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STATEMENT

of the

Honorable Nydia Velazquez, Ranking Member

House Committee on Small Business

"The Health Care Law: Implementation and Small Business"

April 17, 2013

Thank you, Mr. Chairman.   Three years ago, the President signed into law the Affordable Care Act, landmark legislation aimed at improving a system that has been broken for too long.   For consumers, low-income workers, and families with children suffering from a pre-existing condition, the health insurance system offered a raw deal for many decades now. 

Small businesses and entrepreneurs were among those left out in the cold by a structure that put insurance company profits ahead of health care consumers’ needs.     Indeed, small firms have seen their premiums escalate by 113% over the course of the last decade.  For many of the smallest enterprises – those with 50 employees or less – providing quality health care to their staff was simply not an affordable option.  

Last year, the Supreme Court upheld the Affordable Care Act, finding its provisions constitutional.  Regardless of where each of us stood when Congress considered and passed the bill, that debate is now over.  Indeed, rolling back or defunding the measure would be of enormous harm to our nation’s entrepreneurs. The challenge before this Committee is ensuring reform is implemented in a way that allows small businesses to benefit, while minimizing disruption for smaller companies.  

Make no mistake -- there are significant benefits for entrepreneurs in the ACA.   $40 billion in tax credits are being made available for small businesses that supply insurance coverage to their employees.   The smallest companies – those with fewer than 10 employees – gain the most from these credits.  As rates have risen, these small employers have encountered the most difficulty offering coverage.  Over just a nine year period, their coverage levels declined by more than 10 percent, proving the need for a targeted credit.

While these tax credits offer great promise, challenges remain in ensuring eligible businesses take full advantage of the program.  With only 335,000 small firms applying for this assistance, it is clear that more must be done to make small companies aware of how to apply and take advantage of this provision.   I look forward to hearing from our witnesses today what can be done at the IRS and throughout the government to maximize small firms’ use of the tax credit. 

Small businesses are also beginning to reap the benefits from the law’s more general provisions that protect consumers from unfair insurance industry practices.   As purchasers of coverage, small companies are negatively impacted when one of their employees encounters a rare or debilitating illness. 

For these firms, the caps on lifetime limits and the elimination of pre-existing conditions are helping to create a fairer health insurance marketplace.   They prevent insurance companies from drastically raising rates when one of a small firm’s employees grows gravely ill.  

In addition to preventing insurance companies from abusing their small business customers, the law offers a more consumer-friendly marketplace for small companies wishing to offer coverage. By January of next year, there will be health insurance exchanges within every state, providing a competitive marketplace for small firms to shop for affordable coverage that meets their needs.

For too long, affordable, quality insurance was only available to those who worked for large employers such as major corporations or the state and federal governments.  With full implementation of the Affordable Care Act, we can enable small firms to offer comparable coverage, making them more competitive and allowing them to attract employees who might otherwise flock only to major companies. 

When any major law of this complexity is implemented, there will be an adjustment period.  It is my hope we can ensure implementation goes as smoothly as possible for small firms, both by shaping how regulations are crafted and – where necessary – making minor statutory changes.  

Thank you, Mr. Chairman.  I yield back.   

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