The Health Insurance Tax will hurt small business employees the hardest, according to congressional testimony today by New York Farm Bureau President and dairy owner Dean Norton. Testifying before the House Small Business Subcommittee on Health and Technology, Norton, also a board member of the American Farm Bureau Federation, encouraged members to cosponsor H.R. 763, which would repeal the HIT.
The HIT, which was passed as part of the Patient Protection and Affordable Care Act, will be levied on a health insurance company’s net premiums. But, said Norton, in the end it will be employees who ultimately pay the price.
“Because of escalating health insurance premiums, we’ve had to significantly change the cost structure from covering about 90 percent of the insurance cost to approximately 50 percent through a high deductible plan,” said Norton. “Unfortunately, the people who are really hurt by this change are the employees. They now have to contribute a larger portion of the expense when they seek medical attention.”
Most farmers and other small businesses do not self-insure because they do not have a large enough pool of employees, said Norton. Instead, small employers purchase health insurance on the fully insured market. Because the smallest employers almost never self-insure, they will end up bearing the brunt of the HIT.
According to the Kaiser Family Foundation’s 2012 Survey of Employer Health Benefits, only 15 percent of the smallest employers self-insure. Further, health insurance costs for small businesses have increased 103 percent since 2000. According to the Joint Committee on Taxation, the HIT will further increase family premiums by $400 or 2.5 percent in the year 2016, making it even harder for farmers to purchase coverage for themselves, their families and their employees.
“Being able to offer health insurance is important to us as we strive to offer benefits that attract high quality workers and to keep them healthy and productive once they are on the payroll,” continued Norton. But, he said, “Escalating health insurance costs not only impact farm employers, but also those who purchase health insurance coverage for themselves and their families.”
H.R. 763, introduced by Reps. Charles Boustany (R-La.) and Jim Matheson (D-Utah), would repeal the annual fee on health insurance providers, preventing premium increases for individuals and small businesses in the fully insured health insurance marketplace.
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