Thanks to Obamacare, small businesses across the country are getting hammered with a new tax on insurance plans. The tax is appropriately named the Health Insurance Tax (or HIT). As the Wall Street Journal has said, Obamacare includes so many new taxes that it’s hard to keep track — but this tax is one of the law’s worst:
At $8 billion in 2014 and $101 billion over the next decade, the insurance tax is larger than ObamaCare’s taxes on medical devices and prescription drugs combined. The Internal Revenue Service classifies the tax as a “fee” but it functions like an excise tax on premiums. The IRS collects an annual flat amount specified by the Affordable Care Act to be allocated among the insurers according to market share.
More from WSJ:
The Joint Tax Committee and private economists, such as former CBO director Doug Holtz-Eakin, say the tax will boost insurance costs about 2% to 2.5%. The consultant Oliver Wyman estimates the take will rise to as much as $500 per covered worker by decade’s end.
The impact of that additional 2-2.5% cost for insurance is far from abstract for many small businesses. Take, for example, the case of Little Rock Tours, a local Arkansas business: in this report from KATV, LRT’s Gina Martin says they may be forced to discontinue providing health insurance for their employees — because of the HIT.
Also, as the WSJ notes, most large employers and most unions are exempt from the HIT. The burden is almost entirely thrust onto small businesses.
How will the HIT impact the economy? The NFIB Research Foundation predicts it will reduce private sector employment by as many as 262,000 jobs and reduce the nation’s GDP by as much as $185 billion by 2022. So much for Nancy Pelosi’s claim that Obamacare will “create 4 million jobs.”
What can be done about the HIT? Well, Congress could repeal it — along with the rest of Obamacare — says Congressman Tom Cotton (AR-04). Cotton has cosponsored a bill to repeal HIT. But his opponent, Senator Mark Pryor (who helped bring us the HIT in the first place), is declining to take a position. When KATV asked a Pryor spokesperson for comment, he launched into an irrelevant personal attack on Cotton after stating that Pryor intended to “look closely” at the issue. I’m sure the millions of people losing their insurance because of Obamacare and the small businesses being hammered by the HIT are so incredibly thankful for Pryor’s watchful eye.
As Cotton spokesman David Ray said in a press release,
It’s unsurprising that Senator Pryor is dodging any questions on repealing the HIT tax…If I cast a vote that would potentially force employers to stop providing health insurance to employees, I wouldn’t want to talk about it either.
I guess it’s safe to assume that Pryor is having a tough time deciding whether to stand foursquare for Obamacare (he’s already claimed that it’s been “an amazing success story”) or stand with struggling Arkansas small businesses and employees.
While Pryor has indicated in the past that he’s willing to consider “legislative fixes” to Obamacare, so far, there has been no walk to support his talk. Working to repeal the HIT would be an easy, logical first step. It’s too bad that the Obama Administration has resolutely opposed making marginal adjustments to the law, and it’s too bad that Pryor’s legislative actions on this score are entirely consistent with President Obama’s wishes.