More than 25 national groups representing small businesses have banded together to seek repeal of a federal health insurance tax that they say will take $87 billion from small businesses in one decade.
The Stop the HIT Coalition wants to get rid of the so-called health insurance tax (HIT), which is set to take effect in 2014 as part of the federal health care reform law.
A provision in the health care reform law imposes an annual fee on many health insurance providers; the fee is based on an insurer’s market share as measured by premium revenue. The fee revenue is aimed at helping finance health care reform.
“For the small business community, controlling the increasing costs of health insurance premiums has been the top concern for decades,” says Dan Danner, president and CEO of the National Federation of Independent Business, one of the coalition members. “This new tax will be almost entirely passed from insurers to small businesses and their employees, raising health care costs and increasing economic uncertainty for this vital sector of our economy.”
The coalition says the tax will cost small business owners, small business employees and self-employed Americans an estimated $87 billion in the first 10 years and $208 billion in the following 10 years.
The tax will generate $8 billion in 2014 alone, the coalition says, and has no expiration date. The coalition says 87 percent of the U.S. small business sector will be affected by the tax.
The Stop the HIT Coalition complains that the health insurance tax penalizes small businesses by discriminating between the fully insured and self-insured markets. The tax falls solely on the fully insured market, where nearly all small businesses, sole proprietors and individuals buy their health insurance. It exempts the self-insured market, which is dominated by big businesses, labor unions and government agencies.
A bill (HR 1370) filed in April 2011 by U.S. Rep. Charles Boustany, who is a physician, would repeal the health insurance tax.
Aside from the National Federation of Independent Business, members of the Stop the HIT Coalition include the American Hotel & Lodging Association, Associated General Contractors, National Association of Manufacturers, National Automobile Dealers Association, National Retail Federation, Professional Golfers Association (PGA) and U.S. Chamber of Commerce.