Small Business Rundown
Small Business Rundown
Ep. 83: Health Care Affordability with U.S. Rep. Beth Van Duyne
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NFIB member and small business owner Warren Hudak discusses how rising health care costs affect his small business and competition with big businesses. Crucial legislation in Congress would help small business owners contain rising health insurance costs. U.S. Representative Beth Van Duyne (TX-24) explains how this legislation would benefit small businesses.
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The Small Business Rundown is the official podcast of the National Federation of Independent Business, the member-driven voice of small business. Every two weeks, a new episode offers resources for small business owners and information on relevant laws and regulations. NFIB and our members advocate to keep U.S. small businesses strong and independent in Washington, D.C., all 50 states, and the nation's courts.
SPEAKER_05Joining me is NFIB member and small business owner Warren Hudak, president of Hudak and Company in Pennsylvania, and he will explain the realities of managing increasing health insurance rates and costs for small businesses. I'm also joined by two policy experts from NFIB's federal government relations team, Director Josh McLeod and Principal Tyler Deaver. Josh Tyler, thanks for joining us today.
SPEAKER_03Thanks for having us, Adam. Glad to be here.
SPEAKER_05Later, U.S. Representative Beth Van Dyne will join us to discuss related legislation she's leading in Congress. Warren, uh I know you have a lot of experience with this issue. I'm really looking forward to talking with you. But first, I just want to say thanks for taking some time to uh discuss it with us. You're welcome. So I'll just ask you, we've been talking about increased costs in healthcare, something you know well about. And I'd love to just hear from your perspective what changes you've had to make to accommodate these kinds of cost increases.
SPEAKER_00Well, okay, first I want to start out. We're a regional accounting firm here in central Pennsylvania. So we deal with a lot of healthcare issues for our clients. I mean, we're trying to compete with the big guys. You know, when it comes to health care, it's not left, right, or Republican or Democrat, it's more David and Goliath. We're expected to compete with the big boys with um our uh health care benefits, but it's impossible. And a lot of these changes are things that we've always supported over the last 20 years. My wife has MS and it's always been problematic. But you know, we never had problems with um my wife's health coverage and our pre-existing condition until the government decided to get involved with Obamacare. There are 35 states that actually had risk pools that it took all comers. There was for those 35 states, insurability was never an issue. And Pennsylvania, unfortunately, wasn't one of those states. But guess what? The blues, in support of their nonprofit mission, actually had high-risk plans, and they shared that risk almost all of their customers. Believe it or not, my wife had a high mark plan. It was family coverage,$650,$2,400 deductible, and it covered her MS pre-existing conditions before Obamacare, and we didn't have a risk pool. When Obamacare was passed, our premiums went up to$2,200 a month for less coverage, higher deductibles. And believe it or not, the provider, six minutes from my house, was that enough with the very same high mark company. Now I had an$8,000 deductible. It was insane. Insurability was never a problem before, Obamacare. This is a monstrosity. But yet they destroyed the individual marketplace. 100%. There is no individual marketplace. There is no small group marketplace. It is destroyed. And there's no place to go. And all we are stomached with is higher and higher deductibles and higher and higher costs for our premiums. We can't compete. All of these little provisions that we're talking about. HSAs, expanding that, the HSA, the direct payment consideration with HSAs, all that just gives us options to spend our own money based on consumerism. For us to make choices, what we need is true transparency in pricing so that we can make decisions. You know what? In America, left, right, Republican, Democrat, we're great shoppers. I just got an Amazon thing. My daughter just ordered cups for her doll moon, okay? I gotta tell you, she knows how to shop, she knows what she's shopping with, and she knows how to get the right price. You know what? That's the way healthcare should be.
SPEAKER_05As easy to order as on Amazon. So, Warren, you're telling us a lot of things that we're hearing from other small businesses across the country. How do you approach healthcare benefits when it comes to offering those to your employees?
SPEAKER_00You know what? No way small business uh competes in the healthcare space, it's not marrying to an insurance company with an insurance plan. It's providing our employees with a budgetable fixed allowance. We know what we can afford. You know what? It's our flexibility that lets us compete. Not every employee needs health care. Maybe they need better dental, having to be able to give that dollar so they can spend it on dental or insurance premiums or deductibles. You know, being flexible is goes to the heart of our ability to compete. When we're married to a healthcare company and an insurance plan, all we are relegating to is monstrous year after year increases without any control. And it's impossible to change the benefits without reducing or manage costs or premiums without reducing benefits. And right away, people are looking for another job. But if we give them an allowance and allow them to make their own choices, provide them with the tools. You know, years ago we used to do HRAs for our clients. We used to do third-party administration, and along with that, we used to provide services for, let's say, a physical therapist. We had a large contracting firm, they had roofers and floorers, they had all kinds of different tradesmen. And we had a festival, a day, a Saturday, where they all came in and they met with the physical therapist. And the physical therapist said, Oh, you're a floor and you're having problems with your knees, or you're a rooper and you're having problems with your back, or you're sitting at your desk and you're having problems with carpal tunnel. What's the position of your monitor? How do you get up from the floor? You know, inside of two weeks, we surveyed those employees. They said, you know what? We feel better as a rooper. I feel better as a floor. That's the embeddedness of the small business owner. Not a one-size-fits-all, but we look at our customers and our employees and we try to meet them in a meaningful way. These insurance companies, they don't care. The lack of transparency in the insurance committee is ridiculous. Last week I went to Quest Diagnostics for a routine medical. Now I don't have HiMark anymore. I'm cash pay. Okay, fine. I go there, they say, your routine labs are gonna be 500 bucks. I said, no, no, no, no. I'm cash pay. They say, oh, we're giving you the high mark price. Very good, no problem. But guess what? I cleared up with high mark. I am not a customer, I'm cash bank. I go there Saturday, okay, give me the five, say$500 price. I said, I'm cash bank. This is the cash pay. You sure it's not the high mark price? No, it's not. So finally I get the bill. I see the lab codes, I paid it$500. I'm looking at it, I look at their website. Why didn't they charge me$181? That's what the website says. That's diagnosis says we have an arrangement. With who? And when I said I was cash pay, why didn't you disclose it to me? Really? There's no transparency in the system, none whatsoever. That's what makes this so good. You know what? For small business owners, HSAs and the flexibility in that and being able to contribute that is awesome because you get first dollar deductibility for it. It is totally great. Being able to have an HSA-like plan where employer and employee dollars are used, and if you want to pull government money in that, that's fine. But you know what's wonderful about that? It's budgetable. We know what we're paying. Well, near the next year's cost is we decide what we're able to spend, not the annual increase from the insurance company and the reduction of benefits to our employees. We can budget it. Every small business owner knows what their cash flow is, knows what they can afford. We make the decisions, not the insurance company.
SPEAKER_05So you're talking about flexibility now with some of those other options. Talk to me a little bit more about that. If the cost of healthcare was lower and small businesses had more flexibility for what they could do for their employees, what do you think the long-term impact would be?
SPEAKER_00Well, we'd be able to compete again for employers. I mean, look, the number one concern for NFIB models is what? The inability to find qualified people. We're competing every day. In the capital region, we're competing with the state for the state workers in metropolitan areas that are going against the big businesses. We can't compete. We don't have economies of scale. It is so different in our space. And you know what? Policymakers who really are well-meaning think that mandates and our guardrails to protect small businesses and consumers, it does the exact opposite. And it's really hard to continually tell our policymakers, well, we're we're not looking for handouts. We are looking for flexibility. We're delighted to help our employees, but let us make those decisions. Let our employees make their own decisions and let there be true price transparency. There absolutely needs to do this. Look, we got large private equity firms, UPNC, it's a monster. It is absolutely a monster. I was admitted to the emergency room for stroke-like symptoms. That evening, in side of two hours, they moved me from the emergency room down the hall to observation, from observation to another room for my overnight stay. I didn't have a stroke. But yet, 10 o'clock the next day, our lady says, we need to sign this disclosure statement. I say, What is it? I read it. It says, Well, last night, when we moved you from the emergency room to observation, that was considered a different facility. So additional co-basement deductibles will be charged. When we moved you from observation to the other room for the overnight stay, you were being admitted back into the hospital, the very hospital I started in, and there would be additional co-pacing deductibles. Okay, is that the way it is? Fine. Except for one thing. Why are you giving to me at 10 o'clock the next day? Right? Wouldn't it have been better to tell me and disclose it to me at the time of care so I can make decisions? I could have said, you know what, I didn't have a structure. Let me go home and see I'm making my decision. Why the lack of transparency? Why the additional copies and deductibles? That's exactly what we're talking about. UPNC is too big to fail. Quest diagnostic, you didn't disclose it to me. I'm sorry. That's ridiculous.
SPEAKER_05So if you had uh just a minute or two to sit down with lawmakers and talk about what they could do to improve the situation, what would you tell them?
SPEAKER_00Well, understand the true nature of a small business. We're trying to compete every single day with our large business competitors, and we can't compete with capacity and resources like they have. We do not have those internal capacities. You have to understand that we compete with flexibility. We need to know what we're buying, how we're buying it, and what it costs. And the system as it exists today does not do that. You have to understand this isn't left right, this is David and Goliath, and this is basic consumerism. And all these proposals here, the Association Health Plans, expanded HSA access, the choice arrangements, which expands all the health care reimbursement arrangements that we've been doing and using as a tool to give us a budgetable solution, cash rise, on a month-to-month, year-to-year basis. We make the decisions and our employees use it as that's concerned their needs, but only if there's price transparency. This is a wonderful, wonderful initiative. But most legislators think that we're asking for something. We are not asking for anything at all. Just the acknowledgement that when it comes to the small business, it's not a way of living, it's a way of life. Generationally, in most cases. I would love my daughter to take over my firm if she can find out.
SPEAKER_05Right. Good point. And if you I'll flip that question around, if you were talking to a couple of small business owners about what they could do to improve the situation, what would you tell them?
SPEAKER_00Oh, they gotta talk to their legislator and their policymakers, they gotta tell them the true nature of their business and the true constraints that they have and why they're unable to beat their big business competitors with generous benefits. That they care about their employees, they would never do anything to harm their employees. We constitute what 48% of the workplace. They work for us because it's a family. Every small business environment that I know, everybody who works there feels as though they're part of a family. And you know what? You don't get that from the big business. Don't take this away by legislating us out of existence. And that's what's happening with healthcare.
SPEAKER_05Josh, Tyler, uh, what do you have to add on to or react to based on what Warren's experience has been? Tyler, you want to start?
SPEAKER_04Yeah, you know, Warren hits nail on the head when he talks about options that are currently non-existent or very restricted, and we hear it from Hill offices all the time. And when we bring the data to them and say that, you know, small businesses' health insurance premiums have gone up 120% since the turn of the century, that number strikes a chord and they ask what can be done about it. Yeah, and the answer is create more options like choice arrangements, like expand HSAs, take the training wheels off AHPs and allow small businesses to band together and pull their resources for health insurance. And yeah, choice arrangements, I think, are just that one way that you find the off-ramp to more options and you break the cycle of folks that are stuck in their small group plan that they currently have that they're seeing these large premium increases in. Sure. Josh, how about you?
SPEAKER_03One thing what Warren is hitting at is that Washington does not know best when it comes to healthcare. And I think we have countless examples of that. But I think what we're trying to get at is let's get away from that one size fits all approach and let small business owners like Warren make decisions on what is best for them and their employees and give them all these options and flexibility that can really increase healthcare coverage across the country.
SPEAKER_00Warren, before we go, anything else you'd like to add? Competition, transparency, and flexibility. That needs to be a component in everything we do for the small business marketplace when it comes to health insurance. Competition, transparency, and flexibility.
SPEAKER_05I think that's a good place to conclude it, Warren. I'll let you get back to it, but I first want to say thank you for your time today, but also for your advocacy on behalf of other small business owners, both in Pennsylvania and as we all know here in Washington, D.C. Thank you very much. See you guys. After the break, we'll be right back with a conversation we had with U.S. Representative Beth Van Dyne.
SPEAKER_02Small businesses are deeply affected by rising energy costs, limiting their ability to hire, retain workers, and grow their businesses. NFIB continues to fight alongside members nationwide for better energy solutions. Learn more about NFIB's new survey on energy for small businesses and take action to support more affordable and reliable energy at nfib.com/slash take action.
SPEAKER_05We're now joined by Representative Beth Van Dyne serving the 24th District of Texas. She's a member of both the House Ways and Means Committee and the Small Business Committee, so she was instrumental in making the 20% small business deduction permanent last year. But she's also been spearheading efforts to make health care more accessible and affordable for small businesses. Representative Van Dyne, thank you for joining us today.
SPEAKER_01Great to be here. Thanks for having me on.
SPEAKER_05Well, we appreciate your time. And uh I as I mentioned, you serve on two committees that are crucial for America's small businesses. You're a leader in providing Main Street with more options for quality health care. Why is this issue so important to you?
SPEAKER_01Well, you know, on both Ways and Means and on Small Business, I have an opportunity to, you know, to go to all of our hearings. And um, under the leadership, chairmanship of Jason Smith, you know, he's got a lot of small businesses in his district. And while he is the chairman of Ways and Means, he has really been focused in the last few years on small businesses. And then obviously a small business committee that is our bread and butter. So when we have all of these businesses that come in front of us and we talk, we hear over and over again about how expensive it is and some of the regulatory hurdles and other things that the federal government does to just make it that much more difficult. And healthcare always seems to be one of those items that small businesses especially are struggling with. They're not massive companies, so they can't afford to have these large healthcare coverages, but they have to compete, you know, for their employees with these things. So the small businesses are typically having to struggle between offering the benefits to be able to maintain their competitiveness in the workplace. So anything that we can do to make it accessible, to make more people have that flexibility, that option, and to lower the costs, recognizing the fact that small businesses are already hurting their regulatory costs, what they're seeing right now in purchasing power, and we're really struggling to hire people just a few years ago. So my focus is on them because as a former local elected official, I used to be on city council, I was mayor for six years, I worked with our chambers. Those are the people that you know you see on a regular basis. The small business owners are the ones that really are really involved and um on and ingrace shape themselves in the community. So those are the folks that I love, I see a lot, and uh, and we're looking at for up here.
SPEAKER_05Without a doubt. And along those lines, you are one of the original co-sponsors of the Choice Act. Can you explain a little bit about what that does and how that will benefit America's small businesses?
SPEAKER_01So HRAs, which are health reimbursement arrangements, they allow employers to provide tax advantage funds to their employees, you know, to purchase these qualified medical expenses. On 2019, that under the Trump administration, there was a rule that actually expanded HRAs that allowed employees to purchase their own health insurance plans on the individual marketplace. What this does is basically allows businesses to help them pay for that. So it's a benefit that employers can give if individuals want to purchase it on their own. And so about 87% of small businesses report wanting to help their employees get health insurance, but they don't want to have to offer a traditional verb plan. And uh, small businesses are probably about twice as likely to utilize the choice arrangements than larger businesses. And we found that about one in five small business owners report that they consider offering it if Congress had codified it into law. So that's what we're trying to do.
SPEAKER_05Makes sense. And also you have been focused on the Small Business Health Options Awareness Act. Can you talk a little bit about the focus of that bill and again just how that would benefit small businesses?
SPEAKER_01Sure. Well, it requires the SBA to provide more outreach and information about the availability of some of these uh individual coverage health reimbursement arrangements. Uh again, it's a way for small businesses to be able to deliver health care coverage for their employees. When they were first authorized in 2019, it was flexible as a tax-advantage way for employers to be able to help employees again pay for this health coverage. But the funny thing is, is we can offer all these plans, but if the small businesses don't know that they exist, it doesn't really do them a whole lot of good. So the bottom line was to make small businesses much more aware and understand the flexibility that these programs provide, that how they can be tax advantaged and how they can really help pay for their employees for individual health coverage.
SPEAKER_05And as you tackle, you and your colleagues tackle these bills and try to move them along, how does hearing from small business owners influence the actions that you and your colleagues take?
SPEAKER_01We don't know what we don't know. And you know, a lot of times when we when we have folks come to our offices in DC, they've got a problem, but they don't have a solution. And some of those solutions that we maybe come up with from a legislative perspective can really have a lot of unintended consequences. So small businesses coming and having a conversation with us and saying, hey, this is where the rubber meets the road. Hey, this is where we are really feeling it. And our concern is if you pass this bill, you know, you may not have thought about this, but this is what it's going to be like for us. You all also get to put a face to a problem. We have had some of the best testimony in front of the small business hearing. And, you know, I've said this a number of times, but we had a gentleman who brought like this three-range binder, it's about four inches thick, and he said, This isn't one of the regulations I don't know if you know about, but that you're considering if you pass this regulation, you're putting me out of business. He said, you know, these corporations that that have uh regulatory divisions, they can handle it. I'm gonna have to hire somebody, and my margins are already way too thin. You pass this, you're putting me out of business. That story in and of itself, from both a Republican and a Democrat perspective, were enough for us to change that regulation.
SPEAKER_05Wow, that's fantastic. We do hear a lot of stories here at NFIB as well from small business owners that we try to connect with members of Congress. For those that maybe can't make it to DC or aren't invited to testify, what can listeners that hear about this legislation and and would benefit from it, what can they do to support it?
SPEAKER_01Well, if they can't come up to DC, I would suggest going to their chambers and having meetings with their Congress members, letting them know that they support it and why they support it. You know, half the challenge, if not more, of getting these bills out of Congress, of getting them on the floor is actually having enough co sponsors. You know, if you get a bill that has a ton of co sponsors, it's more much more likely to be able to get on a priority list for whoever's the chairman of the relevant. Committee and then it has to go through a more you know, have to have a hearing, then you have to have a markup, and then has to be you know gotten out of that committee before it will go on the floor of the house to go through normal order. So the more co-sponsors you have, the more likely your bill is to get to reach the floor. So if you've got small businesses that are excited about a bill, have them call their congress member, press them to get on it as a co-sponsor for some of these bills.
SPEAKER_05That's great advice. Well, before we let you go, is there anything else you'd like to add?
SPEAKER_01I just want to thank all of you for doing such a great job. I mean, literally, when I think about, you know, my my kids were growing up and they were on T-ball teams and they were on soccer teams, you know, the people that we went to for sponsorships were always our small businesses. Yeah. When I think about going to city council meetings and who was coming up and talking to us about the good things and the bad things, it was usually small business owners. And I think about the investment that they make in our country really fulfilling the American dream. And I it really is the backbone of our nation. And I just cannot tell you how much more I can appreciate the work that you do to help give them a voice in DC and to make sure that they're as successful as they can be.
SPEAKER_05Likewise. Well, we appreciate the work you're doing on behalf of small business as well. Representative Beth Van Dyne, thanks for joining us today.
SPEAKER_01Excellent. You have a great day. Thank you.
SPEAKER_05You too. Thanks. Tyler, Josh, really good words from uh the representative there who was doing a lot of work on these issues. What do you have to say in response to what she told us today?
SPEAKER_04You know, she brought up good points and she's really connected to Main Street, you know, from her time as a working as mayor of and hearing from her constituents sees the value of having the Choice Act passed, as well as other reforms and getting regulations out of the way, which will go a long way into increasing the affordability of healthcare in America, especially for small business owners.
SPEAKER_05Yeah, I thought she did a really good job walking through how that would actually benefit small business owners and what they can do to help push it across the finish line. Josh, what do you think?
SPEAKER_03Yeah, I mean, we we just appreciate her leadership on on this issue and you know, giving small business owners flexibility, increased options. That's what we need from Congress. So we're gonna keep pushing this issue to try to give you all more choices and and hopefully provide some relief from this 40 plus year burden of rising health costs that you all have been facing.
SPEAKER_05So she touched on a couple of options that would make healthcare more accessible and affordable for small businesses. We recently issued here at NFIB a healthcare plan that outlines several more as well. Can you talk a little bit more about that, Tyler?
SPEAKER_04Yeah, so our NFIB legislative plan hits on 10 specific legislative proposals that are currently existing in Congress that, if they were to be done right now, would increase affordability for small business owners. Um, a couple of them are to allow business owners to pool their resources and join an age uh association health plan to reduce burnsome Obamacare mandates, stuff like essential health benefits, which require small businesses only to cover 10 specific benefits that other businesses that are larger would not have to cover. And short-term limited duration insurance plans or STLD for short, which are unregulated from Obamacare, and because they're unregulated by Obamacare, they are generally much cheaper and have a broader provider network than Obamacare plans ch typically would.
SPEAKER_05Yeah. Josh, another thing that we hear often about from small business owners are health savings accounts or HSAs, and that's actually something that Warren talked about as well.
SPEAKER_03So HSAs are a a great innovation over the last 30 years, and it allows small business owners and individuals to save money to pay for health expenses. And uh unfortunately it's limited to high deductible health plans. We want to see that expanded where it's not just people in those plans. We want people to be able to save and invest and use those funds for any type of uh medical expenses that they have. So we're looking for a broad expansion there, and that's one thing that Warren talked about, and and hopefully we can continue to advocate and get the ball rolling in the right direction there.
SPEAKER_05Yeah.
SPEAKER_03Yeah.
SPEAKER_05So, Tyler, what can Congress do on that front?
SPEAKER_04So last week, Congressman Aaron Bean introduced the HSAs for all act, which would decouple the health savings accounts from high deductible health plans and allow many more Americans access to these HSAs, which, like Josh has said, has become a very popular tool for saving up for some larger health expenses. And small businesses have long told us that they want to see more HSA expansion.
SPEAKER_05Josh, Representative Van Dyne talked about the importance of small business owners sharing their stories with members of Congress, and they can do that, like she said, through visits. We also make it possible for small business owners to share their stories with Congress. Can you talk a little bit more about that?
SPEAKER_03Yeah, absolutely. We provide a number of avenues where small business owners can share their story and talk in specifics about what they're seeing from health insurance costs, from reduced competition in healthcare, all PBM issues, all the things that they're experiencing in their healthcare offerings. And we want to make sure that you all have those. So please take action with NFIB. Submit your action alert to us, which will also go to Congress. Reach out to us. Let us know if you want us to share your story with members of Congress. We are here and ready, and members of Congress are really hungry to hear from you and to hear your story. So please, please share those with us.
SPEAKER_05Absolutely. And we'll include some links to uh how to do that in today's show notes as well. Well, we have to conclude this, but healthcare as it relates to small businesses, something that we could talk about all day. And for folks that want to learn more, they can go to the website uh and get more information. Um, but we'll end it there. Josh, Tyler, thank you for joining us.
SPEAKER_04Yeah, thanks for having me. Yeah, thanks, Adam.
SPEAKER_05For those interested in learning more about the healthcare plans that we talked about today, or for those interested in taking action on some of the issues we discussed, you can learn more in the show notes where there's links to take action.
SPEAKER_02Thanks for joining us for this week's episode of the Small Business Rundown. Your continued support helps us amplify the issues that matter most. If you liked this episode, please help small business owners find the podcast by giving it a rating, like, or review. You can find us at nfib.com and on YouTube, X, LinkedIn, Instagram, and Facebook.