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					                                          T I R E     I N D U S T R Y   A S S O C I A T I O N

                                                                              www.tireindustry.org




                                Testimony of the

                  Tire Industry Association

                                Submitted to the

          Senate Small Business Committee

Solving the Small Business Health Care Crisis: Alternatives
      for Lowering Costs and Covering the Uninsured


                                    April 20, 2005

                                       10 a.m.

                  428A Russell Senate Office Building




          Maryland Office:
          1532 Pointer Ridge Road    800.876.8372
          Suite F                    301.430.7280
          Bowie, Maryland            301.430.7283 f
          20716
        Madam Chair and Members of the Committee, on behalf of the 5,000+ members of the
Tire Industry Association (TIA), thank you for the opportunity to submit testimony for the
record. This hearing, “Solving the Small Business Health Care Crisis: Alternatives for Lowering
Costs and Covering the Uninsured” is very important to the members of our association.
       TIA is an international association representing all segments of the tire industry,
including those that manufacture, repair, recycle, sell, service or use new or retreaded tires, and
also those suppliers or individuals who furnish equipment, material or services to the industry.
The Tire Industry Association (TIA) has a history that spans more than 80 years and includes
several name changes. Originally known as the National Tire Dealers & Retreaders Association
(NTDRA), the organization gave birth over the years to the American Retreaders Association
(ARA) and the Tire Association of North America (TANA). ARA changed its name to the
International Tire & Rubber Association (ITRA) and merged with TANA in 2002 to form the
current Tire Industry Association (TIA), which now represents every interest in the tire industry.
       The majority of TIA members are independent tire retailers. Our members have found it
increasingly difficult over the years to offer quality health insurance to their employees. This is
why TIA fully supports the Small Business Health Fairness Act of 2005 (H.R. 525/ S.406). We
thank you, Madam Chair, for you unwavering support of Association Health Plans and for
introducing this important Senate bill. The House version, introduced by Representative Sam
Johnson (R-TX), currently has 135 bipartisan cosponsors and we urge every Member of
Congress to support this crucial legislation. TIA truly believes that while AHPs are not a silver
bullet to cure all ills with the health care system, they would go a long way to leveling the
playing field and allowing small businesses to have access to quality, affordable health insurance
across state lines, something that corporate American and labor unions already have.
       TIA recently held a Legislative Summit and brought our members into town. AHP
legislation was our top issue. One tire dealer took particular interest in the Association Health
Plan legislation. Her name is Carmen Lesieur of Maynard & Lesieur located in Nashua, New
Hampshire. The company was founded in 1928 as a local gas station by Leo Lesieur. Carmen is
married to the grandson of Leo and joined the company in 1987 to help automate the business
into computer world. She now works as the Finance/Computer & Human Resource Manager for
the company. I would like to share Carmen’s story with you.
       Maynard & Lesieur, Inc., a retail/wholesale tire dealer, has between 35-42 employees
working for the company as salesmen, delivery drivers, clerical and tire technicians. The
average annual sales for the past 9 years are approximately $9 million per year. The average non
management salary is $38K/annually. The average management salary is $58K/annually.
       Through the years, the company has offered their employees, health insurance, life
insurance, short-term-disability and recently added vision care and long term disability. The
company pays 100% of life insurance premiums for the employees and 50% of all other
insurance premiums (except for STD & LTD where the employee must pay 100%).
       This is Carmen’s story in her own words:
              “Since 1989, Maynard & Lesieur, Inc. has been a member of the NH Auto Dealer’s
      Association. This allowed the company to purchase lower health care coverage through the
      association. Membership of $200.00/annually is paid to this association. Although all health
      care premiums increased drastically throughout the years, being part of this association as a
      small business was better than receiving health care premiums as a single – stand-alone
      small business. Annual increases between 2% - 24% were the norm with last year’s
      increase being between 32%-101% for most members of NHADA since a new state bill
      (SB110) passed. Maynard & Lesieur, Inc. saw an increase of 66%. With every major
      increase, less notification of rate changes with time to shop around for something else was
      suspect. Maynard & Lesieur, Inc. was often “stuck” with no other options but to take what
      NHADA offered because no one would offer bids.
              “With a 66% increase notification in January, 2005 effective February 1, 2005
      Maynard & Lesieur, Inc. and its employees were facing a 33% increase each. We knew that
      we and our employees couldn’t afford the old plan’s premiums, let alone this increase. We
      faced a drop in health coverage enrollees with disqualification for the 75% eligible employee
      quorum that NHADA required. Fortunately, Maynard & Lesieur, Inc. found and joined
      (AWANE) Auto Wholesalers Association of New England. This was the only company that
      would bid against NHADA. This organization is self-insured in some areas, offered a
      comparable Anthem Blue Cross health coverage (not the same) for approximately a 6-10%
      increase across the board and more “Out-of-Pocket” for the employees. The membership
      fee was $685.00. The rates are below:

                2005 Monthly Premiums             Health           Dental         Vision
                       Single                    $ 372.00         $ 32.50         $ 8.91
                       Employee/Spouse           $1192.00         $ 84.50         $20.63
                       Family                    $1632.00         $137.50         $29.50

              Note: 50/50 of these monthly premiums paid by employee & company

               “Maynard & Lesieur, Inc. offers the best benefits a non-chain, small business can
      offer their employees. If our employees can’t afford to pay for health insurance coverage –
      who will pay for it? Very few of our employees own a home – they pay rent. They live pay
      check to pay check. They don’t go to the doctors unless it is a visit to the emergency room.
      When some of them have been brought to court for not paying their medical bills, the judge
      sides against the hospital or doctor as these employees cannot afford to live. Many
      employees don’t take health coverage for themselves and the use the State of NH’s Healthy
      Kid’s program to provide healthcare for their children. In the end, aren’t we all paying for
      their healthcare?
              “Since 1989, we’ve seen a 124% increase in premiums and approximately a 50%
     increase in payroll. We’ve had an average decline in sales of $250K/year during the past 4
     years. The cost of living is increasing but we cannot afford to pay our employees more
     money to make ends meet. We’ve faced rising expenses in liability insurance, worker’s
     comp, auto insurance, gas, taxes, utilities as well as bankruptcies, bad debt and frivolous
     law suits. We are at a major disadvantage compared to larger businesses. The impact of the
     competition from warehouse clubs and automotive chains are all eating away at the once
                                th
     very stable, prosperous 4 generation family business and we stand alone in our fight to stay
     afloat to offer the consumer competitive pricing, a quality product and excellent service. We
     are becoming dinosaurs in our environment and the government continues to close its eyes
     to our extinction.”

       Stories like Carmen’s are all too common. She feels strongly that Association Health
Plans would give her another alternative for insurance. In the big picture, this means more
competition in the marketplace for all insurance yielding more affordable, better quality
programs. She could get quotes from TIA, the Chamber, NFIB and any other associations that
represent her business.
       Carmen’s experiences don’t end there. She has dealt with many insurance problems
throughout her lifetime. Here is more of her statement:
              Personal Background Experience with Health Coverage
              “My name is Carmen Venne Lesieur. I live in Hudson, NH and have been a resident
     of NH for my entire life. I have been married to Steven Lesieur for almost 28 years who also
     has lived in NH his entire life. Both Steven and I work at his family’s retail/wholesale tire
     business located in Nashua NH that has been servicing the area since 1928. He is the
                                                                rd
     President and I am the Finance Manager - the working 3 generation in this business along
     with his two brothers and his 76 year old father who still comes into work at 4:30 a.m. and
     doesn’t leave until 5:00pm six days per week. All of our three children have worked part-time
     for the family business with only one now working full-time.

              “In 1978, I was employed by Wang Labs in Massachusetts with what I thought were
     excellent health & benefits package. However, because I was only married 4 months when I
     became pregnant, our insurance would not cover our medical bills for the pregnancy or the
     delivery. They said we had to be married for one full year before they would cover any
     pregnancy bills and they would only pay the baby’s bills after it was 1 week old. My child was
     born 3 weeks early and stayed in the hospital for 1 week total. We were forced to pay for all
     of our medical bills despite the fact that we were paying for family coverage and we were in
     fact married. Total income was: $12K (in 1978). Total cost of the medical bills: $2.5K. This
     law was changed shortly after I had this child, but we still had to pay the bill.

             “In 1987, I was employed by our family business and our first born child was
     diagnosed with Turner’s Syndrome – a chromosomal birth defect with less than 2500 girls
     affected each year. She went undiagnosed for 10 years because we belonged to an HMO
     who would not give us a referral for additional tests that I had requested. We then changed
     insurance coverage when this diagnosis was made. Ten years of a child’s illness was
     neglected because of greed.

             “Upon diagnosis, our local pediatrician recommended we see a doctor in Boston,
     MA. This was the only doctor in the area who was familiar with this rare birth defect. Our
     insurance only covered $45.00visit out of the many $250.00+/visit because we were from
     NH and that was “the reasonable and customary fee of service”. The Endocrinologist in
     Boston recommended that our daughter be placed on hormone therapy because she did not
                                                                             th
     have any hormones and she was not growing. She was in the lower 10 percentile for
     height and weight at 10 years of age. Growth hormones were administered by injection
       once a day for five years. This was not cosmetic but so she would be able to do “normal
       things”. The cost: $500.00 week. Insurance paid 50% because they did not consider it an
       approved drug - it was considered “experimental”. Our income at the time: $39K for a family
       of 5. Our average “out of pocket medical expenses for 5 consecutive years”: $25K. We
       received no financial help from the state or any charitable organization because we earned
       more than was allowed: $32K. During these 5 years, we also paid for extensive dental work
       that was not covered as a medical necessity because they said it was cosmetic. However,
       our child couldn’t close her mouth because her pallet was so narrow that it pushed her teeth
       forward extensively. Total cost: $7K. She also needed a hearing aid that insurance didn’t
       cover. Total Cost: $1500.00 the first time – since then, we’ve paid as much as $3K for one
       hearing aid. During all of this time, we had health coverage.

               “Two years after my daughter stopped taking GH, the FDA approved the drug for
       Turner’s patients and our health care offered this very same drug to others under this
       insurance plan for a $5.00 co-pay….but we still had to pay back the $40K+ that we owed the
       drug company.

                “Recently in August, 2004 my 72 year old mother-in-law was diagnosed with
       Idiopathic Pulmonary Fibrosis and was prescribed Interferon. This too is not covered under
       a prescription plan and the cost is $8K per month “out of pocket”. Medicare will not pay for
       this drug even though it is the only current drug available to show any promise for this tragic
       disease. I think it’s an absolute crime that my in-laws, who have worked all their lives, being
       frugal and saving away for retirement, are now going to lose everything so a drug company
       can recoup their losses in the development of the drug.

                “I can’t imagine how many other stories are out there like ours if we’ve been affected
       twice in the same family. Something must be done to hold health care providers
       accountable. You shouldn’t have to pay $160/wk (often times without claims for many years)
       and then find out when you need the help - you aren’t covered because it doesn’t meet their
       “usual and customary ideals”. Who is in control – the doctors or the health insurance
       companies?”



       TIA receives calls almost daily from members looking for health insurance. We would
like to be able to help them but without AHPs there are many roadblocks to offering a
nationwide program. In a recent TIA survey, 84 percent of members who offer health insurance
are facing increases in premiums this year. The survey results showed that the range of premium
hikes ran anywhere from 5 to 150 percent, with the average increase between 20 to 30 percent.
These rising prices will force many small businesses to ask their employees to contribute more
toward their own benefits, limit coverage, raise deductibles or stop offering health insurance at
all.
        TIA urges every member of the Senate to cosponsor Chairman Snowe’s Small Business
Health Fairness Act, S. 406. It would be a big step in helping our country’s small employers.
        If you have any questions about TIA’s testimony, please contact Becky MacDicken,
TIA’s Director of Government Affairs, at 800-876-8372 x 112.

				
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