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Small Business Committee Hearing Room, 428A Russell Senate Office Building 9:30am EST

Chairman David Vitter

Good morning, and thank you for joining us for today’s Senate Small Business Committee hearing to discuss the Supreme Court case, King vs Burwell, and its effect on small businesses and their employees if the Court rules in favor of the plaintiff. We will also be examining and discussing alternative, market-based solutions to health care reform.

The next few months will be important as we await the Supreme Court decision in King v. Burwell and respond to it appropriately. The effect on small businesses and their individual employees will be substantial, and I appreciate you being here today to share your ideas and perspective.

By the end of June, the U.S. Supreme Court will decide the legality of the IRS’s regulation that enables federal health insurance subsidies to be paid to individuals in 34 states who buy their insurance on a Federal insurance exchange, known as a Federally Facilitated Marketplace.

The fundamental issue is whether the IRS exceeded its authority under the 2010 Affordable Care Act by promulgating a final rule that expanded the provision of the health insurance subsidy beyond what was allowed by Federal law. King v. Burwell is not a constitutional challenge, but rather a challenge to the IRS regulation as being inconsistent with the Act. It is a question of interpretation of very precise statutory language.

If the Supreme Court decides in favor of the Administration, then not much changes. But our purpose here today is to review this question from the perspective of a Court decision in favor of the plaintiff and, more importantly, to examine the effect of such a decision, the consequences for individuals who have purchased a health insurance policy on a Federal exchange, the effect on employers, and action the Congress may take.

This litigation is set against the backdrop of a highly controversial legislative battle over five years ago, with the final result, the Affordable Care Act, passed into law, apparently before it was thoroughly read or fully understood by many who voted for it. For those who did understand it and who opposed it, including a majority of Americans, Obamacare remains deeply unpopular.

Obamacare raised their taxes. It mandated they buy a product they may not have wanted. It raised their health insurance premiums. It narrowed their selection of health care providers. It limited the number of hours they could work. It imposed penalties on individual Americans, their families, and the businesses that provide them their livelihood.

So a larger issue, above and beyond the focus of the Supreme Court case and the effects of a ruling in favor of King, is a question of what is the best approach to health care reform. The creators of Obamacare have come down on the side of government mandates and price controls because they do not fully trust people, and when you don’t trust people, you impose control and inhibit freedom.

On the other hand, when you do trust people, you enable greater freedom, freedom to choose, and that is at the center of an alternative approach to health care reform - an approach we will hear more about today. There are alternatives to Obamacare that are more consumer-driven and value-based, that enable the functioning of free market mechanisms and the fostering of competition among health care providers that will improve quality and lower costs.

There are also alternatives to the subsidy currently being offered on the Federal insurance exchanges, a subsidy in the form of an advance-able tax credit that actually flows directly from the government into the pockets of the insurance company, not into the hands of the consumer.

These alternatives, which we will hear more about shortly, will help those who may be caught in the lurch if the Court sides with the plaintiff and throws down the gauntlet to the Administration over this poorly constructed law and possibly unlawful IRS regulation.

At the end of the day, our greatest concern as Senators is discerning how our legislative decisions will affect our fellow Americans who sent us here to represent them. So, when the Supreme Court has made its decision, we must ask ourselves—how can we best help our fellow citizens?

I look forward to hearing from our witnesses.