, extending its solvency from 2017 to 2029.
Insurance companies' can no longer deny coverage to children with
pre-existing conditions and will be banned from discriminating against
adults with pre-existing conditions in 2014 under the Affordable Care
Law. There are 117,000 to 297,000 residents in the 8th district with
pre-existing conditions like diabetes, heart disease, or cancer,
including 8,000 to 36,000 children. The 19,000 to 48,000 individuals in
the district who currently lack insurance coverage will be able to
purchase individual policies under the new law.
Affordable Care Law allows young adults to remain on their parents'
insurance policies up to age 26. In Rep. Bucshon's district, 2,300
young adults have or are expected to take advantage of this benefit.
The ban on annual and lifetime limits. The health reform law
prohibits insurance companies from imposing annual and lifetime limits
on health insurance coverage. This provision protects the rights of
416,000 individuals in the district who receive coverage from their
employer or through the market for private insurance.
More Americans will be covered. When fully implemented; the health
reform laws will extend coverage to 94% of all Americans. If this level
of coverage is reached in the district, 46,000 residents who currently
do not have health insurance will receive coverage.
The Affordable Care Law protects individuals from soaring insurance
costs by requiring reviews of proposed rate increases and limiting the
amount insurance companies can spend on administrative expenses,
profits, and other overhead.
Hoosiers living in Indiana's 8th District and millions of other
Americans are benefitting from the Affordable Care Law. It needs to be
protected, supported and expanded.
This information is based upon the following sources: the U.S.
Census (data on insurance coverage rates and types of coverage, small
businesses, early retirees, income, and district populations); the
Centers for Medicare and Medicaid Services (data on Medicare enrollment
and the Part D donut hole); the Department of Health and Human Services
(data on uncompensated care, Early Retiree Reinsurance Program
participation, and preexisting conditions); and the Congressional
Budget Office (data on health insurance coverage and deficit reduction
under the Affordable Care Act).
[Additional submissions of Ms. Crosson follow:]
Chairman Roe. Being no further business, the committee
[Whereupon, at 10:53 a.m., the subcommittee was adjourned.]