The health insurance tax, a component of the Affordable Care Act that was suspended for 2017, is slated to return in 2018 unless Congress takes additional action. During a recent discussion, representatives from the Stop the HIT Coalition, Wisconsin Farm Bureau Federation, Wisconsin Manufacturers and Commerce and a small business owner talked about the implications the tax would have on small businesses and individuals, including farmers.
According to a study by Oliver Wyman, an international management consulting firm, the health insurance tax is estimated to increase 2018 premiums by 2.7 percent and between 2.6 percent and 2.8 percent in future years. The tax will apply to all fully insured coverage, including public programs such as Medicare Advantage and BadgerCare.
Mark Graul of Stop the HIT Coalition said the moratorium was passed with strong bipartisan support, with more than 400 members of Congress voting to suspend HIT. He said many people in Washington believed the future of the tax would be determined with the overall issue of health care.
“And we all know how that ended,” Graul said.
Graul said the Wyman study estimated that the tax could result in an increase of more than $500 per family for a small business health plan.
“This is really a big deal to most businesses in Wisconsin who get their health insurance this way. It is going to have a dramatic impact on already skyrocketing premiums, which certainly have been in the news,” Graul said.
Steve White, owner of a small manufacturing company in Genoa City, said the increasing cost of health insurance has already affected his business over the past few years.
“I have a small company with eight people. Currently, there are six of us on our health insurance plan,” White said. “(Our health insurance) has gone up quite a bit in the last four years. We were at $369 per month per employee and now it is $574 per month per employee.”
White said when the plan was released, he was promised around a $2,500 decrease in health insurance cost, but instead has seen an increase of approximately $2,400.
“I am in favor of anything that will cut a few points off the cost,” White said. “We definitely have our competition and are not sitting on big fat profit margins so if it is just a few thousand dollars per year difference, it makes a big difference.”
White said the increases in health insurance costs have forced him to ask his employees to co-pay some of their premiums.
“We take a lot of pride in having very good benefits for our people. About two years ago, we decided we couldn’t afford these types of increases so we asked our employees to co-pay, which was a downer for us,” White said. He said the increases have also forced him to make tough decisions when hiring new talent, including weighing the costs of that employee and how much the company can really afford.
Karen Gefvert, Wisconsin Farm Bureau director of government relations, said farmers have also had to make tough decisions when it comes to health care in recent years.
“Farmers are struggling right now. Recently farm income has dropped 46 percent and is expected to keep dropping, according to the February 2017 (U.S. Department of Agriculture) report by the Economic Research Service,” Gefvert said. “During this time of depressed commodity prices, farmers are having a difficult time making ends meet, not only in their farming businesses, but in their personal lives. We have farmers who are already paying a significant amount for health care coverage because of the independent nature of their profession and the risks that come with that profession. The impact of not delaying the HIT for another year would be an additional financial burden on the backs of our already struggling farmers.”
Chris Reader, director of health and human resources policy for Wisconsin Manufacturers and Commerce, said the increased costs do not just affect the small businesses and their employees, but the impacts will be felt throughout the economy.
“Health care costs are already significant in Wisconsin. We just saw a report that the Milwaukee area has the highest hospital cost in the country, and that certainly doesn’t help the situation on our insurance cost,” Reader said. “The per person tax increase you will see is shifted to premiums as a result of HIT. We are looking at almost $577 in Wisconsin. Pulling that kind of money out of families’ paychecks or out of a business’ bottom line means they have to cut back elsewhere. That is just not a path to prosperity or a path to competitiveness with the rest of the country.”
Reader said the costs will affect the state coffers as well.
“This is going to amount to a significant increase on BadgerCare for the state. It is going to be about a $34 million hit to BadgerCare, and that is something that also has to get made up either through lawmakers increasing the expenditure there or by participants having a higher cost for themselves,” Reader said.
There is currently bipartisan legislation in support of eliminating the HIT authored by Cory Gardner of Colorado and Heidi Heitkamp of North Dakota. Sen. Ron Johnson, R-Wis., is a co-sponsor of the bill.
“Hopefully lawmakers will hear what we are hearing from our members and see that it is something they should postpone for at least another year, if not get rid of all together,” Reader said.