Small Business Rallies Against Health Insurance Tax

July 17, 2013

pic-HealthCostsOn Wednesday, July 17, the Stop the Health Insurance Tax (HIT) Coalition is holding a press event with Senators John Barrasso (R-Wyo.) and Orrin Hatch (R-Utah) along with Reps. Charles Boustany (R-La.) and Jim Matheson (D-Utah)—the lead sponsors of bills (H.R. 763 and S. 603) to eliminate a fee on health insurance companies scheduled to take effect when the Patient Protection and Affordable Care Act (PPACA) goes into full effect next year.

The fee, commonly referred to as the health insurance tax (HIT tax), will be calculated based on the plans insurers sell directly to individuals and companies, known as the fully-insured market, and excludes plans set up and managed by firms themselves, called the self-insured market. Most large companies self-insure their employees; consequently, experts warn that insurance firms will pass the added costs of collecting the fee to small businesses, which tend to purchase coverage in the fully-insured market.

Increasing the cost of health insurance plans for small-business owners and the self-employed make offering affordable coverage, or any coverage at all, to employees more difficult. In fact, former Congressional Budget Office (CBO) Director Douglas Holtz-Eakin estimates the average impact is as much as a three percent (or $5,000) increase in premiums for a family of four over ten years.

In the more immediate time frame, the Joint Committee on Taxation (JCT) estimates that “eliminating [the HIT] fee could decrease the average family premium in 2016 by $350 to $400.” The JCT also has noted multiple times through their analysis that the tax would be passed on to the purchaser of insurance in the form of higher premiums, further validating what the CBO, small-business owners and others have stated since passage of PPACA.

The Jobs and Premium Protection Act (S. 603) would repeal the annual fee on health insurance providers enacted by PPACA. The House version also titled the Jobs and Premium Protection Act (H.R. 763) will act to amend PPACA to repeal provisions imposing an annual fee on health insurance providers. In the House, the number of cosponsors has exceeded the total needed to secure its passage, souring to 224. With the recent additions of Sens. Pat Toomey (R-Pa.), David Vitter (R-La.) and Deb Fischer (R-Neb.), the Senate bill has reached 24 cosponsors.

Over the 4th of July, small-business owner and NSBA member Mike Mitternight, president of Factory Service Agency, spoke with Louisiana state director, T. Bradley Keith urging Senator Mary Landrieu to cosponsor the HIT repeal legislation. Mr. Mitternight will also be participating in a press event in Washington, D.C. this week designed to highlight the burden the HIT would impose on small business.