November 8, 2017 10:51am
Stop the HIT
*Note this editorial was recently published in “Louisville Business First”
Throughout the debate in Washington over the future of the Affordable Care Act, one aspect of the law has flown largely under the radar: the health insurance tax, or HIT.
The HIT directly raises the cost of health insurance premiums for small businesses, self-employed people, families, and senior citizens on Medicare Advantage plans. Congress voted to place a moratorium on the tax for 2017. They must do the same for 2018.
Next year, HIT will impose a tax on health insurance premiums with a projected price tag of $14.3 billion nationwide. This tax is one of the greatest challenges Louisville’s small business community will face in the coming months. Our sector enjoyed a 12-month reprieve from the tax. Now that it’s scheduled to go back into effect January 1, small business owners are getting alarmingly high quotes from insurance companies for 2018.
At an average cost of $500 per employee, the health insurance tax can easily cause a small business, defined as businesses with 50 full-time employees or fewer, to pay tens of thousands of dollars more compared to what they spent on health coverage last year. Setting aside such funds has an immediate effect on all sorts of business decisions, ranging from hiring plans to salaries and benefits.
As the cost of health care continues to rise, employers will be forced to pass along costs to their workers. We also expect more “shopping to the bottom” of the market, as companies look at less generous health plans as the only type that will still fit their budgets.
This is the opposite of what Kentucky needs. Small businesses must shed undue tax burdens so we can build a more robust, diversified economy with a place in it for anyone willing to work hard. Middle-class families need to secure better wages and more opportunities, so they can stop living paycheck to paycheck. And every American needs high-quality healthcare we can actually afford.
The return of the health insurance tax is an impending disaster for not just small business owners, but also their employees. The Greater Louisville region’s senators—Mitch McConnell, Rand Paul, Todd Young, and Joe Donnelly—should lead the way in extending the health insurance tax suspension for another year. This is a pro-business, pro-growth, pro-people change that Congress can deliver with support from both Republicans and Democrats. It’s their responsibility to do it as soon as possible to keep small businesses thriving in our region.