March 2013
At Issue

Repeal the Health Insurance Tax

By Christine Stearns, Vice President, New Jersey Business & Industry Association

In a bill as long and complicated as the Affordable Care Act, with more than 900 pages covering virtually every aspect of health insurance, it’s inevitable that there are going to be mistakes. For employers who are bracing for the impact of federal healthcare reform, one of those mistakes is going to make their job harder. The mistake: The Affordable Care Act taxes the very health plans that many employers and individuals are going to be required to purchase.

In New Jersey, the problem with health insurance has not been a lack of access to insurance plans, but finding ones that are affordable. If this tax goes into effect next year as scheduled, it will add hundreds of dollars to the cost to premiums over the years. That’s why NJBIA has joined with other groups to urge Congress to repeal the Health Insurance Tax.

The tax is listed in the healthcare law as an annual fee on health insurers. But while it may be the health insurance company that writes the check, that fee will be passed along to consumers. In 2014, that tax will cost $8 billion, then rise to more than $14 billion in 2018. Over the next 10 years, the tax is estimated to cost $87.4 billion. That means the health plans many employers are already struggling to afford will get even more expensive.

For employers, the expense of health plans is the problem. According to the Kaiser Family Foundation, the average cost of a family policy has nearly doubled in the last 10 years, rising from $8,000 in 2002 to $15,745 nationwide last year. Here in the Northeast, it was even worse, with the average cost exceeding $17,000.

For employers, this is a big problem. In fact, in NJBIA’s annual Business Outlook Survey, employers have placed the cost of health insurance at the top of the list of the biggest problems they face.

What’s more, this tax hits small businesses the hardest. Large companies tend to offer self-insured plans, where they fund the benefits themselves and usually hire a company to manage them. Because the Health Insurance Tax falls on insurance companies, businesses that self-insure will not pay it. That leaves the bulk of the tax falling on smaller companies that have to purchase insurance on the open market.

Also, this tax comes on top of implementation of the incredibly complex Affordable Care Act. The law itself is over 900 pages long, and many of the regulations implementing it have not even been written yet.

What we do know is that beginning next year, businesses with 50 or more employees as well as individuals will have to obtain health insurance or pay a penalty to the government. There is something fundamentally unfair about mandating that people purchase health insurance, and then taxing the health insurance plans they have to buy.

Employers overwhelmingly believe that providing health benefits for employees is good business, they just don’t know how they are going to be able to afford it. The cost of health insurance combined with the anxiety and uncertainty surrounding implementation of federal health insurance reform have made health insurance a bigger headache for employers than usual. Piling a huge tax increase on top of that is a mistake.

The goal of the Affordable Care Act is to provide more people with health insurance. But in New Jersey, the biggest impediment to obtaining health insurance is its high cost. The Health Insurance Tax only makes that problem worse. That’s why Congress needs to repeal it.

Vincent Schweikert, Vice President & Publisher
973-882-5004. ext. 110
v.schweikert@njbmagazine.com

Anthony Birritteri, Editor-in-Chief
973-882-5004. ext. 104
a.birritteri@njbmagazine.com

George Saliba, Managing Editor
973-882-5004. ext. 106
g.saliba@njbmagazine.com

Lisa Criscuolo, Advertising Director
973-882-5004. ext. 108
l.criscuolo@njbmagazine.com

Gloria Owens, Account Executive
973-882-5004. ext. 109
g.owens@njbmagazine.com

Doug Prefach, Account Executive
973-882-5004. ext. 102
d.prefach@njbmagazine.com