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Chairman Smith Remarks: Rules Testimony on CHOICE Arrangement Act and Small Business Flexibility Act

June 20, 2023

As prepared for delivery.

“Thank you, Chairman Cole and Ranking Member McGovern, for having me here today.

“As we learned this week with the latest Consumer Price Index report, working families that have spent the last two years being hammered by inflation, continue to suffer under higher prices. At the start of Joe Biden’s presidency, the Congressional Budget Office projected the economy would recover to pre- pandemic levels without any more stimulus. Then, Democrats proceeded to ram through trillions in new spending that led to the highest inflation in 40 years, making everything from food to gas to health care less affordable.

“What the President’s cost of living crisis has taught us is that, too often, Washington gets in the way of Americans being able to provide for their families. And when Washington needs to be involved, it should be a partner with the American people – not a barrier.

“The Ways and Means Committee has traveled over 5,000 miles from Atlanta to the plains of Oklahoma, where we’ve heard from workers and small businesses about their difficulty in today’s economy.

“The very first health care hearing our committee had was specifically focused on identifying the drivers of high health care costs and to hear from small business owners and policy experts, what Congress can do to expand choice, increase flexibility and reduce burdens.

“I’m here to discuss policies that recently passed out of the Ways and Means Committee that will do just that.

“Health Reimbursement Arrangements (HRAs) allow employers to provide tax-advantaged funds for their workers to cover qualified medical expenses. In 2019, President Trump expanded HRAs to let workers use those funds to purchase their own health insurance plan on the individual market. Representative Kevin Hern’s bill, the CHOICE Arrangement Act, would make this flexible option permanent under the law for small businesses and workers.

“We’ve heard that 87 percent of small businesses say they want another way to provide health insurance for their employees without offering a traditional group plan, and 90 percent of individuals want to be able to take their health insurance with them if they change jobs. The CHOICE Arrangement Act allows for just that. Through this bill, mom-and-pop shops on Main Street have the option to avoid managing a complex health insurance plan, and instead spend their time focusing on their workers and customers. And for workers, it means that they have more flexibility and options when it comes to choosing the right health plan that works for them and their families – and as important, they can take their plan with them if they change jobs.

“Also contained in the CHOICE Arrangement Act is a solution authored by Representative Claudia Tenney. During our hearings, we learned that only 30 percent of small businesses with less than 50 employees offer health insurance, that’s down from 50 percent only 20 years ago. Importantly, 70 percent of small businesses do not know that the federal government already allows for flexible health coverage opportunities that could be beneficial to them and their employees – this includes CHOICE Arrangements, and Qualified Small Employer Health Reimbursement Arrangements and the Small Business Health Care Tax Credit. Representative Tenney’s proposal requires the Treasury Department to notify small businesses of these different tax-advantaged coverage options available to them.

“Giving employers more information about the health benefit options available to them will not only reduce the burden on small businesses who are scrambling to keep the lights on, but will also give workers access to personalized health options that meet their needs.

“Thank you for allowing me to testify today, and I look forward to your questions.”