“One key way to reduce costs in our health care system is to eliminate loopholes in the system that increases profits for insurers by shifting costs to hardworking Americans,” said U.S. Rep. Rob Andrews (D-NJ), chairman of the subcommittee.  “We need to create real competition between insurers in the health care market in order to further reduce costs for consumers.”

Working Americans and employers have seen these rising costs reflected in the increases in their health insurance premiums each year. According to government statistics, health insurance premiums for employees more than doubled in the last 9 years, a rate 6 times faster than wage increases.




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“Guaranteeing adequate, affordable coverage for all Americans regardless of where they obtain their health insurance is a key component of health reform,” said Karen Davenport, director of health policy at the Center for American Progress Action fund. “Reforming our nation’s health care system is a challenging task but the results will be worth the effort – lower costs and better coverage.”

Rising costs have led to millions of Americans without any health coverage and millions more who have inadequate health insurance. Witnesses also said that ensuring a more efficient delivery of care will help drive down waste and costs within the health care system.

“The American health care system can be fixed, but consumers need tools to help drive the system toward quality and cost savings,” said William Vaughan, health policy analyst for the Consumers Union. “Consumers are both paying more in premiums, and shouldering a higher burden for out-of-pocket expenses, including deductibles, co-payments and other expenses not covered by their health insurance.”

Guaranteeing health care coverage for all Americans, regardless of an individual’s health, will create larger pools of risk where costs could be spread more efficiently throughout system than in smaller pools. Smaller pools of risk lead to more expensive coverage for individuals and small businesses. 

“Generally speaking, small businesses lack economies of both scale and expertise via-a-vis larger employers in providing health, retirement, and other employee benefits to their workers,” said Bill Oemichen, president and CEO of the Cooperative Network, a Minnesota and Wisconsin association of businesses that provide employee benefits to 600 businesses. “For this reason, millions of small business employees do not receive health care and benefits coverage, and small business employers that do provide benefits often struggle to maintain these programs.”

Another strategy is to ensure that everyone will be covered regardless of preexisting conditions. Loopholes in current law force many individuals with preexisting conditions to go without coverage and drive up costs when they do have to seek health care treatment.

“[Current law] does allow insurers to exclude coverage for a preexisting condition for up to one year for employees who previously had less than 12 months of continuous coverage,” said Ron Pollack, executive director of Families USA. “These exclusions cause employees to postpone or forgo treatment for serious illnesses such as cancer.”

Congress is currently working on a proposal to provide comprehensive health care reform. On March 11, the chairs of the three House committees of jurisdiction sent a letter to President Obama pledging that they will work together to deliver a comprehensive reform package to the floor before the August recess. To read the letter, click here.

“When a worker spends most of their lifetime investing their hard-earned dollars into an account for their retirement and later discover that they were being charged fees that contributed to a significant loss of their nest egg, they understandably lose trust and confidence in the system,” said U.S. Rep. Rob Andrews (D-NJ), chairman of the subcommittee. “The lack of transparency in the 401(k) system is unacceptable and must end now.”

The 401(k) Fair Disclosure for Retirement Security Act (H.R. 1984), introduced yesterday by Reps. George Miller (D-CA) and Andrews, will help workers shop around for the best retirement options by requiring simple fee disclosure on the investment options contained in their employer’s 401(k) plan.

“It is an especially difficult time for our country. Families are running their budgets and cutting back just to survive including, as evidence suggests, their retirement savings,” said Miller, chairman of the full committee. “As a result, it is more important than ever that Americans are armed with simple and complete information so they can get the best bang for their retirement buck.”

Current law does not require all fees workers pay to be disclosed; and even for information that is available, it can be difficult for workers to find. According to the Government Accountability Office, these hidden fees can greatly reduce workers’ retirement account balances. In fact, just a 1-percentage-point in excessive fees can reduce a worker’s 401(k) account balance by as much as 20 percent or more over a career.



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“Achieving financial security in retirement is a significant challenge for most Americans,” said Kristi Mitchem, managing director and head of U.S. defined contribution plans at Barclays Global Investors. “Providing plan fiduciaries and individual plan participants with additional targeted information about fees and expenses…will promote better investment decisions and help 401(k) plans to better deliver retirement security for American workers.

The legislation would require financial service providers to disclose all the costs and fees associated with each investment option to both employers who sponsor the 401(k) plan and employees who direct choose investments.

“The retirement security of employees is completely dependent upon the business owner’s choice of retirement plan service providers,” said Julian Onorato, CEO of ExpertPlan, Inc. “If the fees are unnecessarily high, the workers’ retirement income will be severely impacted. It is imperative that the business owner have the best information to make the best choice.”

H.R. 1984 would also require service providers to disclose any financial relationships or potential conflicts of interest to plan sponsors.

“Plan sponsors must understand the incentives that may exist for service providers to encourage participant behaviors that may not be in their best interest because they do not contribute to great retirement security,” said Alison Borland, retirement strategy leader of Hewitt Associates LLC, a company that advises employers on retirement plans. “Identifying these potential conflicts of interest requires more detailed disclosure than is available today.”

The 401(k) Fair Disclosure for Retirement Security Act would also require plans to offer at least one low-cost index fund that tracks a broad market index to plan participants in order to receive protection against liability for participants’ investment losses. Because index funds are not actively managed, they carry lower costs and generally outperform the vast majority of other investment options over time.

“The 401(k) Fee Disclosure Act takes the long overdue step of prohibiting pension plans from limiting investment options to actively managed portfolios and thereby forcing participants to pay higher fees and assume active management risk,” said Mercer E. Bullard, founder of the investor rights group Fund Democracy and assistant professor of law at the University of Mississippi. “It is widely accepted that actively managed funds cannot, as a group, outperform the marketplace after taking fees into account.”

For more information on the 401(k) Fair Disclosure for Retirement Security Act (H.R. 1984), click here.

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The GAO found that the Wage and Hour Division’s complaint intake, complaint resolution, and investigation processes were ineffective and discouraged workers from lodging wage theft complaints. In several of the division’s regional offices, staff were directed to only record successful complaint resolutions in its database, making the Wage and Hour Division statistics appear better than they were. In addition, the GAO found that because of the lack of resources and staff, investigations on wage theft and child labor violations were frequently delayed by months or years.  

“This investigation clearly shows that the Department of Labor has left thousands of actual victims of wage theft who sought federal government assistance with nowhere to turn,” said Gregory Kutz, GAO’s managing director of forensic audits and special investigations, “Far too often many of America’s most vulnerable workers find themselves dealing with an agency concerned about resource limitations, with ineffective processes, and without certain tools necessary to perform timely and effective investigations of wage theft complaints. Unfortunately, far too often the result is unscrupulous employers taking advantage of our country’s low wage workers.”

Over a period of several months, GAO investigators filed ten fictitious complaints with agency district offices across the country, posing as both the employee and the employer. Of the ten complaints that were made, only one was successfully resolved. The GAO also reported that after reviewing the agency’s complaint database, only five of ten fictitious complaints were logged into the system weeks later.

In one case, an undercover investigator called the agency to complain about children working with saws and meat grinders, illegal under child labor laws, during the school day. Although the agency states that investigating child labor violations is a top priority, the call was never investigated or logged into the complaint database.

To listen to this call, click here.

In another undercover call, a Wage and Hour employee told the GAO investigator that they could not follow up on the complaint because the IRS said that his employer was not big enough to be covered under the law. As the GAO testified, though the company was a fictitious and had never filed a tax return, Wage and Hour employees do not have access to IRS data. The Wage and Hour employee was referred to the Department of Labor Office of Inspector General for administrative action.

To listen to this call, click here.

In addition, the GAO audited Wage and Hour Division’s database and sampled several dozen cases to determine whether they were properly handled. Just as the undercover calls highlighted, many times, when employers declined to pay back wages – even if employers admit wages were owed – the division was likely to drop the investigation and inform the complainant the right to sue in court.  

Also, the GAO found that Wage and Hour employees often took the word of employers that they paid workers back wages owed, even if the employee never got paid.

“While some investigators wait for proof of payment before closing the conciliation, others told us that they close conciliations as soon as the employer agrees to pay,” said Kutz. “Even if the employee later tells the investigator that he has not been paid, investigators told us they do not change the outcome of a closed case in the WHD database.”

Today’s hearing follows a July 2008 Education and Labor hearing on wage theft where the GAO presented 15 case studies where the Wage and Hour Division ineffectively enforced the law. The GAO reported then that actions initiated by the Department on wage and hour violations dropped from approximately 47,000 in 1997 to fewer than 30,000 in 2007. And, the use of fines that punish repeat or egregious offenders declined by nearly 50 percent from 2001 to 2007.

To read more about the July 2008 hearing, click here.

To read the GAO’s testimony, click here.

The proposal, finalized on Jan. 20, 2009, would largely remove the prohibition of pension plan investment advisors in giving self-interested financial advice to their plan participants. Consumer advocates and lawmakers are concerned that the regulation would allow financial advisors to charge higher fees and allow them to give conflicted investment advice on products they have a financial interest.

“If workers receive investment advice, it should be independent and free of conflicts of interest,” said U.S. Rep. Rob Andrews (D-NJ), chairman of the subcommittee. “During a time where American workers have already lost $2 trillion in assets due to last year’s market downturn, exposing their hard-earned retirement savings to greater risk by allowing advisers to offer them conflicted advice is irresponsible and imprudent.”

Several members of Congress objected to the proposal last summer because they said it was contrary to provisions in the Pension Protection Act of 2006 that allows limited investment advice by pension providers based on independent computer models. The regulation has been put on hold by the Obama administration.


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“The effect of legal protections for conflicted advice is quite predictable,” said Mercer Bullard, president and founder of Fund Democracy and associate professor at the University of Mississippi School of Law. “Rather than promote the providing of independent financial advice to participants, the [new regulation] will promote conflicted advice, higher fees and lower investment returns.”

Ken Baker, the corporate director of human resources for Applied Extrusion Technologies in Terre Haute, Ind., said that after his company hired an independent pension consultant to examine the company’s program, they grew uncomfortable with their 401(k) plan because of hidden fees and the close relationship between their advisor and the service provider.

After the company switched service providers, in addition to providing workers access to an independent investment advice firm, participation and contributions by employees to the new 401(k) plan jumped. Baker testified that employees better understood the fees they paid and were able to choose from straightforward, low-cost investment options.

“The employees know what the investment advisor fees are and they know they do not change when the plan assets grow,” said Baker. “In fact, even though employees could now see that they would be paying the fees for our new independent advisor, they did not object because they could see that it was worth it.”

The U.S. Government Accountability Office examined Security and Exchange Commission data on pension plans and found that undisclosed conflicts of interest could lead to low returns than those plans that properly documented any financial interests.

More problems may arise because of the prevalence of 401(k)-type plans. Instead of traditional pension plans that are operated by professional managers, 401(k) account holders pick investment options provided by their employer on their own and therefore assume greater risk. In addition, any seemingly small fees, many that are not required to be disclosed to participants, could significantly reduce long-term retirement security of the account holders.  

“The threat posed to participants in account based retirement plans like 401(k)s, now the primary plan design in the United States, is quite direct,” said Charles Jeszeck, acting director of education, workforce, and income security of the GAO. “Since workers largely bear the risk of investment under this plan design, any factor, and decision that reduces the account’s rate of return can have potentially irreversible consequences for the participant’s retirement income.”

For more information, click here. 

“Passing the President’s economic recovery plan was only the first step in our efforts to restore our nation’s economic and fiscal health,” said Miller. “Eight years of reckless fiscal policies and the ongoing economic crisis have left our country in a sea of red ink. President Obama and Speaker Pelosi have made it clear that they are committed to using the resources of the federal government to rescue our economy but that they also are committed to operating our government in a fiscally responsible manner. Whether it is our health care system, our tax policy, or other issues, I look forward to working with the president and the speaker to make our nation more efficient while raising the quality of services Americans receive. Doing so will strengthen our middle class and our nation."

Improving workers’ access to quality, affordable health care is a top priority for the Education and Labor Committee in the 111th Congress. As chairman of the committee, Miller shares jurisdiction on health care reform with the House Ways and Means and Energy and Commerce Committees.

“It is not surprising that, in its waning days, this administration is possessed with an urgency to undo basic worker protections,” said U.S. Rep. John Conyers Jr. (D-MI), chairman of the House Judiciary Committee.  “This regulation will hurt American workers and make foreign guestworkers even more subject to abuse. I will work with my colleagues and the new administration to right the wrongs undertaken in the issuance of these midnight regulations.”

"Once again the Bush Administration has shown that it is no friend to working people," noted U.S. Rep. Zoe Lofgren (D-CA). "In this last minute maneuver the administration has slashed protections that agricultural guest workers have secured. These changes not only hurt foreign agricultural workers, but also undercut standards for American workers, as the new rules lower pay and working conditions for temporary foreign agricultural employees. My colleagues and I will work with the incoming Obama administration to ensure that these ill-conceived changes are undone."

“Given today’s economic crisis,” U.S. Rep. Howard L. Berman (D-CA) said, “it is stunning that on their way out the door, the Bush Administration would take this eleventh-hour swipe at farm workers who are already paid some of the lowest wages in the United States.”

The rule affects workers in the U.S. Department of Labor’s H-2A guest worker program, which has become rife with fraud and abuse under the Bush administration’s watch. Under this program, employers are allowed to hire foreign workers only if they can’t first find American workers, and only if the wages and working conditions they provide don’t have a negative impact on U.S. workers.

Among other things, yesterday’s rule weakens these requirements, making it much easier for employers to simply hire foreign workers over available American workers.  These changes would also, for the first time ever, allow employers to pay American workers lower wages and benefits than H-2A workers for performing the same job.

The regulation came just one day after Congress approved legislation that creates new criminal penalties for foreign labor recruiters and U.S. employers that lure foreign guest workers to this country under materially false pretenses. Miller, Conyers, Lofgren and Berman championed these provisions, which were passed as part of a larger bipartisan measure to combat human trafficking. For more information on the bill, click here.

The Bush administration is also expected to issue new regulations next week that would lead to further exploitation of non-agricultural foreign guest-workers in the Department of Labor’s H-2B program and would fuel greater unemployment among U.S. workers in construction and service industries.