House Small Business Committee

Small Business Regulatory Flexibility Improvements Act

House Small Business Committee News - Tue, 01/27/2015 - 12:00am
Small Business Committee Chairman Steve Chabot speaking in favor of his bill to craft smarter, less burdensome regulations during its markup at the Judiciary Committee. 

Chabot Introduces Small Business Regulatory Flexibility Improvements Act of 2015

House Small Business Committee News - Mon, 01/26/2015 - 12:00am


WASHINGTON – Small Business Committee Chairman Steve Chabot (R-OH) today introduced H.R. 527, the Small Business Regulatory Flexibility Improvements Act of 2015.

“The Small Business Regulatory Flexibility Improvements Act is about making the federal government stop and think about its impact on the millions of American families who operate or work for our small businesses,” said Chairman Chabot. “That’s the heart of good government. The one-size-fits-all approach to federal regulations has, for decades, hit small businesses, their owners, and their employees the hardest. Giving them the voice they deserve helps give our small businesses the freedom they need to provide the jobs and innovation that drive the American economy forward.”


The Small Business Regulatory Flexibility Improvements Act strengthens and modernizes the Regulatory Flexibility Act of 1980 (RFA), which requires agencies to assess the impact of rules and regulations on small business and consider possible alternatives.


In the 35 years since the RFA was enacted, agencies have exploited loopholes to get around the good-government intentions of the original legislation. The Small Business Regulatory Flexibility Improvements Act closes those loopholes by requiring more detailed analysis of proposed regulations, providing greater opportunity for small business input, and ensuring agencies regularly review regulations already on the books for their economic impact on small businesses. Additionally, it expands the scope of the required economic impact analysis to consider those effects which are often indirect but reasonably foreseeable.


The Small Business Regulatory Flexibility Improvements Act of 2015 is currently scheduled for markup by the House Committee on the Judiciary, which holds primary jurisdiction over the federal regulatory process, on Tuesday, January 27, 2015.  


Small Business Committee Announces Majority Members

House Small Business Committee News - Wed, 01/21/2015 - 12:00am
WASHINGTON – The House Small Business Committee today announced its Republican Members for the 114th Congress.

Chairman Steve Chabot (R-OH) said, “With half of all working Americans going to work at a small business every day, and 7 out of every ten new jobs coming from our small businesses, the work of the Small Business Committee helps all American families. Each of these members understands the challenges and the unlimited potential of American small business, and we’re ready to get to work.”

House Committee on Small Business Majority Members for the 114th Congress:

Chairman Steve Chabot (OH-01)
Rep. Steve King (IA-04)
Rep. Blaine Luetkemeyer (MO-03)
Rep. Richard Hanna (NY-22)
Rep. Tim Huelskamp (KS-01)
Rep. Tom Rice (SC-07)
Rep. Chris Gibson (NY-19)
Rep. Dave Brat (VA-07)
Del. Amata Radewagen (American Samoa)
Rep. Steve Knight (CA-25)
Rep. Will Hurd (TX-23)
Rep. Carlos Curbelo (FL-26)
Rep. Mike Bost (IL-12)
Rep. Cresent Hardy (NV-04)

Chairman Chabot Responds to State of the Union

House Small Business Committee News - Tue, 01/20/2015 - 12:00am
Innovation and Job Creation, Not Tax Hikes, Help American Families

WASHINGTON – House Small Business Committee Chairman Steve Chabot (R-OH) released the following statement in response to tonight’s State of the Union Address:

“American families need innovation and job creation to succeed, not another combination of tax hikes,” said Chabot. “President Obama’s efforts to raise taxes on anybody would have a devastating effect on American small businesses, and as a result, half of America’s workers. That’s not what the American people sent their new Congress to Washington to do.

“Since seven out of every 10 new American jobs are coming from our small businesses, the New American Congress is working on the reforms and solutions that can help them, not the tax hikes that will hurt them. I wish President Obama would join us in this effort, but he proved tonight he’s still putting politics over people.”


Contact Kelley McNabb or Adam Scheidler 

House Acts to Restore Traditional Work Week

House Small Business Committee News - Thu, 01/08/2015 - 12:00am

House Acts to Restore Traditional Work Week

WASHINGTON – The U.S. House of Representatives today passed H.R. 30, the Save American Workers Act. The bill, which passed with bipartisan support, restores the traditional definition of full-time work to 40 hours per week, which had been reduced to 30 hours under Obamacare.

Today, America’s new Congress acted to help our hardest-hit workers increase their take home pay and find full-time work,” said House Small Business Committee Chairman Steve Chabot (R-OH). “Obamacare’s 30-hour work week has forced small businesses to reduce hours and shed part-time employees. It didn’t harm the well off, it harmed those who could least afford it. This bill is a win for the American workforce, who will have more opportunity to find meaningful work, and for our small businesses, who will no longer be burdened by this misguided provision.

There are currently 6.9 million Americans working part time, who would prefer to work full time. According to analysis by the Hoover Institution, Obamacare’s 30-hour rule “makes it more unlikely that these Americans can find the jobs they want and need.” Furthermore, it finds that the rule “disproportionately impacts low wage earners,” and, “creates administrative complexity and additional costs for businesses, making it less likely they will expand and create jobs.”


House Acts to Help Veterans, Small Businesses

House Small Business Committee News - Tue, 01/06/2015 - 12:00am
January 6, 2015
  Contact: Kelley McNabb or Adam Scheidler
  House Acts to Help Veterans and Small Businesses with First Bill of New Congress
  Washington, DC – Today, with the first act of legislative business in the new Congress, the U.S. House of Representatives passed H.R. 22, the Hire More Heroes Act, by an overwhelming majority. This bipartisan bill makes it easier for small businesses to hire veterans by exempting those veterans already receiving health care at the Department of Defense or the Veterans Administration from Obamacare’s employer mandate.

After the vote, Small Business Committee Chairman Steve Chabot (OH-01) released the following statement:

“The Hire More Heroes Act marks the first of many solutions that the new American Congress will produce to help our small businesses grow and create jobs,” said Chabot. “Small businesses are responsible for the majority of new opportunities in America and make our communities more vibrant and strong.

“As incoming Chairman of the Small Business Committee, my goal each day is to make life better for America’s small businesses, so that they can continue to innovate and create jobs. The bill passed by the House today is an important step toward that goal and towards the new American Congress’s commitment to produce positive solutions for our communities.”

Chairman Chabot has served the people of Southwest Ohio on the House Small Business Committee for 18 years. Prior to becoming Chairman for the 114th Congress, he served as Ranking Member of the Committee from 2007-2008.

Associated Press: Small Business and Politics: How Did Graves Do?

House Small Business Committee News - Wed, 12/10/2014 - 12:00am

Small Business and Politics: How Did Graves Do?

By JOYCE M. ROSENBERG, AP Business Writer

Small companies were still reeling from the recession in 2011 when Sam Graves became chairman of the House Small Business Committee. As the Missouri Republican prepares to leave his post, small business has a higher profile, partly because of the committee's legislation on issues like federal contracts and its more than 200 hearings.

"I think he's had a pretty good record," says Todd McCracken, president of the advocacy group National Small Business Association. "His is one of the most active committees in Congress."

Although the committee's primary function is overseeing the Small Business Administration, under Graves it became a forum on small business issues, McCracken says. Among them: health care, taxes, availability of bank loans and federal regulations. The committee also campaigned with other lawmakers for small business legislation.

Graves cites as one of his achievements the repeal of a law requiring businesses to report to the IRS sales of goods or services over $600, a regulation that would have sharply increased companies' paperwork. The committee was one of the first to hold a hearing about the law, says Kevin Kuhlman, director of legislative affairs for the National Federation of Independent Business.

Graves also pressured government agencies for more time for companies to comment on regulations like an Environmental Protection Agency rule on waterways, Kuhlman says.

The committee is one of several government advocates for small business, along with the Senate Committee on Small Business & Entrepreneurship and the SBA. Graves has been on the committee since 2001; his term as chairman ends Jan. 3 under limits set by the Republican majority. He'll move to the House Transportation and Armed Services committees and be succeeded by Steve Chabot, R-Ohio.

Graves spoke recently with The Associated Press. Here are excerpts, edited for brevity and clarity:

Q. What have been your biggest accomplishments on the committee?

A. The biggest by far is making the committee relevant. We came in at the height of the recession, and the Small Business Committee was in many cases taking a back seat and I think there were some out there who didn't think it was relevant. But when you have small businesses creating seven out of every 10 jobs, it's extraordinarily relevant, and we brought that relevance to the forefront with our very active hearing schedule and some very high profile witnesses including Treasury Secretary Tim Geithner.

We leveraged the Regulatory Flexibility Act in ways that hadn't been done before, forcing the administration to comply and do its analysis (of the burden regulations place on small businesses). We've been very active in contracting reform, which is one of the cornerstones of what I've been trying to do, making sure small businesses are included in government contracts.

Q. What is the biggest thing you've learned about small business from the committee?

A. Small businesses face different challenges in different parts of the country, and one of the biggest is access to capital. For some small business segments, it's very easy to get, but what I've learned is for some sectors, like service-based businesses or startups, it's very hard for them to get the capital they need. In many cases they don't have assets to use as collateral.

Q. What advice do you have for small business owners?

A. Sometimes when you're going after an SBA loan, it is so overwhelming, the amount of paperwork and the burdens. Don't give up. There is light at the end of the tunnel. We're trying to make it easier, trying to reduce that paperwork and the hoops you've got to jump through. Hang in, because it'll happen.

Q. What should Congress and the next Small Business Committee focus on?

A. Continue with contracting reform. We have to do everything we can to allow small businesses to be able to participate in these contracts. We have to continue to keep the government from (combining small contracts into larger ones) to the point where no one can compete except for the very largest businesses. My reforms led to the government finally reaching its goal for giving 23 percent of contracting dollars to small businesses. One of the things we tried to do was increase that to 25 percent. That's something that needs to continue.

Graves Supports Extension Of Business-Friendly Tax Provisions

House Small Business Committee News - Wed, 12/03/2014 - 12:00am

House Small Business Committee Chairman Sam Graves (R-MO) issued the following statement in support of the Tax Increase Prevention Act (HR 5771):
“High taxes and a complex tax code have a devastating effect on small businesses,” said Chairman Graves. “I support extending these business-friendly tax provisions that will help our economy improve. The research credit, bonus depreciation, property expensing, small business stock exclusion, and reduction in S-corporation recognition period for built-in gain are worthy extensions that will help small businesses grow and create jobs.

“The SBA reports that the average tax compliance cost per employee for small businesses is almost three times the per employee cost for the average large firm, and small businesses spend more than 5.5 billion hours fulfilling their income tax obligations. The power of our entrepreneurial private sector won’t be unleashed until we provide tax relief for our small business community.”

Beneficial tax extenders for small businesses in the Tax Increase Prevention Act include:
    • Section 111. Extension of research credit
    • Section 122. Extension of 15-year cost recovery for qualified leasehold improvements, qualified restaurant buildings and improvements, and qualified retail improvements
    • Section 125. Extension of bonus depreciation
    • Section 127. Extension of increased expensing limitations and treatment of certain real property as section 179 property
    • Section 136. Extension of temporary exclusion of 100 percent of gain on certain small business stock
    • Section 138. Extension of reduction in S-corporation recognition period for built-in gains tax

The Committee has made small business tax issues a high priority during the past two Congresses. In April, Graves held a hearing on the challenges small businesses face with complying with the tax code. A National Small Business Association (NSBA) tax survey was released in conjunction with the hearing, showing that a majority of small businesses spend 40 hours preparing to file their taxes, while 40 percent spend a costly two full workweeks on the process. In April of 2013, the Committee held a hearing with Ways and Means Committee Chairman Dave Camp supporting tax reform.


Committee Small Business Contracting Reform Included In Final NDAA

House Small Business Committee News - Wed, 12/03/2014 - 12:00am
House Small Business Committee-sponsored contracting reform legislation has been included in the bicameral National Defense Authorization Act of 2015 (NDAA) agreement that will soon be voted on in the House. 

During the 112th Congress and early in the 113th Congress, the Committee has been successful in including small business legislation that it marked up in the final NDAAs that were signed into law. Given that about 70 percent of government contracts are awarded by the Department of Defense, the Armed Services Committee and Small Business Committee have worked together to include reforms into the NDAA.

“I’m pleased that we were able to again include many of our small business contracting reforms in this year’s NDAA,” said Chairman Graves. “The included legislation will help small businesses have a better chance at competing in the procurement marketplace. Our reforms from the last several years have contributed to the federal government finally reaching the 23 percent small business contracting goal for the first time in eight years. The reforms in this NDAA will help this accomplishment become a regular occurrence.”

“Many of our federal government procurement bidding processes are unnecessarily complex and complicated, especially for small businesses,” said Subcommittee on Contracting and Workforce Chairman Richard Hanna (R-NY). “These reforms are a positive step toward giving small contractors the ability to more fairly compete for business. I am particularly pleased that we are making progress in reforming reverse auctions which actually hurt taxpayers and small contractors in industries like construction and design.”

Committee-sponsored legislation included in this year’s NDAA:

  • Design-Build Bidding Reform (Section 814) – Simplifies the multistep process of competing for design-build contracts with the Department of Defense. Originated as the Design Build Efficiency and Jobs Act of 2013, sponsored by Graves.

  • Comprehensive Subcontracting Plan Reform (Section 821) – At the request of Graves, the NDAA included provisions to increase transparency and accountability in the Test Program for Negotiation of Comprehensive Small Business Subcontracting Plans.

  • Contracting Data and Bundling Accountability (Section 822) – Brings more transparency to data reported on bundled and consolidated contracts. Originated as the Contracting Data and Bundling Accountability Act of 2013, sponsored by Graves, and passed by the Committee. 

  • Export Assistance for Small Businesses (Section 823) – At the request of Committee members, the NDAA included provisions intended to help small businesses comply with complicated import and export requirements with the International Traffic in Arms Regulations and Export Administration Regulations.

  • Reverse Auctions Reform (Section 824) – Within the Department of Defense, this provision limits the use of reverse auctions by banning the use of single-round reverse auctions, single-bid reverse auctions absent price protections, third-party reverse auctions that include inherently governmental functions or private past performance evaluations, and reverse auctions for design-build work.  Given that 95 percent of reverse auctions are for contracts of less than $150,000, improper use of this tool has been harming small businesses, limiting competition, and delivering contracts that fail to save the taxpayers money. Originated as the Commonsense Construction Contracting Act of 2013, sponsored by Hanna, and passed by the Committee.

  • Women-Owned Small Businesses (Section 825) – Permits sole-source contracts for Women-Owned Small Businesses (WOSBs) and Economically-Disadvantaged Women-Owned Small Businesses (EDWOSBs) if there is only one WOSB or EDWOSB who can perform the work and the value of the contract is below $ 4 million, or $6.5 million for manufacturing. This provides WOSBs and EDWOSBs with the same sole-source authority currently available to HUBZone and Service-Disabled Veteran-Owned Small Businesses firms.  Originated as the Women's Procurement Program Equalization Act of 2013, sponsored by Ranking Member Nydia Velasquez (D-NY), and passed by the Committee. 


Graves Encourages Americans to Shop Local, Introduces ‘Small Business Saturday’ Resolution

House Small Business Committee News - Tue, 11/25/2014 - 12:00am
House Small Business Committee Chairman Sam Graves (R-MO) today highlighted “Small Business Saturday” in appreciation of the small businesses that help build strong, prosperous communities throughout the nation. Members of the Committee joined Graves and 54 bipartisan cosponsors to support a resolution designating a day as an expression of support for America’s 28 million small businesses. 

The Graves’ resolution encourages people to buy goods and services locally from the small firms in their communities on November 29th, the Saturday after Thanksgiving. Again this year, Small Business Saturday coincides with the holiday weekend’s traditional surge in economic activity. Major retailers often advertise heavily for “Black Friday” shopping specials, and since 2010, Small Business Saturday has followed with a “shop local” theme. This bipartisan resolution helps raise awareness of the value of having thriving small businesses in every community and the outsized impact of small businesses on the U.S. economy.

“I’m pleased to introduce the ‘Small Business Saturday’ resolution for 2014, and express support for the small firms that serve our communities every day,” said Chairman Graves. “The Saturday after Thanksgiving is a great opportunity to simply say ‘thank you’ to a small business near you. Small businesses have a big impact on the economy, and they are built on hard work and good ideas. By employing nearly half of all private sector employees in the country, small businesses support millions of families, and we can all celebrate when they succeed.”


Rep. Bachmann
Rep. Barber
Rep. Bentivolio 
Rep. Bonamici
Rep. Brownley  
Rep. Bustos
Rep. Cardenas 
Rep. Chabot  
Rep. Chu 
Rep. Cicilline 
Rep. Clarke 
Rep. Coffman 
Rep. Collins (NY) 
Rep. Daines
Rep. DeLauro
Rep. DelBene 
Rep. Ellmers  
Rep. Esty 
Rep. Farenthold  
Rep. Garcia  
Rep. Gosar
Rep. Grijalva  
Rep. Hahn 
Rep. Hanna
Rep. Hastings
Rep. Herrera-Beutler
Rep. Huizenga  
Rep. King (IA) 
Rep. Kirkpatrick  
Rep. Latham  
Rep. Loebsack  
Rep. Leutkemeyer
Rep. Meng
Rep. Moore 
Rep. Mulvaney  
Rep. Murphy  
Rep. Pingree 
Rep. Richmond  
Rep. Ruiz 
Rep. Rush 
Rep. Ryan (OH) 
Rep. Sanchez (CA-46) 
Rep. Schakowsky
Rep. Schrader
Rep. Sensenbrenner
Rep. Shea-Porter 
Rep. Slaughter  
Rep. Speier
Rep. Takano
Rep. Tipton  
Rep. Titus
Rep. Van Hollen
Rep. Womack


CQ: Graves: SBA Rule Change Would Hurt Small Businesses

House Small Business Committee News - Wed, 11/19/2014 - 12:00am

Congressional Quarterly: Graves: SBA Rule Change Would Hurt Small Businesses
November 19, 2014
By Shawn Zeller

House Small Business Committee Chairman Sam Graves and the Small Business Administration are quarreling again over a new administration move to increase the size of firms eligible for government contracts set aside for small companies.
Graves, R-Mo., wrote this month to Khem R. Sharma, the chief of the SBA’s size standards division, to protest the agency’s proposal in September to allow larger companies in 30 industries to apply for the set-asides.
It would, for instance, set the bar for book publishers seeking small business contracts at up to 1,000 employees, twice the current 500. Companies that extract natural gas or oil could employ 1,250 workers, up from 500.

Graves’ concern is over the agency’s plan to eliminate a special exemption that allows information technology firms with up to 150 workers to win large contracts to advise agencies on their hardware and software needs and to then buy and install the equipment. The SBA would do away with the 150-worker rule and limit eligible firms to $25.5 million in revenue.

SBA says it is changing the rules to adjust to changes in the business world. The IT rule change might help agencies better coordinate IT procurement to ensure government computer systems work well together, a common problem now, by ensuring better-equipped firms get the deals.

But Graves, as well as some advocates for small businesses and the IT firms themselves, say this would hurt many small companies because the cost of computer equipment would be counted against the $25.5 million. For firms with 150 employees and a $25.5 million government contract, “simply paying for supplies and the salaries of employees will cause the company to run a deficit,” Graves wrote, arguing SBA should keep the head-count standard.

The American Small Business League, a California-based group that’s long criticized the SBA for not helping more small companies win government deals, is threatening to sue the agency if the rule is finalized. Lloyd Chapman, the league’s president, says the proposal is “absurd and laughable” and that it would “devastate thousands of small businesses.”

But Sharma notes the agency is merely carrying out the mandate it received in a 2010 law (PL 111-240) to review all of its size standards for small business contracts every five years. The bill was enacted by a Democratic Congress over Republican objections. Sharma notes many of the size standards haven’t been adjusted since the 1970s and are out of step with the current contracting market.
When the SBA moved to increase some of the size standards in 2011, Graves – who’d become chairman of the Small Business Committee that year – objected on the grounds that they would hurt some small firms, and the agency scaled back its plans.

The following year, at Graves’ urging, Congress included provisions in the fiscal 2013 defense authorization (PL 112-239) aimed at making it harder for the agency to raise size standards by requiring the SBA to conduct more comprehensive reviews of the affected industries. Graves contends that the September proposed rule violates that law.

The main trade group for government contractors, the Professional Services Council, says although Graves’ concerns about the change in IT contracting rules may be legitimate, it generally supports the SBA’s efforts. “We’ve felt for a long time that the size standards do not reflect the current market realities for federal procurement,” says Alan Chvotkin, the group’s executive vice president.


Graves Again Calls on EPA and Corps to Withdraw Flawed 'Waters of the United States' Rule

House Small Business Committee News - Fri, 11/14/2014 - 12:00am

House Small Business Committee Chairman Sam Graves (R-MO) today urgedthe Environmental Protection Agency (EPA) and the U.S. Army Corps of Engineers (Corps) to withdraw the “Waters of the United States” proposed rule to expand the reach of the Clean Water Act (CWA), due to the agencies’ failure to examine the impacts of the proposal on small entities as required by the Regulatory Flexibility Act (RFA).  The agencies certified the proposed rule as one that will not have a significant economic impact on a substantial number of small entities.

In a comment letter, Graves wrote, “Based on the testimony from the hearings and the Committee staff’s analysis, the Committee disagrees with the agencies’ certification of the Proposed Rule. Contrary to the agencies’ assertions, the Proposed Rule will increase the geographic scope of CWA jurisdiction and small entities will be directly affected. The EPA should have conducted a Small Business Advocacy Review (SBAR) panel to get input from small entities and performed an initial regulatory flexibility analysis (IRFA) assessing the impacts of the Proposed Rule on small entities as required by the RFA.  Unfortunately, the agencies did not do so and instead engaged in arbitrary and capricious rulemaking.”

A particular concern is the rule’s failure to clarify what specifically are “Waters of the United States,” which is one reason the regulation was deemed necessary.

“For a large business with access to lawyers and civil engineers deciphering these terms would be very problematic.  For small entities such as a rural town government, a farmer or a home builder, the determination of whether a water body is an adjacent water under the Proposed Rule will be well nigh impossible due to the inherent vagueness.  This inherent vagueness portends significant civil liability if the small entity is incapable of ascertaining whether it needs a permit under §§ 402 or 404 of the CWA,” Graves continues.

“The agencies failed to comply with the requirements of the RFA and their rationales appear to be nothing more than pretexts to avoid consideration of impacts on small businesses, small governmental jurisdictions and small not-for-profits as directed by Congress.”

Graves concludes, “As it now stands, the Proposed Rule will clarify little, lead to significant litigation (including challenges that might prohibit enforcement against small entities), and ultimately undermine the agencies’ mission of protecting the waters of the United States from degradation.  The only logical course for the agencies is to rescind the proposal and reissue it after fully complying with the RFA so the end result will be a logical, non-arbitrary rule that actually clarifies definitions and protects the waters of the United States.”

The Committee held a hearing on this proposed rule on May 29, 2014. Small business leaders have overwhelmingly maintained that the rule creates more confusion, would be economically detrimental on many levels, and wouldn’t improve water quality. Also in May, Graves and Members of the Committee wrote to EPA Administrator Gina McCarthy and Assistant Secretary of the Army Jo-Ellen Darcy, who oversees the U.S. Army Corps of Engineers, to urge withdrawal of the pending rule. 


Congressional Quarterly: Small Business Exchanges Find Few Customers So Far, Study Shows

House Small Business Committee News - Thu, 11/13/2014 - 12:00am

Congressional Quarterly: Small Business Exchanges Find Few Customers So Far, Study Shows
November 13, 2014
By John Reichard

Only 76,000 people working for 12,000 small employers were covered through plans offered by the health law’s small business exchanges as of June, the Government Accountability Office reported Thursday.

That figure – reflecting 18 state-based small business exchanges – is vastly lower than Congressional Budget Office projections, said House Small Business Committee Chairman Sam Graves, R-Mo.

The Congressional Budget Office estimated that 2 million employees would enroll in so-called SHOP coverage this year, Graves said in a press release. The health law requires each state to have a Small Business Health Options Program that is administered either by the state or through the federal government.

The Obama administration still hasn’t released enrollment numbers for the “federally facilitated” SHOP exchanges it runs in 33 states. It says, however, that they are comparable to the numbers for SHOPs created on their own by 17 states and the District of Columbia.

The low enrollment figure gives Republicans another opening to attack the health law as they prepare for the next session of Congress and a new series of attacks on the overhaul.

“Obamacare’s SHOPs have been fraught with errors and high costs from the beginning,” Graves said.

GAO detailed the slower-than-scheduled startup of the SHOPs and the features they offer.

The exchanges were supposed to open in all states by Oct. 1, 2013. In all but four states, SHOPs were accepting enrollment applications by that date but important promised features were typically not ready, including online enrollment, and “employee choice” features.

Though insurer competition in the SHOPs was supposed to drive down premiums, the GAO found prices comparable to coverage outside of the exchanges.

The typical small business owner that provides coverage also picks the plan. The idea of SHOPs, in part, is to give their employees a menu of coverage options to choose from. Many state-created SHOPs offer this feature, but none of the federally facilitititated ones do, GAO found.

The same is true of online enrollment, which exists in most of the state-run SHOPs but not at all in the exchanges operated by the federal government, the report said.

What small business owners have gained, however, is the ability to see plan information such as premiums and benefits online on web sites in all of the states.

And federal officials are preparing to implement online enrollment for federally run SHOPs for 2015, GAO said. Employee choice will be available next year in 14 states with SHOPs operated by the federal government, though 18 states took up a government offer to delay that feature until 2016.

Enrollment figures for the federally run SHOPs will be made public early next year.

Most bosses are offering their workers a menu of coverage options in states where the option is available, the study found. “Exchange officials in Kentucky and Rhode Island said that approximately 65 and 61 percent of enrolled employers, respectively, decided to offer their employees a choice of plans,” GAO said.

The added features will bring many more customers to the SHOPs, exchange backers say. So too will more aggressive marketing, closer coordination with insurance agents and the fact that employers after 2016 won’t be able to renew coverage that doesn’t comply with the health law, which will make them more likely to start shopping at the small business exchanges.

Others predict the SHOPs won’t be a big draw because the tax credits they offer small businesses end after this year. The exchanges may not be able to charge lower premiums.


GAO: Obamacare Small Business Exchange Enrollment ‘Significantly Lower’ Than Expected

House Small Business Committee News - Thu, 11/13/2014 - 12:00am

The Government Accountability Office (GAO) today released a report, requested by House Small Business Committee Chairman Sam Graves (R-MO), showing that enrollment for the state-operated Small Business Health Options Program (SHOP), created by the Affordable Care Act, was significantly lower than expected. No data was released for the federally-operated SHOP, but CMS told GAO it anticipates similarly low enrollment numbers. This report’s release comes just days after the Obama administration predicted that overall enrollment for next year is expected to be 30% lower than expected.

The Committee has documented continued mismanagement with the SHOPs going back to the summer of 2013, when another GAO report requested by Graves, confirmed the administration was ill-equipped for its rollout, and cited potential for “implementation challenges going forward.” This year, Graves has repeatedly pressed the administration to provide data on the enrollment and updated compliance timeline of federal and state SHOPs, but the data has not been provided. During a September 18 Small Business Subcommittee hearing, Centers for Medicare and Medicaid Services (CMS) Director of State Exchange Group, Mayra Alvarez, was asked about SHOP enrollment data, yet the administration was still unable to provide the information. Today’s GAO report is the first federal government release of SHOP performance data.

“Obamacare’s SHOPs have been fraught with errors and high costs from the very beginning,” said Chairman Graves. “The administration touted the SHOP as a way for small companies and their employees to benefit from more health insurance competition and choice, and ultimately lower prices. Instead, we have seen that costs are increasing for nearly two-thirds of small businesses that provide health insurance to their employees and the majority of small business owners paid more per employee for health insurance in 2013 than in 2012.”

Graves continued, “The lack of specific federal SHOP enrollment data confirms that CMS initially created no mechanism to monitor or measure its performance after enrollment began. It is apparent that the Obama administration didn’t prioritize the SHOP exchange in the law. Small businesses and taxpayers deserve better.”

GAO Report Highlights:

• As of June 1, 2014, enrollment for the SHOPs was significantly lower than expected, and, at its current pace, is unlikely to reach expectations by the end of 2014.

  • State SHOPs – 76,000 individuals through 12,000 employers.
  • Federal SHOP – data will not be available from CMS until next year, but CMS does not expect major differences between federal and state SHOP numbers.
  • In April 2014, the Congressional Budget Office estimated that 2 million employees would enroll in coverage through the SHOPs in 2014, with the number of enrollees rising to 3 million in 2015 and leveling off at 4 million enrollees by 2017.

• Most state SHOPs had multiple plans available, but some states had counties with no plans. For example, in Washington state, SHOP plans were only available in a few counties, and the state had only 8 employers enrolled.

• The average number of employees per business enrolled in SHOPs is 3.7 employees.

• Many state SHOP features were delayed and enrollment was low as of June 2014 and key SHOP features, such as online enrollment and employee choice, were delayed for all federal SHOPs and some state SHOPS.

• The primary incentive for many small businesses to enroll in SHOPS was to utilize the small business health care tax credit.  But the credit is so narrow, complex and temporary that it has been an insufficient incentive to enroll. Although the President’s Council of Economic Advisors and stakeholder groups initially estimated over 4 million small businesses would be eligible for the credit, a 2012 GAO report showed only a small fraction (170,300) actually claimed it. 



Graves Disagrees With President Obama Net Neutrality Comments

House Small Business Committee News - Mon, 11/10/2014 - 12:00am

House Small Business Committee Chairman Sam Graves (R-MO) released the following statement in response to the President’s comments regarding net neutrality and regulating the Internet:

“The Internet was born and bred from American ingenuity and innovation and has been one of, if not the most, successful drivers of economic growth here and abroad for the past 20 years. Small businesses have come to depend on and utilize the Internet in ways not even imagined two decades ago, allowing them to compete across town and across the globe. In that time, the Internet has remained free of burdensome regulations that had the potential to curb its growth or limit its role in our economy. I was troubled by President Obama’s announcement supporting regulation of the Internet as a utility under Title II of the Communications Act. Doing so has the real potential to stifle economic growth, hurt small businesses and the jobs they have created.”
In September, the Committee held a hearing with Federal Communications Commission Chairman Thomas Wheeler on telecommunications issues that are important to small firms, including net neutrality, broadband deployment, Universal Service Fund reform efforts, and wireless spectrum availability.



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