Even though the Affordable Care Act (Obamacare) has been in effect for some time, both the intended and unintended consequences of the law continue to negatively impact consumers. The sheer number of taxes added by the law is rather staggering: from the Individual Mandate, the Surtax on Investment Income, and the Health Insurance Tax Excise (HIT), the law was itself half tax increases by design. The backers of the bill missed the irony of “The Affordable Care Act”; making healthcare more costly to over half of the country due to its overabundance of tax increases.
Back in December of 2015, Congress passed a temporary one-year hold on the Health Insurance Excise Tax (HIT). The HIT is a tax on health insurance companies based on its share of the insured marketplace – but exempts the large employer and corporations that are self-insured. Economists predict that this cost will be passed directly on to small businesses in the form of higher premiums. When Obamacare was getting shoved through congress (“but we have to pass the bill so that you can find out what is in it”) the law was hailed as aimed at increasing the pool of covered people. By enacting a tax such as the HIT, Obamacare is essentially pressuring both providers and companies that offer insurance to their employees to eliminate certain plans simply because they cover too much.
Just as is the case with other liberal economic policies, the HIT picks winners and losers. By its design the winners are health insurance plans with just the “right” amount of coverage, as well as high-cost plans by large corporations that are in the self-insured market that are exempt from the tax. Because of this the HIT unfairly affects small businesses and individuals whose only mistake was choosing a more comprehensive plan for their own comfort.
The Congressional Budget Office (CBO) has estimated the HITx would cost small business owners an additional $530 per employee per year. Much of this cost will be passed on to employees in higher premium costs. Wages are stagnant, healthcare costs have already increased, and the HIT would be responsible for yet another increase in healthcare premiums.
As if those reasons weren’t enough, another group has weighed in with a final, highly impactful repercussion from the HIT. The National Federation of Independent Businesses (NFIB) has estimated that job growth will be stunted if the tax is implemented. The NFIB has estimated that private sector job growth will be reduced by 125,000 simply from the implementation of the HIT.
Let’s recap the Health Insurance Tax:
- It unfairly affects small businesses and individuals over large corporations
- It picks winners and losers in insurance plans by arbitrary ideal coverage
- It will cost small businesses millions of dollars each year
- It will cost families about $500 more per year in higher premiums
- It will negatively impact economic growth to the tune of 125,000 jobs lost.
The HIT costs employees, employers, and jobs. Another temporary one-year hold is not enough. Congress needs to permanently stop the Health Insurance Tax. Our Ohio delegation needs to step up and drive the fight for this repeal.