By N.C. Aizenman
Washington Post Staff Writer
Wednesday, January 26, 2011; 6:46 PM
Republicans on Wednesday used their new majority in the House of Representatives to hold the first of what they promise will be a steady drumbeat of congressional hearings to denounce the new health-care law.
During a hearing before the House Ways and Means Committee, two business owners and a prominent economist testified that the law imposes crushing costs that hamper job creation. Republican members also grilled Austan Goolsbee, chairman of the White House Council of Economic Advisers, for nearly two hours, charging that his rosy assessment of the law's economic impact was based on accounting gimmicks.
At a separate, nearly simultaneous hearing before the House Budget Committee, Chairman Paul Ryan (R-Wisc.) heaped praise on his star witness, Rick Foster, chief actuary for Medicaid and Medicare, who has questioned some of the Obama administration's predictions of savings through the health-care law.
"Time and time again, Rick's unbiased actuarial reports have proved difficult to square with the claims made by the law's proponents," said Ryan, adding that such analyses "enabled us to unpack the law's budgetary smoke and mirrors and reveal its true impact."
The Obama administration responded with a public relations offensive of its own, releasing letters from high-profile economists who back the law, and holding a news conference at which Secretary of Commerce Gary Locke and Costco chief executive Jim Sinegal argued that the law is a lifesaver for U.S. businesses because it will curb skyrocketing premiums.
In a White House blog post, Stephanie Cutter, a top White House official, also took on Foster's conclusions, writing that his analysis "discounts proposals that other independent experts credit with getting at the root causes of health care cost growth."
The latest round of sparring largely reprised arguments made in both the lead-up to the law's adoption last March and the floor debate preceding the House's nearly party-line vote to repeal it last week. However, the vigor with which each side jumped into the fray suggests both are determined to continue attempting to shape public opinion on an issue over which Americans have remained stubbornly divided.
"The hearing today is just our first of many," said House Ways and Means Chairman Dave Camp (R-Mich.) at the outset. "It is my intention to give the American people and employers big and small the opportunity they never had when this law was being written to testify in an open hearing about the impact the law will have on them."
Scott Womack, owner of 12 IHOP restaurants in Indiana and Ohio, told the committee that the law's mandate that he begin purchasing health insurance for his workers in 2014 is simply unsustainable. It will cost him $7,000 per worker to comply, he said, "more money than we make."
The alternative, to pay a $2,000 penalty per worker, would still eat up 60 percent of his company's earnings, Womack added. As a result, he may be forced to forfeit an agreement to develop additional restaurants, for which he has already invested $360,000.
"The goal of providing health coverage is noble, but the restaurant industry can't afford the steep fines and mandates loaded upon us," Womack concluded. "The law is one-size-fits-all for employers, and restaurants don't fit."
Joe Olivo, co-owner of a printing business in Moorestown, N.J., was particularly critical of the so-called 1099 provision of the new health-care law - which requires businesses to substantially expand their reporting of purchases to the IRS. The aim is to help the agency identify tax cheats, but Olivo said with his profits already squeezed to 3 cents on every dollar earned, the cost of complying would be "huge."
Democrats have long expressed willingness to remove the provision, and President Obama reiterated his support for doing so during his State of the Union speech Tuesday.
However, Camp was not mollified. Noting that Obama has called the provision "counterproductive," he said, "I have one simple question today: How is it that Congress passed a health-care bill that is 'counterproductive' to American employers - especially at a time when we need to be looking for solutions that encourage, not impede, job creation?"
Olivo, who currently offers health insurance to his 45 employees, also testified that - in contravention of the president's promise that people who liked their health plans would be able to keep them - his insurer has informed him that his plan will be discontinued. The reason, said Olivo, is that the plan does not offer the level of preventative care coverage required by the new law.
"After 20-plus years of voluntarily providing coverage for my employees, much of it at my own cost, I am now finding out this coverage is no longer acceptable according to the government," he said.
Rep. Bill Pascrell (D-N.J.) questioned Olivo's account, noting that many of the law's minimum requirements for plans do not apply to those already in existence before the law was passed. "It sounds like your carrier may have pulled a fast one on you," he said. "Obamacare was the perfect scapegoat before the law even went into effect."
Democrats also echoed Goolsbee's testimony that the law would prove a boon to businesses. The smallest firms can get tax credits to offset the cost of buying insurance for their workers, he said. Slightly larger companies will be able to buy insurance on state-run marketplaces that can offer the more stable premiums that big companies have long enjoyed, leveling the playing field. And all businesses will benefit from the anticipated curbing of health-care costs resulting from the drop in the large uninsured population - whose uncompensated health-care costs often get passed on to paying customers.
During the White House news conference later in the day, Sinegal said that those savings alone would make all the difference for his company. While Costco is committed to offering its roughly 96,000 U.S. employees generous health insurance benefits, Sinegal said, its ability to do so has been being seriously threatened by double-digit premium spikes each year.
"We either have to have some type of plan like this that helps us rein in costs or we're not going to be able to continue as a business," he said.