Hearing Of The House Committee On Small Business - Common Ground: Finding Consensus On Health Reform, The Small Business Perspective

Statement

Hearing Of The House Committee On Small Business - Common Ground: Finding Consensus On Health Reform, The Small Business Perspective

Chaired By: Rep. Nydia M. Velazquez

Witnesses: Jim Wordsworth, Owner, J.R. Goodtimes Incorporation, Mclean, Virginia, On Behalf Of The U.S. Chamber Of Commerce; Joan M. Burkholder, Owner, Crist Instrument Co., Incorporated, Hagerstown, Maryland, On Behalf Of The U.S. Women's Chamber Of Commerce; Freddy Castiblanco, Owner, Terraza Cafe, Jackson Heights, New York, On Behalf Of The Main Street Alliance; John Nicholson, Co-Owner, Company Flowers & Gifts Too!, North Arlington, Virginia, On Behalf Of The National Federation Of Independent Business; Bradley L. Thompson, Ii, President, Inland Press, Detroit, Michigan, On Behalf Of The Printing Industries Of America

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REP. VELAZQUEZ: Good afternoon, this hearing is now called to order. (Sounds gavel.)

Whether it is in political discourse, the nightly news, or conversations around the dinner table, Americans consistently use the same word to describe health care, "broken." And that is exactly what it is. With 47 million people uninsured, there is no question that the status quo is unsustainable. But where do we go from here? How do we chart a new path moving forward?

Today, it seems, everyone has different thoughts for doing so. But regardless of those varying ideas, one thing is very clear. If we are going to fix health care, we have to start with small businesses. There is a reason we call small firms the backbone of our economy. They employ half of the private sector workforce. When these businesses do well, the whole country does well.

On the flip side, however, obstacles for entrepreneurs mean challenges for American workers. In the case of small business health care, the challenges are significant. Already, the overwhelming majority of America's uninsured are small business employees and their families.

In the last year, this committee -- well, in the last several years, this committee has held several health care hearings. But today's will be different. That is because both Congress and the administration are committed to change, and the ball is officially rolling towards reform. Today, we will discuss ways to make sure it is rolling in the right direction.

The call for health care reform is nothing new. For decades, Americans have waited for a solution that is both comprehensive and sustainable. It wasn't until recently, however, that reform took on new urgency.

For entrepreneurs, the clock is truly ticking. Already, their coverage costs are 74 percent higher than they were in 2001. And those rates aren't leveling off. As a general rule, small business premiums shoot up between 8 percent and 16 percent annually.

That means they will be even more expensive next year. For small businesses already battered by the recession, these costs have become impossible to absorb. As rates continue to climb, entrepreneurs are facing tough choices, cut health care or cut jobs.

According to the National Small Business Association, 10 percent of small firms may drop coverage in the next year. That is not a decision an entrepreneur should have to make. After all, a small business workforce is a close-knit community. Already, coverage within micro-firms, those with 10 employees or fewer, has dipped to 35 percent.

In the last few months, Congress has taken steps to help small firms survive the recession. We have made credit less expensive and capital more accessible. But until we have made health care affordable, these provisions can only go so far.

That is why Ranking Member Graves and I have introduced the Small Business CHOICE Act of 2009. That bill has the potential to reign in health care expenses. By cushioning costs and giving entrepreneurs better bargaining power, it promises small firms the best range of possible options.

While there is no silver bullet solution to America's health care woes, there is opportunity for improving the system. At the end of the day, small businesses need options, and there are several out there. Whether it is pooling mechanisms, insuring exchanges, or refundable tax credits, the one thing we know won't work is the status quo. That has become abundantly clear.

In the coming weeks, Congress will begin laying the groundwork for real and lasting reform. It's about time. Entrepreneurs cannot afford to wait any longer, and neither can our economy.

It is critical that we come to a consensus on small business health care, because until we do, small firms will continue to struggle, and so will our recovery efforts. At a time when we are counting on entrepreneurs to lead us out of recession, we cannot afford to hold them back.

I would like to take this opportunity to truly thank all the witnesses for being with us today and look forward to hearing from them. With that I will like to yield to Ranking Member Graves for his opening statement.

REP. SAM GRAVES (R-MO): Thank you, Madame Chair, and good afternoon everyone, and thank you for participating in today's hearing. The rapid rise in the cost of health care is placing a strain on many working families in small businesses.

Nearly 46 million Americans are without health insurance. And of those, an estimated 26 million are small business owners, employees, or their dependents. For those who do have health insurance and can afford to pay the premiums, costs are rising, and there doesn't seem to be any end in sight.

On the other hand, the United States is the leading innovator of newer and more effective treatments for a variety of conditions and diseases that are improving the quality of life for people. Unfortunately, millions of our citizens cannot take advantage of these innovations because they can't afford good health insurance or a finding that the insurance that they do have doesn't fit their needs.

As Congress gets set to consider comprehensive health care legislation, my principal objective is to make health care more affordable without sacrificing access to quality care. Price is often the primary barrier to care and to that end keeping frivolous lawsuits in check, any of the tax codes discrimination against the self- employed and allowing businesses to pool together to negotiate better rates will be -- will all be helpful to keeping prices affordable.

We should also focus on more preventive tools and incentives that help providers keep people healthy rather than reimbursing them to treat people when they are sick. Wellness programs, like those mentioned in previous hearings, are a great way to decrease health care costs, reduce absenteeism, and increase productivity.

Lastly, I'm a strong opponent to a national employer health care mandate, especially one administered by the federal government. As I've mentioned in previous hearings, mandating employers to offer coverage is a very costly option.

According to an NFIB study, a national employer health care mandate can cost our economy roughly 1.6 million jobs for small businesses taking on the brunt of those losses. It's apparent that fixing our health care system will be a challenge. But I look forward to the hearing, and I think that -- (laughs) -- I look forward to the hearing and the challenges, Madame Chairwoman.

I appreciate you bringing up the bill that we've sponsored. I do want to thank our witnesses for coming here today. You all -- some of you have come ways to be here, and again I appreciate the opportunity.

REP. VELAZQUEZ: Thank you. And I welcome our first witness, Mr. Jim Wordsworth. He is the owner of J.R. Goodtimes Inc. located in McLean, Virginia. J.R. Goodtimes is made up of a number of small companies delivering a wide range of hospitality services to the Washington D.C. area.

Mr. Wordsworth is testifying on behalf of the U.S. Chamber of Commerce. The U.S. Chamber of Commerce is the world's largest business federation, representing three million businesses.

Welcome sir, you'll have five minutes to make your opening remarks -- testimony.

MR. WORDSWORTH: Good afternoon, Chairwoman Velázquez, Ranking Member Graves and distinguished members of the Committee. Thank you for asking me to testify before you today.

I am Jim Wordsworth, president of J.R. Goodtimes, Inc., a 250 seat restaurant located in Tysons Corner, Virginia. I also own several other small businesses. And I am here to speak to you today on behalf of the U.S. Chamber of Commerce.

I'm currently on the Chamber's board of directors, and serve as the chairman of the small -- Council on Small Business, and also as the chairman of the Labor Relations Committee on health reform.

As you know, small businesses have a hard time finding affordable health insurance. Insurers may not want to contract with a small group or premiums may be astronomical. Small businesses must purchase coverage that complies with state mandate laws that raise the cost of insurance. The same insurance policy might cost twice as much in one state as in the next. But small businesses generally cannot purchase policies across state lines.

Even worst, small businesses lack a streamlined way of pooling together to spread risk or to negotiate with insurers. They are positive steps. Congress is currently considering many good strategies to combat rising health care cost. The Chamber applauds these efforts, especially proposals to pay for performance and not just quantity of care, to improve care coordination and to explore bundling payments, reduce hospital readmissions, and more.

We support robust implementation of health information technology, increased transparency of quality and cost information, and efforts to support administrative simplification, which will necessitate Congress stepping in and creating some national standards that override state rules.

Some changes will be beneficial to small businesses almost immediately. Among these is fair regulation of the insurance companies to the creation of a national health insurance exchange. By setting national rules that require health care's insurers to issue policies to all comers, preventing drastic variances in the cost of coverage, putting an end to pre-existing condition restrictions, and changing insurers' incentives from avoiding risk to managed care, Congress will make health insurance much more affordable to small businesses.

The exchange could be a powerful tool for connecting individuals and small businesses with insurers, and helping them to shop smart and find the best fit policies. But it should be up to the employer, whether or not to participate. And employees should not get tax incentives to leave employer plans.

Ideally, employers should be able to join ERISA-like plans through the exchange. Chairman Velazquez, the CHOICE bill that you have sponsored, would be an excellent step in the right direction in creating a pooling and reinsurance mechanism that could help small businesses control costs, manage risks, and build more predictability into the premium structure.

Small businesses are also grateful that Congress is considering subsidies for small business to ensure that their employers -- for the insured employees, and to create wellness programs. These subsidies, because of the tax structure and strategies of many small businesses, should be refundable, flexible, and apply to a large swath of small businesses, not just to the smallest micro-business.

There are steps in the wrong direction as well. Referred to as "shared responsibility," many in Congress are insisting on the creation of a mandate that employers sponsor insurance coverage or be forced to pay into a fund. Employers who want to provide -- employers do want to provide insurance, but many are precluded from doing so by high costs, low profit margins, or insurance market problems.

The idea that an employer mandate will increase coverage is illusory, because new rules will not change financial realities for small businesses, but could cost hundreds of thousands of jobs, and prevent businesses from hiring new workers.

Congress might propose to carve out some small businesses from an employer mandate, but in the end, these carve-outs tend to shrink and disappear. The proposals in the Senate attempting to target only medium to large employers would be devastating to small employers, and would have damaging effects even on some micro-businesses.

In effect, smaller employers would still be swept up by these new mandates. A better option will be to create an individual obligation to obtain health insurance. This would bring market forces to bear on employers.

Employers who wanted the best talent, and to be competitive at all, would have to do their best to offer benefits that satisfied individual obligations of potential employees, and those employees, they want to keep.

Ideally, if Congress puts in place aggressive insurance market reforms and robust exchange, a government-run health insurance company would be unnecessary. Employers of all sizes have serious concerns about the consequences that have on the insurance marketplace, or employer-sponsored coverage, as the nation's finances.

The Chamber also has concerns about proposals to tax employee benefits. Congress should keep in mind that capping the employee exclusion has been a long-time goal of policy wonks who believe that a national, standardized cap will lead to reducing regional variations and lowering the cost of health care and the insurance coverage.

However, proposals to cap or eliminate the exclusion only for high income earners represents a "soak the wealthy" mentality that is unhealthy for the nation's fiscal policy as well as useless from the standpoint of a health care policy perspective.

In conclusion, the Chamber is eager to work with the Congress, to enact this year comprehensive health reform legislation. That being said, the business community will not support reform for the sake of reform.

As Congress continues to work on health care reform, the Chamber looks forward to working with you to ensure that these goals and priorities of small business are taken into account. I thank you.

REP. VELAZQUEZ: Thank you. And our next witness is Ms. Joan Burkholder. She is the owner of Crist Instrument in Hagerstown, Maryland. The company primarily specializes in the design and manufacturing of biomedical research equipment.

Ms. Burkholder is testifying on behalf of the U.S. Chamber -- Women's Chamber of Commerce with over 500,000 members, the Women's Chamber of Commerce works to create economic and leadership opportunities for women throughout networking and advocacy.

Welcome.

MS. BURKHOLDER: Chairwoman Velázquez, Ranking Member Graves, and members of the Committee. I am here today as a member of the U.S. Women's Chamber of Commerce representing over 500,000 members and millions of American small businesses who are struggling to provide health insurance for themselves, their families, and their employees.

The employer-based health care system in this country has become a travesty. It particularly disfavors small and medium-sized businesses that do not represent a large risk pool of insured employees. And it leaves out the self-employed who either go without coverage or are left to seek individual policies where premiums are exorbitant.

Costs - costs have been spiraling for small businesses for a number of reasons. Small business premium costs are based upon size, the average age, and the historical health care costs of the employee group. As the employees age, overall health care costs increase, and small businesses bear increasingly heavy burdens.

The effect on small businesses and their employees as a result of spiraling health coverage cost is multi-faceted. Many firms simply drop out, no longer able to provide the employee health insurance due to cost. This leads to an exodus of good employees seeking employment where health insurance is offered.

In the case of my company, we continue to provide coverage, but have asked employees to pick up more of the cost. We are not alone in this practice. As the employee's share of premiums has increased, more employees are opting out of coverage.

Today, only 73 percent of our employees are covered under our company policy. This year, we have asked the employees to pay 60 percent of the premium payment, thus decreasing their real income. If we ask them to cover even more next year, fewer will remain covered, shrinking the size of our group, and thus driving costs up even more, as only those with chronic conditions will opt to continue coverage.

Last year the total cost of coverage for only 11 employees of our company was a whopping 10 percent of our gross revenues. It ate up every bit of the profit that we should have made and then some. The rate increase last year was a whopping 22 percent. Even worse, we've been informed as of this morning that the rates are set to increase by another 19 percent in August of this year.

How can health insurance be affordable when an employee earning ($)300 to $500 per week pays premium coverage for their family at $1,500 per month with a $2,400 deductible and co-pays as well? How can a small business owner afford $1,500 per month for each of their employees and still stay in business?

Frankly, short of any catastrophic health issue, our firm could pay for normal health maintenance for all of our employees for less than we are paying for 73 percent of our staff now.

Age and size discrimination - small businesses are being forced to discriminate in their hiring practices to continue health insurance coverage for employees as insurance rates begin to increase dramatically for persons over 40.

Substantial increasing and unpredictable health care costs force small businesses to delay or cancel new hires. Ideally, the whole existing system should be scrapped and re-thought. As it is not practical or politically feasible, I recommend the following.

One, major reductions of premiums by requiring insurance companies to honestly pool risk among all insured individuals and families. The plan proposed by Senator Baucus, as an example, implementing a national insurance exchange, including a public option, would be a good way to make this happen. However, the public option should be in addition to the private insurance to provide choice and competition.

Two, ensuring all Americans are covered to spread the cost is desirable as it would potentially drop rates. However, mandates are not an option, as it would force many small businesses to close their doors completely. Affordability is essential, and tax incentives for small businesses should be included.

Three, streamline the processes through information technology. Four, limit the ability of insurance companies to deny coverage. Primary physicians and specialists know about their patients, they know their history, and know what best care they should receive.

Finally, over the past several years the competition between health insurance companies has decreased as a result of mergers. Fewer health insurance companies create less competition resulting in higher premiums. It is government responsibility to establish guidelines for equality for the good of all, small businesses, health care providers, and insurance providers, as long as the system we currently have continues to be utilized. Thank you very much.

REP. VELAZQUEZ: Thank you. Our next witness is Mr. Freddy Castiblanco. Mr. Castiblanco is the owner of Terraza Café in Jackson Heights, New York. Mr. Castiblanco employs six people in his café, and his employees are all uninsured. He is testifying on behalf of the Main Street Alliance, a network of faith small business coalitions building a new voice for small business on health care.

MR. CASTIBLANCO: Thank you. Chairwoman Velazquez, Ranking Member Graves, members of the committee, I thank you for the opportunity to testify on ways to make health care reform work for small businesses.

My name is Freddy Castiblanco, and I am the owner of Terraza 7 Train Café, a small business located in the Jackson Heights, Elmhurst neighborhood of Queens, New York, one of the most diverse places in the country.

We have been in business for over eight years. When I immigrated to America nearly a decade ago from Colombia, where I had practiced as a physician, I wanted to achieve the American dream and open a small business. With my own hands and the team of employees, I build a cafe in formerly abandoned storefront, which has become a vibrant center of neighborhood life, where the community members gather, and where local artists show their work.

We have built our business to employ 11 dedicated employees, five fulltime and seven part-time, and I'm proud to create job for my community. As my business grew, I wanted to find health coverage for my employees and their families.

However, my hopes were crushed when I consulted a broker, and I found the premium for a decent benefit package would be over $700 amount for each employee. It will -- this would make health care the largest expense for my business after wages, over 18 percent of my payroll. That's more than my rent and any other operating expenses.

I consider purchasing a less expensive plan, but the high deductibles seemed unfair, and ultimately, not worth the cost because my employees wouldn't be able to afford the out-of-pocket costs. I had to make the hard decision to forego health insurance.

I have lost some of my most talented employees, because I couldn't provide health insurance for them. I have witnessed that employees avoid necessary medical treatment because they fear large hospital bill. What would have been a small problem turned into large crises because my workers do not have health coverage.

Others have gone without regular check-ups and preventive care for many years now and have no regular physicians.

It pains me, as an employer, as a doctor, that my employees, their families can't get routine care that would help them lead a healthier and more productive life.

I share my story because I believe it is emblematic of the larger health care crisis which small businesses have been on the front lines of for years. Our health care isn't working for the small businesses. To fix this, we must consider the following four points.

Affordable costs, quality coverage, shared commitment, and real choices. I will focus the rest of my comment in the last two points, shared commitment, and real choice. You may not hear consensus of these points today, but I encourage you to talk to their real business owners in your home districts. You may find they have different views than what you hear from groups based here in Washington.

This issue of shared commitment is sometimes put as, do small businesses like the idea of a mandate? I believe this is asking the wrong question. Nobody likes the word "mandate," this is no surprise. But I ask the small businesses, do we want good health insurance for our workers? Yes, we do.

Do we feel a responsibility to have your employees -- our employees afford health care? Yes, we do. Do we want to be part of the solution? Yes. Are we willing to contribute? Yes. There seems to be an assumption that if we don't have a mandate, we won't have to pay health care.

This ignores the reality that we are paying already. We are all paying the cost of our broken health care system and affordable premiums for those who have coverage, and in loss of employees, lower productivity, and financial insecurity for those who do not.

As the cafe owner, maybe it is my job to remind us all that there is no free lunch in health care. So we are willing to contribute to make that possible, we need real affordability of real choices. Now a central question is, should the reform include the public health insurance option. I say, yes.

Let the small business owners decide what works for us to keep what we have if it's working, or choose something new if we have no good choices, no good options. This will give us greater bargaining power and encourage competition among insurers to make coverage affordable.

Some argue, which will leave health reform to private insurers. But I ask, why put all your eggs in one basket? It's hard for a small business to trust the insurance companies. Why should we, after so many years of frustration?

Insurers have been unable or unwilling to contain cost increases, and cannot offer a real coverage we can afford. So why put all our eggs in one basket, especially when the basket is broken. In closing, I wanted to say I admire the American entrepreneurial spirit. I'm proud to be an example of that spirit in action, and I know other immigrants, business owners, share that pride.

I know a small business will help us regain our economic vitality. We need to fix health care to make this possible. A common sense compromise is within reach, give us more choices, including a public health insurance option to ignite competition, drive down costs, and make good coverage affordable.

And you will find the small business owners on main streets across America not only willing to contribute, but to -- ready to serve. Thank you.

REP. VELAZQUEZ: Thank you, Mr. Castiblanco. Our next witness is Mr. John Nicholson. Mr. Nicholson is the co-owner of Company Flowers & Gifts Too!, North Arlington, Virginia.

After 30 years of being a newspaper editor, executive of the National Trade Association and federal official, Mr. Nicholson retired to promote and support his family company. He is testifying on behalf of the National Federation of Independent Business. Founded in 1943, NFIB represent over 600,000 small and independent businesses across the country.

Welcome.

MR. NICHOLSON: Thank you, Madame Chairwoman, and the ranking member, and members of the committee. My name is John Nicholson and I'm the co-owner with my wife of Company Flowers & Gifts Too!.

We've been in business in Northern Virginia for more than 18 years, and currently provide floral and gift services throughout northern Virginia, and of course, here in Washington D.C. Our floral business is my retirement occupation, as you pointed out, which I own and operate with my wife. We are all too familiar with the ever increasing costs of providing health care.

From a cash flow perspective, each month we must generate cash to pay for health insurance at a rate that is roughly half the amount needed to pay the rent, and usually slightly more than what's needed to pay the outstanding sales tax due on the previous month's sales. And it's also roughly equal to the amount of cash needed for the payroll-related expenses such as federal tax withholdings, social security, and Medicare.

So in short, health insurance is a huge expense associated with our business. We have 15 part-time and fulltime employees. Of the nine fulltime employees that are eligible, seven of our employees obtain their health insurance through our business.

We used to pay a 100 percent, but then the cost increases, we'd made adjustments over the years so that with our employees' sharing now an additional percentage of cost, we pay half and they pay half. In addition to the expense maintaining coverage in a market, where flexibility and choice are limited, is also very extremely tough.

We have difficult medical histories and they are very reluctant to shop around for new plans, because we'd be subjected to new underwriting processes, and that would increase our cost, I'm sure.

But at the end of this year, that may all change and not for the better. At the end of this year, we anticipate our rates are going to skyrocket. Because what has happened is, our small groups, and the experience of just the small groups, have been told to us that they were probably going to double the rates at the end of the year.

Depending on just how bad the sticker shock is, we'd have to stop paying for half of the coverage altogether or shift out of our current plan and start looking for another one, hopefully at a lower cost, I doubt it. At NFIB, we have three Cs, Cost, choice, and competition.

We want to lower the costs for small business. We want to provide easier ways to shop for insurance and competition among the number of choices when buying plans. Let me suggest three policies that we ought to focus on.

One is pooling. NFIB has long advocated that small businesses have the ability to pool their resources in purchasing insurance. Pooling shows individuals to have harness power and administrative cost, reduce the risks which in turn decrease the cost.

Secondly, the insurance market reform, national insurance rating rules are long overdue and will provide small employers with a marketplace that more closely reflects the large competitors that they get. For instance, the reforms are especially crucial for small group marketplace because they experience the greatest lack of choice, and the most significant premium volatility.

Take our plans for example. Individual coverage through our PPO operation has increased from 406 a month to 747 a month in 2008. Let me introduce this, my insurance consultant came up with this. And I think you all have it, and let's introduce that into the record here if we might.

REP. VELÁZQUEZ: Without objection.

MR. NICHOLSON: Family coverage is even worse. In 2004, the coverage was $1,157 a month. Today it's ($)2,092. So you can imagine that very few pick up that plan and none of our employees do. Third point is the tax-based incentives. Tax assurance can come in variety of ways including our tax credits and equalizing tax treatment.

Currently, we don't have equal tax treatment.

As the employer's family, we do not get to deduct the cost of our health insurance the way we are able to deduct the cost of our employees' insurance. The SHOP act is one approach that NFIB suggests.

Small Business Health Options Program is an incremental approach that includes pooling, insurance reform, and some tax-based incentives. As Congress then works on these reforms it's important to suggest how new approaches can hurt rather than help. NFIB has identified four potential roadblocks, and but for time cover purposes I want to cover only three.

One is employer mandates. We oppose employer mandates in any of these reforms. Secondly, public option. NFIB has long advocated that Americans ought to continue to receive their health insurance and health care through the private sector. So that opposition to a public sector option is a direct reflection of the NFIB members' belief, that coverage should be obtained in a better private section.

I just don't want my health coverage operation, run by efficiency like, the post office or IRS with its police attitude or even the huge Amtrak costs. Those don't add up to what we want out of health insurance. And finally, caution; do not put coverage ahead of cost containment.

We really -- what we are going to be talking about today has to do with how we can work our side of the issue. But the most important thing, without question, is to have cost containment, to put -- you have the power, we don't have the power. You have the power to lean on the whole process. The doctors, the hospitals, all the rest of that side of cost containment, it's most important.

Thank you.

REP. VELÁZQUEZ: Thank you Mr. Nicholson.

And the now the chair recognizes Mr. Graves for the purpose of introducing our next witness.

REP. GRAVES: Thanks, Madame Chair. Madame Chair, I would like to introduce Bradley Thompson who is the President of Inland Press located in Detroit, Michigan. And he is testifying today on behalf of the Printing Industries of America.

He was born and raised in Michigan. He is the fifth generation of his family to lead this publicly traded Michigan company and thanks Brad for being here today. I appreciate it.

MR. THOMPSON: Thank you. Chairwoman Velázquez, Ranking Member Graves, and members of the committee, and members of the committee, good afternoon, and thank you for inviting me to testify today.

I'm Brad Thompson and I am the President of Inland Press, a Detroit, company engaged in both the commercial printing and the newspaper businesses. I am also here as labor policy chair of the Printing Industries of America.

Printing Industries is proudly headquartered in Congressman Altmire's district. Inland Press has been in operation for 114 years, we have provided health insurance to our workers since 1934. Today, we employ 115 fulltime employees, 25 of whom are union workers. We provide family coverage to all of them.

While health benefits are a tool to attract and retain a qualified workforce, many small business owners feel a moral obligation to provide health insurance. I strongly agree. In April, our annual health insurance renewal was nearly a 12 percent increase, the fifth year of double digit increases.

To put this in historical perspective, in 2003, our health benefit costs averaged $4.86 per employee, per hour; this year it will be nearly $11 per hour. That translates to nearly $600 per month for single coverage and almost $1,600 per month for family coverage.

Our union employees are paying more than ever. Their contributions range from $55 to $70 per month. In comparison, average printing company employees are now contributing in a much higher -- ($)90 to $350 per month.

In 2007, we paid more in health care premiums than our printing company earned in profits. The follow-up from this has been that we've frozen hiring just because the employee benefit costs are just too high.

Like many, we've tinkered with adjustments and higher co-pays, but minor adjustments are just not enough any longer. Real reform and solutions are necessary. I'd like to comment on four policy solutions, I hope you will keep in mind.

The first is pooling. The idea of small companies pooling together to achieve greater economies of scale is valid and it works. I encourage Congress to keep the pooling concept alive. Ideally this would include the ability to pool across state lines.

Tax credits, as an incentive to small businesses to provide health benefits is a great idea and our industry would strongly support this. As you examine these credits I urge consideration of the following.

Number of employees; I've seen 100 floated as cap on the number of employees for eligibility of a tax credit, which would render Inland and other printers, my size, ineligible. Increasing this number to 200 or 250 would ensure more workers and prevent small firms in our industry from choosing between job growths and losing a tax credit.

Wellness programs. While connecting a wellness program to a potential tax credit is a good commonsense idea, it is important to consider the burdens this might have on small firms. The tiniest printers may not have the resources necessary to implement a program and are often the ones most in need of a tax incentive to provide health benefits.

Others face operational hurdles. In our newspaper operation, I have 60 employees spread out over 10 locations, which could make it challenging for us to implement and administer a program. There is probably a solution there and I urge Congress to consider these practical questions.

Hours of workweek; recent studies cite that the majority of employers use a 30-hour workweek as a cut off for health insurance eligibility. So I would encourage the same standard to apply as regards tax credits. Again this would lead to more insured workers.

I hope Congress will consider the needs for increased competition and products offered in the health care marketplace. It's key that both owners and workers at small printing companies have flexibility and choice in what insurance best fits their needs and budgets. When it comes to competition and choices, more, more, and more.

The three policy suggestions I've given are positive ones, but I must address one proposal, which most small printers, are very worried, government-mandated health insurance. Whether it would be state mandates, mandated minimum levels of coverage, or pay-or-play structures, there is a real concern about cost increases outweighing the noble goal of insuring more Americans. It also creates serious barriers to entry for very small and start-up printing companies.

Again, thank you for holding today's hearing and for inviting me to testify. I look forward to answering any questions you may have.

REP. VELÁZQUEZ: Thank you very much Mr. Thompson.

Mr. Castiblanco, I would like to address my first question to you.

The economy has played significant strain on small businesses. And many are barely able to keep their door open, let alone provide health insurance. How would you respond to critics who claim that an employer mandate would cause job losses and put firms completely out of business?

MR. CASTIBLANCO: About mandate, I feel the -- if you provide good choice, really good options, options that would be -- would decrease the prices of the insurance and options then that can guarantee long-term solutions, I think, we are going to have to recover the truth in the system.

I think the word mandate is a word that nobody likes. But if you push us to a trusted system, a system that is going to guarantee that the prices are not going to increase again in the future, we're willing to contribute. I think when I talk about shared compromise, we are talking about -- we as employers has to put apart employees, that the government too -- and we have to regulate the market.

How are you going to make sure that the rates are not going to increase later? I think if we have an -- a public option, we can control. We can provide that competition. We as a small business, we don't believe in the private insurers. So the way to recover our trust is --

REP. VELÁZQUEZ: Thanks. Mr. Nicholson, as an employer who offers coverage, can you discuss your concerns about an employer mandate for small business?

MR. NICHOLSON: For unemployment coverage as we now provide?

REP. VELÁZQUEZ: As an employer who is offering health insurance now, can you discuss your concern about an employer mandate?

MR. NICHOLSON: Oh, an employer mandate. Yes, you know, we believe that an employer mandate problem would exist much in the way that I look at, for instance, the social security system, always in favor of it. But over a period of time, where there are benefits, not this group of politicians, but prior ones, and the others to come, will have the opportunity to change. That changing is very difficult for us to accept in the long term.

Secondly, as I outlined, the government-run mandate would be probably quite difficult to handle, and secondly, you know, if I get angry at Aetna or somebody of that nature, they don't throw me in jail. But if I get angry at IRS, they can throw me in jail, big difference.

REP. VELÁZQUEZ: Okay. So let me ask you, if we fail to have some type of health care reform, the consequences could be severe. And if premiums go up by over a 100 percent in the next decade, as they did, in the last decade, what would be the impact on small businesses on job creation?

MR. NICHOLSON: Tremendous. No question about it. But that's why I concluded my statement by saying; we look to you because we are unable to do it. We look to you all to lean on cost containment. And we believe that if the costs are kept relatively level, not increasing this huge amount that you point to, if they can be kept that way, then we can work with private insurers to get the best competitive rates possible.

REP. VELÁZQUEZ: Okay, Mr. Thompson, nearly all the reforms being discussed include the creation of a health insurance exchange. One of the debates in Congress is whether there should be a public plan. Do you think then an exchange without the public plan option can be structured in a way to make insurers compete?

MR. THOMPSON: I am not entirely familiar with that proposal. What I would think that with the right direction from Congress that the private industry should be able to and the private insurers should be able to provide that sort of thing. Our emphasis is on choice and allowing the employers, the employees to make proper levels of choice. I guess, I'd sum it up that way.

REP. VELÁZQUEZ: Mr. Wordsworth, do you have any comment on that?

MR. WORDSWORTH: Yes, I do from the standpoint of mandates and I particularly come back and speak for that. We are a hospitality company. We have a low profit margin, about 3.5 percent nationally, is what hospitality companies like restaurants prior to the last couple of years.

But in my company, we pay 25 percent of premiums for the first six months. And we have a transient kind of business, what we do. After one year we'd pay 50 percent of the premiums. Their choice of premiums and they can include vision, and hearing, and life insurance.

And then, after that 10 percent each year up to 80 percent max, including my wife and I. So if we already pay 80 percent, it's a great program, because it helps in our retention and we just don't lose the employees, there are many 25-year employees. Why would a mandate be a good thing? Mandate, equals force, equals required.

REP. VELÁZQUEZ: Are there ways to increase coverage without some kind of mandate, individual or otherwise?

MR. WORDSWORTH: You are talking about nationwide or within my company -- nationwide?

REP. VELÁZQUEZ: Yes. In terms of the health care, yes.

MR. WORDSWORTH: Yes. The cost is just enormous. I haven't heard anybody say anything about losses and malpractice cost. And that's if you are doing a comprehensive reform, you have to include the cost for malpractice.

And so cost is the biggest issue. That certainly is for me and I think is for most of the people. In a small business you know, your employees are like your extended family. They are not your family, but they are like your extended family. And so it's in your best interest to do everything you can to keep a symbiotic relationship.

REP. VELÁZQUEZ: Thank you. Ms. Burkholder, you noted that your health care costs went up 22 percent in the last year and now make up 10 percent of your gross revenues.

MS. BURKHOLDER: That's correct.

REP. VELÁZQUEZ: What will you do, if reform fails and this trend continues over the next few years?

MS. BURKHOLDER: We maybe forced to cut employees, cut their time, go out of business, and because there is a limit to what we can charge our customers. And you know, at that point, we may just drop insurance altogether. And that would not necessarily be good for our company, because seven of the members of this company are all family.

(Laughter.)

We believe in nepotism, I mean, big time. And so, in addition to caring about our extended family as Mr. Wordsworth mentioned, which we do very much, you know, we really do have immediate family members who would be suffering as well. So it would be a very serious thing for us.

REP. VELÁZQUEZ: Thank you. Well, now I recognize the ranking member. I'll come back --

REP. GRAVES: Thank you Madame Chair. You all mentioned that, I mean everybody here has mentioned that you want to provide health insurance for your employees. In case you can't in some cases you can't, but cost is obviously the number one issue out there.

And you know, we hear about mandates and you all have kind of touched on it a little bit, about what a mandate would do to you, do to your company. And then we also hear about maybe the possibility that if there is some sort of government option that it is going to, you know, provide an opportunity to be lower a bit.

You know, if we look at the way the government has run Medicare, and the way the government has run the VA health system. You know, we hear complaints in my office all day long coming in about the problems associated with the coverage from Medicare, or even you know, for Medicaid in there too. And look what the costs has done there.

The VA system alone in the last decade you know, we have doubled the expenditure over -- more than doubled the expenditure at least in the last eight years, or the last nine years to the VA system, and the cost just continued to go up. And there is a government-run health care system right there.

So if you have a situation where, and I'll ask all of you, if you have a situation where you are mandated to provide that coverage, and those costs continue to go up you know, and even the government system. You know, obviously what is that going to do to you?

And I guess some of you have already answered that and you know, it's unfortunate too because we haven't really gotten a chance to talk about Madame Chairwoman's bill and my bill with pooling. Because I think that offers great opportunity if you've got a business with 10 employees or 7 employees, it's pretty hard to go out and get health insurance. But if you can pool together with a 100 other businesses with 7 employees or 10 employees your buying power just got a whole lot better.

And it was touched on when it, obviously too, when you talked about medical malpractice reform, which is a huge cost driver. But I guess you know, we are kind of talking today about these mandates, and you know, I just want to, you know, what's the one thing that's going to do.

Are you going to be able to stay in business or are you just going to you know, quit business. Are you going to you know, drop employees? What are you going to do, just the quick answer, if you are mandated to do this? And I don't see any reason why costs are going to be contained just because the government has an option out there. I think it is going to make it worse.

We'll start with you Mr. Thompson.

MR. THOMPSON: Yeah, ranking member, I think that we would continue to do everything on our power to keep our headcount down, reduce our employment levels. We may invest in more technology than we already have. But obviously, as health care costs rise, we just look at every other way we can continue to maintain our business and keep reducing the employee cost, which means we are going to hire less people or lay people off, and reduce our headcount on a continued basis.

I don't want to do that. I have been in my community for nearly 115 years. My family started the business. I mean, I have deep, deep ties. I want to hire people. I want to hire a lot of people. It's one of the stakes in our business. It's, you know, I have shareholders, and I have stakeholders, I have the community. They are the stakeholders.

So we want to do this. But we don't have any choice. I have to be profitable. I have to report to shareholders that demand that we be profitable and don't lose money. So we'll do whatever we can even if it means cutting headcounts, that's what we'll have to do. But that's -- it pains me terribly. I mean, I just -- that's the worst thing I can possibly do in my business and I don't want to do that.

REP. GRAVES: Mr. Nicholson.

MR. NICHOLSON: Yeah, I guess we are talking about mandates as if it is -- without getting into the details of what -- how you administer the mandates. And I think we have to look at some of those if we are going to examine a mandate program.

But one of the things, for instance, that we have done when we ran into a similar situation where we were going to take a government contract, which we eventually decided no to. We looked into one of the problems was that we realized we had to go out and hire independent contractors to get -- accomplish what we were going to do. And that took them off our payroll so that we could then get, meet some of the federal restrictions on the payroll and cost-plus, and so on, and so forth.

I suspect that if we end up with some sort of an employer mandate, there is going to be an awful lot of looking closely at all of the little tiny details. And to me the way you handle that, if I were in your shoes, would be to require the private insurers to have the mandate restrictions.

But let them negotiate with us employers, so that we can then not get into trying to find a way around this or that. And make them responsible for getting the various objectives accomplished by what you want to have done.

MR. CASTIBLANCO: Well, I believe if we get a mandate and we keep the private insurers working like -- who are working until now, we will have to close our business, our small business. I wouldn't be able to afford that mandate in that way. But I want to insist that a public option would be one extra choice.

I mean I went to competition for private options and I think if we can lower the cost of insurance 47 million people would be recruited to the system, and I think that would be good not only for a public option, but also for the private insurers.

This would be a really good business for everybody. Well, in that case, a mandate would be possible, would be -- well, that we need to put a part in this process as small business, but if we don't have real choices, that would be catastrophic.

REP. GRAVES: Ms. Burkholder. Yes.

MS. BURKHOLDER: Okay. Well, you know, we could probably live within a mandate as long as the prices didn't increase. But I don't think that's a guarantee that you know, it's -- those costs for health care are going to be maintained at a reasonable rate, unless there is a regulation covered that sets that. And short of that you know, our company cannot, and we can't afford what we are paying now, let alone paying more.

And yes, you know, our company is in the medical business, not the insurance side of it, because what we are making are the leading edge devices that are used by researchers for scientific advancement. And in particularly the medical field, and particularly in the neurological area.

If we can't keep our engineering staff and our existing shop staff to manufacture new devices, let alone continuing to make the existing ones, then you know, our purpose and our service to this country and the rest of the world is basically voided. .

REP. GRAVES: Mr. Wordsworth.

MR. WORDSWORTH: I think one of the great things about this country, and regarding what I do, in hospitality and food service, is the great quality and diversity and safeness of our food, and the way we serve it. I think in my business not necessarily mine, we use all fresh ingredients and we prep there. Locally we use our staff.

I think you would find people either cutting services, perhaps cutting quality, perhaps losing attention to safety, not in my business, but I think that those things would happen. And I think people would -- now, you've got drive in, carry out, home delivery, walk up, sit down, fine dining.

I think you'd find a great consolidation of all those things, in products and services, and our variety would be lost I think, secondary to just cutting employees. I mean, where you had eight employees doing a job, you'd spend all your time finding a way to have five down, have it automated, to outsource it. Nobody likes outsourcing. But you know, the math is just the math. And hopefully this is for small business community.

I know this is not health care discussion. But I just feel compelled to bring it in. Hopefully you'd look at the holistic things that are happening in the small business. Right now, many of the proposals including, card check and those kinds of things. I mean they have merit and your consideration, how much weight a small business can take.

And health care is a high, high cost. I'm very proud of the health care we provide. Like I said, I don't have any pilferage. My employees stay with me. I get my money back. It is a great investment to invest in the employee versus the building. But I think you'll find a real suffering in our quality and delivery and safety.

REP. GRAVES: Thank you.

REP. VELÁZQUEZ: Ms. Clarke.

REP. YVETTE CLARKE (D-NY): Thank you very much Madame Chairwoman for holding this very timely, important, and relevant hearing on addressing comprehensive health care reforms from the small business perspective, and it's just so interesting sitting here, because I guess walking into the room, I thought I was going to hear, sort of a uniform response.

But I feel even more confused now than I did when I walked in quite frankly. But that's what this debate is all about to try to find the win-win solution to what is really a challenge for our small entrepreneur, and I think at the heart of it, all of the concerns that each of you have raised.

So I just want to raise a couple of questions with each of you, because again, I'm hearing different perspectives, and I guess every business is as unique as the person who has started that, or the family that runs that, and the people that they employ.

On the one hand, I've heard concern about health care remaining in the domain of the private insurer. And it's my understanding that the private insurer has been part of the challenge in terms of the cost containment.

So the question becomes with an expansion of health care choices or options, I think that in listening I heard commentary about, concern about government I guess running the public option. And that's not what I've necessarily heard about a public option. I've heard about public investment in a health care option.

And I was wondering if anyone had any ideas about how that public investment in a health care options could be employed in the way in which it creates win-win because I'm not sure that I will want government folk, you know, handling my health care either. I have health care insurance through the federal government, but I go to a private insurer to have that health care delivered to me.

Has anyone, any of you, and I would like to get all of your feedback on that, given any considerations to that just very quickly about if there were public investments for health care, how it would best be utilized as opposed to the government actually, you know, giving the service itself, but working as we do in most areas as a contract though that subcontracts out that health care benefit to the benefit of small business.

MR. NICHOLSON: I could try to answer. I think I mentioned it when we were talking about mandates that if you define what it is that we are talking about in the mandate, get some of the specifics, I think it might make sense to then package those specifics and lay them on the private insurer table and say, "Okay guys, we want to have this objective, that objective" whatever that are part of what we are talking about as a mandate.

And then get a reading as to, all right, some of that is going to cost money, how much public funds are we really talking about and do we really want to have -- you all as politicians frankly want to have subsidy going to private insurance companies to make sure that some of those mandates get accomplished.

REP. CLARKE: It -- I know someone else will want to -- may want to respond to this. What about the non-profit sector as a deliverer of health care and how would you see that? I'm just trying to get small business to be a part of how we make this happen versus oh, government can't do this, or whatever. You know what I'm saying? I'm just trying to see how we create as many choices as possible.

And my time has winded out. So whatever you -- may be coming from your minds creatively, please me know.

MR. NICHOLSON: Let me amend that. When I say private, I mean also the non-profits, yeah.

MR. THOMPSON: I think that, you know, there is ways to bring health care cost down, new technology, investment, that sort of thing that the government could well do perhaps to help bring the tools into the, you know, into the health care arena to help bring costs down. That might be good. You know, part of the problem we have now is that government regulations don't allow us to shop our insurance in areas we may go want to go shop, or you know the pooling concepts that we've talked about earlier.

So we feel like we are a little handcuffed by government regulations. So if some of that was changed, we might be able to get more aggressive in the marketplace. But I do think that the government could provide tools to either the insurance companies or the health care industry overall that could help bring those costs down, that would then benefit all of us and bring our insurance rates down through either -- through the insurance companies that we are currently utilizing.

REP. VELAZQUEZ: Would the gentle lady yield?

Mr. Thompson, do you believe that small businesses should have the ability to pull together a big part of any legislation?

MR. THOMPSON: Yes.

REP. VELAZQUEZ: Okay. Thank you.

And time is expired. I recognize Mr. Coffman.

REP. MIKE COFFMAN (R-CO): Thank you Madame Chairwoman. And thank you all so much for coming here today. This is such an important topic and having been a small businessman, I can remember the struggles of trying to fund a health care plan. I got up to 50- percent, but only for the employee and not for the -- it didn't cover the family. They had to make up the difference for that and that was unfortunately the best I could do.

Mr. Wordsworth, if I say it right, you said something about, in your testimony, about the -- that you don't think that the government -- and I might have misinterpreted this -- about having incentive for the individual to steer them away from an employer based system. Am I right in that interpretation or did I get that wrong?

MR. WORDSWORTH: No, that's just what I did say. If the government has a program and there are discussions about the government either having an insurance company or having governmental program, if those programs or any kind of government incentives took it away, or actually paid the employees, you could have paid by reducing payments or whatever away from the concept of employer based insurance coverage, I think that would be damage to the system.

REP. COFFMAN: Well, I'm just and maybe someone else may want to comment on this. I am not clear on why would we damage. If we gave tax incentives, say to the individual, to purchase their own insurance, to make their own decisions and not to be relying upon the employer, what do you think would be wrong with that?

MR. WORDSWORTH: If there were incentives to the individuals?

REP. COFFMAN: -- to the individual.

MR. WORDSWORTH: To the individual, I think that would require a little bit of study and I don't feel qualified on that very question.

REP. COFFMAN: Okay.

But anybody else like to comment on that?

Yes. Mr. Nicholson?

MR. NICHOLSON: Are you talking about individuals being mandated?

REP. COFFMAN: No. Individuals -- just giving tax incentives to the individuals, and even tax credits to those who don't have the capacity to purchase insurance due to their income, but shifting from an employer based system to an assessed system whereby the incentive resides with the individual. Not -- it could still reside with the employer, but right now we really don't have incentives to the individual to purchase their own insurance and maybe if any of you would like to comment on that?

MR. NICHOLSON: I think it's a grand idea. We looked into it and tried to figure out a way to do it. The problem, of course, is that our youngest employee would much rather spend $125 a month on beer that on health insurance.

REP. COFFMAN: No question about that.

Mr. CASTIBLANCO: I would say that -- the problem there, my concern is that was we to going to control the increases in your insurance. We need that long-term solution. So I think it is not, those tax credits are not going to be the real solution. The prices are going to increase eventually.

REP. COFFMAN: Let me just say, I think the problem with having a public option is that what happens in everything in Washington is the government just runs ready, that we just borrow and that's how we fund it. And so somebody else is paying for. But I do think that there is no competition in the marketplace right now because there is no transparency and there is not an apples to apples comparison and maybe the exchange issue will help with that.

Anybody else like to comment? Yes.

MS. BURKHOLDER: Okay. I don't see a huge problem with having a system similar to the one that the federal government uses for its health care program because there is a group that goes out on the marketplace and bids on contracts to cover various aspects. Even that has been increasing, I know. But the other issue is that what we have been talking about today doesn't necessarily cover the problems that occurs when an employee leaves a particular job for another one or either because they chose to and they are going to a new employer or because they have been laid off because of the economy.

And, you know, one of the issues here that we have been talking about today is that in small businesses dropping the coverage and/or delaying hiring, that is going to prevent our economy from recovering and that's something that we need to do right now.

REP. COFFMAN: Okay.

MR. NICHOLSON: I think we're generally agreed well being taking care ahead of times is an ultimate goal. I'm not sure that as a small businessman, I can perform a nanny service on just a few employees now. Now if I had 150 or 200, I could afford to get a gym facility, you know, that kind of thing. So I think if we are going to shoot toward wellness coverage which I -- it makes a great deal of sense, I think we have got to really figure out how to get the individual assistance worked out properly.

REP. COFFMAN: Thank you very much. Thank you Madame Chairwoman.

REP. VELAZQUEZ: Mr. Luetkemeyer?

REP. BLAINE LUETKEMEYER (R-MO): Thank you Madame Chairwoman. I thank all of you for being here as well. As a small business owner, as the book holder of the family owned business, we face that situation everyday. So I understand your dilemma.

Well, small business owners are the ones that make this country what it is today and it's interesting that we seem to continue to have more situations on the small business folks and this is just one of those. You know, small business is really hanging on by a thread; it's a very tenuous situation for them in general right now. And this is a situation where hopefully with this bill that's being proposed by the Chairwoman and Ranking Member with pooling we'll be able to hopefully find a way to minimize some of the impact of these increasing costs.

Till there, we got to find a way to control cost. I mean that's the general objective in the hearing and to do that is -- you know, we've all got our ideas and I'm concerned about some of them, but I think you know, we are here today to discuss that the bill itself to an extent. And I was just curious, I assume that all of you are for it, or are you -- is anybody against it, have any reservations about pooling for small business folks. And we'll start with Mr. Wordsworth.

MR. WORDSWORTH: Well, I don't know how you would relate this to the old Association Health Plans, if you hear about those AHPs. But the concept is a terrific concept because it does allow you to get critical mass and get the attention of the insurance companies. And large companies can do that, even the companies that aren't large enough to self insure.

And we just cannot do it. I mean an insurance company that is non-interested with someone with say 7 employees like the other with someone with 700. But I liked it by industry because if you pool by industry, let's say in food service, it gives the insurance companies a much better thing to get their arms around, even bid on it rather than mixing me with an aircraft company and let's say a landscape or a -- because the risk and those kinds of things are of much difference.

And the other thing I will just add is I don't hear any reward for wellness and I really believe our future of our health system is not on the backhand and repair, but I think it's on the front-end and prevention. And I would -- and I think this for the government -- there is a great term I love to use is "meddle," the term as meddling. I think the government should meddle in rewards to help --

MS. BURKHOLDER: I'm with you, sir.

MR. WORDSWORTH: Good.

MS. BURKHOLDER: I'm with you.

REP. LUETKEMEYER: Thank you.

Ms. Burkholder?

MS. BURKHOLDER: Okay. There again, I think, if we don't pool then what happens is that the size of the group is greatly diminished where, you know, for example, with small businesses right now that group is the size of that business. We employ a total of 15 employees. Six months ago, we had 18, but because of the economy we have had to cut back.

Now, the other thing is that in terms of pooling, we need to have larger groups because if you look at what's happening in the western Maryland area, there are now only two companies that provide health insurance coverage. There is no competition. And, you know, we need -- if there's not going to be any competition, then we as small business owners need to have a means of fighting back against that.

REP. LUETKEMEYER: Very good.

Mr. Castiblanco, I am just curious whether you are supporting the bill we are discussing here today or getting information for with regards to pooling of like businesses to try and find a way to cut costs. Is it something that's -- that will work for you?

(No audible response.)

Okay, that's fine.

Mr. Nicholson?

MR. NICHOLSON: I am not sure that I want to comment on specific bill. I think we --

REP. LUETKEMEYER: How about the concept?

MR. NICHOLSON: The concept of pooling --

REP. LUETKEMEYER: Okay.

MR. NICHOLSON: Okay, let me add -- (off mike.) First of all, there is a insurance company that provides coverage or insurance. And for a while, that was quite advantageous. But then the trial lawyers entered the scene and they got someone who all of a sudden said that they had an allergy to their flowers and the next thing you know, the cost of the insurance went skyrocketing.

So you have to be careful about how you define your pool. Secondly, we've been a member of a pool for actually longer than we have had the flower shop. And when we entered, after we passed the underwriting test, we've been a member of that pool ever since which has been very advantageous for us.

During that last 20 years, I've had two heart attacks, my wife has had breast cancer, and we've stayed the same because we haven't had to change our underwriting because of being members of that pool. But the difficulty was that this pool was composed of very small businesses just like ours, and as a result, it had a very good experience. And as a result, its rates did not go up quite as much as everybody else until two years ago because of competition the consultant industry looked at it and said, "Hey, you Mr. Employee with 20 employees can drop your insurance and join this pool, and it would be a lot cheaper for you."

And so in the past year, we have had lots and lots of members joining that pool. But our experience has gone right through the roof because all of a sudden much worse. That's why come December, my rates are probably going to double. So be careful about the pooling process.

REP. LUETKEMEYER: Okay.

My time is really up. I will yield back to the chair. Thank you, Madame Chairwoman.

REP. VELAZQUEZ: Mr. Graves, do you have any other question? All right.

Well, let me thank the members of the panel and let me just say Mr. Luetkemeyer, I -- you know, our bill, Graves and myself, the legislation that we introduced, the CHOICE Act basically what it does is establishes a pooling mechanism that addresses two elements that are responsible for health insurance cost to go up and that is risk and catastrophic costs.

And we believe that in any health care reform legislation, those elements should be addressed and that a pooling mechanism should be part of any health care reform that will serve the small business community. Let me add that I have met with the committee of jurisdiction on health care reform that I've been raising the issues that are unique to small businesses. The fact that out of the million of uninsured Americans, are employees who work for small businesses and that in a way the health care problem that we are facing in this nation or the lack of health insurance is a small business issue.

And I encourage the members of the committee of jurisdiction to continue to listen to the small business community concerns when it comes to health care reform.

So with that let me again thank all the members of the panel for being here today. And I ask unanimous consent that members will have five days to submit a statement and supported material for the record. Without objection, so ordered.

This hearing is now adjourned. Thank you. (Sounds gavel.)

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