As expected, members of the new Congress have scheduled a number of committee hearings to address the Affordable Care Act. Panelists during both House and Senate committee hearings expressed divided viewpoints regarding the law’s benefits and detriments. The House Ways and Means Committee held the first hearing on Wednesday to discuss the health care law’s impact on jobs and the economy. In his opening statement, committee chairman Dave Camp (R-MI) claimed that the law “imposes more than one-half trillion dollars of tax increases and thousands of pages of mandates and onerous regulations on employers,” adding that the hearing “is just our first of many with regard to the health care law.” A number of panelists echoed his concerns.

Douglas Holtz-Eakin, President the American Action Forum, a policy think tank argued (pdf) that the employer mandates and tax provisions in the Affordable Care Act “will have detrimental impacts on employment growth, wages, and economic growth.” Holtz-Eakin was particularly critical of the employer mandate, saying that it acts as a disincentive for employers to expand to more than 50 employees, when the “pay or play” requirement is triggered. He dismissed the potential benefits conferred by the small business health care tax credit, claiming it is limited in scope, and available for a maximum of six years only. Holtz-Eakin cited one study issued by the National Federation of Independent Business (NFIB) that found that the total number of firms that offer health insurance and pay more than half of their employees’ premium costs, as mandated by the health care law to qualify for the tax credit, is only 35 percent of all firms with less than 25 employees. He also claimed that the tax credit, which applies to firms whose employees earn an average wage of less than $50,000, acts as a disincentive to increase wages.

Small business owner Joe Olivo testified (pdf) during both House and Senate hearings as to how the Affordable Care Act’s employer mandate will impair his 45-person company’s ability to grow. He also claimed that the law may discourage him from providing health insurance at all, as the coverage he currently offers – which he deems generous by industry standards – does not meet the Affordable Care Act’s requirements. Like Holtz-Eakin, Olivo testified that the small business tax credit “is so narrow and so limited that it would provide marginal assistance to a very low percentage of small businesses that are out there.”

Speaking on Behalf of the U.S. Chamber of Commerce, Scott Womack, President of Womack Restaurants, similarly criticized (pdf) the health care law, particularly its impact on the restaurant industry, which maintains a low profit margin. According to Womack, the law is “one-size-fits-all for employers, and restaurants don’t fit.” He claimed that the per-employee cost of providing health insurance or paying the penalty would “devastate” the industry.

Each of these panelists also expressed sharp criticism of the Affordable Care Act’s 1099 tax reporting requirement, which obligates employers to report all payments made for goods or services costing $600 or more. Even President Obama during his State of the Union address called for this provision’s repeal.

Expressing a different viewpoint, Austan Goolsbee, Chairman of the Council of Economic Advisors, testified (pdf) that much of the health care law’s impact will not be felt until 2014, and that “in addition to slowing the growth of Medicare spending and significantly reducing the deficit over the next twenty years, the Affordable Care Act can be a significant benefit to the job market by easing the burden of health care costs on small businesses and by reducing the growth rate of health care costs.” Goolsbee outlined a number of ways in which he claimed the health care law will benefit employers and the job market, including:

• The small business health care tax credit, for which he claimed approximately 4 million small businesses may be eligible. This credit “covers up to 35 percent of small business’ premium costs; in 2014, this share rises to 50 percent.”
• Health care exchanges, which “pool risk and reduce administrative costs for small businesses.”
• Reduction in the growth rate of health care costs by, among other things, “reducing the indirect cots associated with caring for the millions of uninsured in the country that are passed through to insurance premiums,” a “hidden tax” estimated to be as high as $1,000 per worker per year.
• Promotion of prevention and wellness programs.

More favorable views of the Affordable Care Act such as those expressed by Goolsbee were aired during Thursday’s meeting conducted by the Senate Committee on Health, Education, Labor and Pensions. Kathleen Sebelius, Secretary of the U.S. Department of Health and Human Services, talked about the law’s benefits to individuals and businesses. For example, Sebelius cited a study by the Congressional Budget Office that estimates that small businesses “will be able to purchase coverage in the [health insurance] Exchanges at a significant savings than what they are paying now, because of the larger risk pools and streamlined administrative costs. Large employers are also benefiting.” She claimed that under the new law, “more than 5,000 businesses, local governments, and unions have signed up for a new program that helps them maintain coverage for retired workers who are not yet eligible for Medicare,” and that “more than one million new private sector jobs have been created since the law passed and the health sector is one of the fastest growing parts of our economy.” The HHS recently issued a report (pdf) claiming that the tax credits created by the Affordable Care Act will save small businesses $6 billion over a two-year period, and that all businesses will likely see lower premiums of $2,000 per family by 2019.

Christopher F. Koller, Health Insurance Commissioner for the State of Rhode Island, offered his generally positive assessment of the Act, stating: “I have no doubt that in statute and regulation we did not get everything right, and we will have to make corrections as we proceed. However, I am also certain that the trajectory of the [Affordable Care Act] is the right one for citizens and we in Rhode Island look forward to the benefits it will continue to bring.”

A number of individual health insurance consumers also related their personal experiences and praised the new law. A list of the panelists and links to their testimony can be found here.

In a separate hearing held Wednesday, the House Committee on the Budget heard testimony regarding the fiscal consequences of the health care law.

This entry was written by Ilyse Schuman.