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The Impact of the Health Care Law on the Economy, Employers, and the Workforce

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The Impact of the Health Care Law on the Economy, Employers, and the Workforce THE IMPACT OF THE HEALTH CARE LAW ON THE ECONOMY, EMPLOYERS, AND THE WORKFORCE HEARING BEFORE THE COMMITTEE ON EDUCATION AND THE WORKFORCE U.S. HOUSE OF REPRESENTATIVES ONE HUNDRED TWELFTH CONGRESS FIRST SESSION HEARING HELD IN WASHINGTON, DC, FEBRUARY 9, 2011 Serial No. 112–2 Printed for the use of the Committee on Education and the Workforce ( Available via the World Wide Web: http://www.gpoaccess.gov/congress/house/education/index.html or Committee address: http://edworkforce.house.gov U.S. GOVERNMENT PRINTING OFFICE 64–228 PDF WASHINGTON : 2011 For sale by the Superintendent of Documents, U.S. Government Printing Office Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800 Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001 COMMITTEE ON EDUCATION AND THE WORKFORCE JOHN KLINE, Minnesota, Chairman Thomas E. Petri, Wisconsin George Miller, California, Howard P. ‘‘Buck’’ McKeon, California Senior Democratic Member Judy Biggert, Illinois Dale E. Kildee, Michigan Todd Russell Platts, Pennsylvania Donald M. Payne, New Jersey Joe Wilson, South Carolina Robert E. Andrews, New Jersey Virginia Foxx, North Carolina Robert C. ‘‘Bobby’’ Scott, Virginia Duncan Hunter, California Lynn C. Woolsey, California David P. Roe, Tennessee Rube´n Hinojosa, Texas Glenn Thompson, Pennsylvania Carolyn McCarthy, New York Tim Walberg, Michigan John F. Tierney, Massachusetts Scott DesJarlais, Tennessee Dennis J. Kucinich, Ohio Richard L. Hanna, New York David Wu, Oregon Todd Rokita, Indiana Rush D. Holt, New Jersey Larry Bucshon, Indiana Susan A. Davis, California Trey Gowdy, South Carolina Rau´ l M. Grijalva, Arizona Lou Barletta, Pennsylvania Timothy H. Bishop, New York Kristi L. Noem, South Dakota David Loebsack, Iowa Martha Roby, Alabama Mazie K. Hirono, Hawaii Joseph J. Heck, Nevada Dennis A. Ross, Florida Mike Kelly, Pennsylvania [Vacant] Barrett Karr, Staff Director Mark Zuckerman, Minority Staff Director (II) CONTENTS Page Hearing held on February 9, 2011 ......................................................................... 1 Statement of Members: Hinojosa, Hon. Rube´n, a Representative in Congress from the State of Texas, prepared statement of ....................................................................... 66 Kline, Hon. John, Chairman, Committee on Education and the Workforce 1 Prepared statement of ............................................................................... 3 Additional submissions: Letter, dated February 7, 2011, to Hon. Kathleen Sebelius, Sec- retary, U.S. Department of Health and Human Services, from 21 States’ Governors ....................................................................... 85 Article, ‘‘Bay State Health-Care Blues,’’ by Paul Howard, Na- tional Review, August 5, 2010 ....................................................... 88 Article, ‘‘Judge Rejects Health Law,’’ by Janet Adamy, Wall Street Journal, February 1, 2011 .................................................. 89 Article, ‘‘An ObamaCare Appeal From the States,’’ by Mitch Dan- iels, Wall Street Journal, February 7, 2011 ................................. 91 Miller, Hon. George, senior Democratic member, Committee on Education and the Workforce ......................................................................................... 3 Prepared statement of ............................................................................... 5 Additional submissions: J. Kelly Conklin and David Borris, on behalf of the Main Street Alliance, prepared statement of .................................................... 68 John Arensmeyer, founder & CEO, Small Business Majority, prepared statement of .................................................................... 71 Letter, dated January 26, 2011, from 250 economists in support of the Patient Protection and Affordable Care Act of 2010 ......... 77 Statement of Witnesses: Howard, Paul, Ph.D., senior fellow and director, Center for Medical Progress, Manhattan Institute for Policy Research ................................... 7 Prepared statement of ............................................................................... 9 Johnson, Gail, president/CEO, Rainbow Station, Inc. ................................... 15 Prepared statement of ............................................................................... 17 Trautwein, Neil, vice president and employee benefits policy counsel, National Retail Federation ........................................................................... 23 Prepared statement of ............................................................................... 25 Van de Water, Paul N., senior fellow, Center on Budget and Policy Priorities ........................................................................................................ 20 Prepared statement of ............................................................................... 22 (III) THE IMPACT OF THE HEALTH CARE LAW ON THE ECONOMY, EMPLOYERS, AND THE WORKFORCE Wednesday, February 9, 2011 U.S. House of Representatives Committee on Education and the Workforce Washington, DC The committee met, pursuant to call, at 10:01 a.m., in room 2175, Rayburn House Office Building, Hon. John Kline [chairman of the committee] presiding. Present: Representatives Kline, Biggert, Platts, Foxx, Roe, Thompson, Walberg, DesJarlais, Hanna, Rokita, Bucshon, Barletta, Noem, Roby, Heck, Ross, Kelly, Miller, Kildee, Payne, Andrews, Woolsey, Hinojosa, McCarthy, Tierney, Kucinich, Wu, Holt, Davis, Grijalva, Bishop, Loebsack, and Hirono. Staff present: Kirk Boyle, General Counsel; Casey Buboltz, Coali- tions and Member Services Coordinator; Ed Gilroy, Director of Workforce Policy; Jimmy Hopper, Legislative Assistant; Marvin Kaplan, Professional Staff Member; Barrett Karr, Staff Director; Ryan Kearney, Legislative Assistant; Brian Newell, Press Sec- retary; Molly McLaughlin Salmi, Deputy Director of Workforce Pol- icy; Ken Serafin, Workforce Policy Counsel; Linda Stevens, Chief Clerk/Assistant to the General Counsel; Loren Sweatt, Professional Staff Member; Joseph Wheeler, Professional Staff Member; Aaron Albright, Minority Press Secretary; Tylease Alli, Minority Hearing Clerk; Jody Calemine, Minority General Counsel; Brian Levin, Mi- nority New Media Press Assistant; Jerrica Mathis, Minority Legis- lative Fellow; Megan O’Reilly, Minority Labor Counsel; Julie Peller, Minority Deputy Director of Policy and Planning; Meredith Regine, Minority Policy Associate, Labor; Melissa Salmanowitz, Mi- nority Press Secretary; Michele Varnhagen, Minority Labor Policy Director; Daniel Weiss, Minority Special Assistant to the Chair- man; and Mark Zuckerman, Minority Staff Director. Chairman KLINE [presiding]. A quorum being present, the com- mittee will come to order. Well, good morning, everyone, and wel- come. Today’s hearing is the first opportunity for this committee to take a close look at the consequences of the health care reform bill that was signed into law last year. It has been less than a year, and already this 2,700-page law has led to more than 4,000 pages in new government regulations. A proposal designed to reduce health care costs will instead in- crease national health care spending by $311 billion. And during (1) 2 a time of stubbornly high unemployment, job creators are forced to wrestle with the uncertainty of what the law and its new regula- tions mean and how that all fits into their plans for the future. Employers already struggling to keep their doors open now must choose between higher health care costs or costly penalties. To sug- gest this doesn’t undermine job creation is, I believe, to deny re- ality. Recently, a number of small-business owners were asked how they are adjusting to the new health care law. Their answers help provide a snapshot of what our economy is facing and will continue to face if the law isn’t replaced. Blake Haynie, resident of Georgia and owner of Action Signs, In- corporated, said, ‘‘I will lay off the necessary number of employees to cover the extra costs.’’ Gary Crosby, who owns Gary Crosby Con- struction in my home state of Minnesota, said he will ‘‘have fewer employees.’’ Catherine Marsh of Botkins, Ohio replied, ‘‘reducing staff, cutting benefits.’’ And Darcy Gunn of Loveland, Colorado declared, ‘‘I have never laid off any employees. The last thing I need is more expenses. This is the wrong time to hurt small-business owners. I will have to pull the plug.’’ These are honest responses to a government takeover of one- sixth of the economy. Behind every story of a small-business owner struggling to meet the demands of the law’s mandates and pen- alties is the reality of a workforce with fewer jobs and opportuni- ties for workers and families. I anticipate supporters of the law with have their own stories to share as they seek to convince the American people that meaning- ful health care reforms are only possible as part of this costly gov- ernment takeover. The American people reject this false choice, and we are here today to begin fulfilling our promise to find a better way. Today we will also examine what changes the law is imposing on employer-sponsored health care plans. This committee has broad jurisdiction over health insurance provided through the workplace, coverage that affects roughly 170 million Americans. By the admin- istration’s own estimates, up to 69 percent of all business health plans and 80 percent, 80 percent of small business health plans will soon see significant changes to the benefits they provide. This has a potential
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