WASHINGTON -- The Senate committee's hearing Wednesday on the impact of the Affordable Care Act on small businesses began the way it started -- with Senate Democrats defending the law but promising to work for modifications and Republicans saying it is destructive and must be repealed. "Let's go back to what we have that does not do harm to...
WASHINGTON -- The Senate committee's hearing Wednesday on the impact of the Affordable Care Act on small businesses began the way it started -- with Senate Democrats defending the law but promising to work for modifications and Republicans saying it is destructive and must be repealed.
"Let's go back to what we have that does not do harm to the situation in American today," said Sen. James Risch, R-Idaho, the top Republican on the Senate Small Business Committee. "It is just disgusting what has happened as far as the federal government having botched this as badly as it has."
"Thank you Sen. Risch, but we're not going to go back to the time before people had affordable insurance," said Sen. Mary Landrieu, D-La., the committee chair whose vote for the Affordable Care Act is the top issues raised by Republicans trying to unseat her in 2014.
"There are some glitches that we need to fix," Landrieu said. But she said "we will not go back to the time when a firm loses coverage because one child is born with Down Syndrome."
Republicans centered on the testimony of Lawrence "Larry Katz of Metairie, the president and CEO of six Dots Diners. He was invited to testify by Sen. David Vitter, R-La., an opponent of the law, known as Obamacare.
With 65 full-time employees, Katz' firm is above the law's 50 employee threshold that exempts some businesses from providing health coverage to full-time workers, or paying a $2,000 per employee fine. Ninety one percent of Louisiana businesses have fewer than 50 workers and therefore are not subject to the law's employer mandate.
Falling slightly above the threshold, means Dots Diners won't get the same subsidies provided smaller companies under the Affordable Care Act, Katz told the Small Business Committee. Yet, he said, his small business lacks the group buying power that produces lower premiums for businesses with over 200 workers.
"We are caught in the unintended donut hole," Katz said. "And thus, we will be saddled with the options of either dropping our current health insurance plans, and pay the penalty, or cover 100 percent of our employees and incur its resultant much higher costs."
"I have unfortunately made the decision to quit offering coverage, as soon as the employer mandate kicks in,' Katz said. The Obama administration recently delayed the employer mandate for one year until January 2015.
Katz said the $2,000-per-employee penalty, "while huge," is less than the cost of offering required coverage under the Affordable Care Act to all his employees.
"So, beginning on January, 1, 2015, my employees and I will become part of the federal system and the company will be saddled with a $70,000 after-tax penalty," he said.
Katz is referring to the Affordable Care Act's exchanges under which people without insurance can purchase coverage, and determine eligibility for the law's subsidies.
Katz is contemplated selling his two least profitable diners so he could fall below the law's 50 full-time worker threshold, and therefore be exempted from the requirement of providing health coverage and meeting new federal standards for heath coverage, which he says he can't afford.
Currently, Katz said he pays two thirds of the costs for health insurance, with his workers responsible for one-third. About half have decided not to take coverage, either because they can't afford it or because they get coverage via a spouse, he said.
Sen. Vitter said Katz in a few minutes of testimony dramatized the huge shortcomings of the Affordable Care Act.
Landrieu agreed that Katz faced an untenable situation, and vowed to work to change the law to fix the problem small businesses that employ over 50 workers are facing.
But she said that law is producing important benefits, including tax credits that small businesses are already utilizing to provide coverage for their workers. That's not to mention, she said, the elimination of caps on lifetime or yearly coverage, or the ban on rejecting insurance applications from people with pre-existing conditions.
Before the Affordable Care act, she said, small businesses paid 18 percent higher premiums than bigger businesses.
The hearing was contentious. After Risch presented a study he says predicts significantly higher premiums in some states, including Louisiana, Landrieu said she wanted to correct the record. She said the study's authors acknowledged that they couldn't determine the impact of subsidies nor the effects of increased competition as companies compete for business under a new online process for purchasing coverage and qualifying for subsidies, called exchanges.
Risch and Sen. Marco Rubio, R-Fla., said the problems facing the owner of Dots Diners offfer a strong repudiation of Obamacare's major defects. Risch said the law could have been stopped if just one Senate proponent had voted no. That comment seemed aimed at Landrieu, the committee chair.
Half of the six small business owners, or advocates, who testified on the law cited problems with it, the other half said it is and will continue to provide important benefits.
Nancy Clark, owner of a small advertising and marketing firm in New Hampshire, told the committee that tax credits for small businesses, made available immediately after the law's adoption in 2010 via an amendment by Sen. Landrieu, had been very helpful in keeping her costs down as she tries to do "right" for her nine workers by providing health coverage. While some businesses said the law is extremely complicated to comply with, Clark said her accountant had no trouble filing the paper work to qualify her company for the law's tax credits.
You can watch a replay of the hearing here.