Health Insurance Tax to Wallop Businesses with Higher Costs

Nov 22, 2013

Most of the Obamcare conversation centers on the broken Healthcare.gov and the health plan cancelation letters sent to millions of Americans, but the Wall Street Journal notes that the Health Insurance Tax, while not in effect yet, is already harming small businesses: 

When Patrick Norris renews his small business's health-care plan in March, he'll need to switch to a costlier plan that complies with the Affordable Care Act.

But that isn't the only reason why Mr. Norris, co-owner of a manufacturing company in New Iberia, La., expects the premiums he pays on behalf of his 100 employees to be significantly higher in 2014.

Starting next year, small businesses are among those poised to bear the brunt of a little known tax created by the Affordable Care Act that will impose an annual "fee" on health-insurance companies. The fee is expected to bring in a total of $8 billion next year and as much as $14.3 billion by 2018, according to the legislation, and will be spread out among insurers based on the percent of the market they cover.

But the Congressional Budget Office and industry experts say the expense will largely be passed on to small businesses and consumers who buy their own policies in the form of higher premiums.

The new health-law tax, which increases annually, is projected to raise premiums for small businesses by an average of 1.9% to 2.3% in 2014, or about $150 per employee and $360 per family, according to a report by management-consulting firm Oliver Wyman in Milwaukee, Wis. By 2023, the firm predicts the cost could rise to an average of $360 per employee and $890 per family for small businesses.

Small business owners have said the tax will be “catastrophic” and “devastating” to their businesses

Reps. Charles Boustany (R-LA) and Ami Bera (D-CA) introduced a bipartisan bill to delay the HIT for two years. The U.S. Chamber supports the bill as a step towards repealing the tax and easing the premium rate shock that is walloping small businesses.

[H/t Natalie Scholl at AEI]

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