Leaders in Washington are seeking ways to stabilize the health care system and lower premiums next year. Deep divisions have so far stood in the way of action. But there is one bipartisan opportunity yet to be tapped: delaying the health insurance tax.
The HIT, which was included in the Affordable Care Act, was found to have disastrous effects. The tax directly raises health insurance premiums for small businesses, individual enrollees, and senior citizens on Medicare Advantage — in other words, tens of thousands of constituents in my district and across Maine. The HIT even affects our state coffers with higher costs for Medicaid managed care plans.
Taxing health insurance makes coverage harder to afford for 100 million Americans. When Congress realized these unintended consequences, 400 members of Congress, both Republican and Democrat, voted to temporarily suspend the HIT for 2017.
Sadly, the permanent health care solution many expected by now hasn’t happened, and the HIT will automatically return Jan. 1. This would amount to a $14.3 billion tax hike health care consumers weren’t expecting.
The best solution is for Congress to delay the HIT another year. It’s clear that health care issues will take more time to resolve, and the American people — especially our small businesses and senior citizens — should not pay the price for their elected officials’ slow negotiations. The U.S. Treasury managed just fine without HIT payments in 2017. Surely the government can adapt to a moratorium lasting 12 more months.
The problem is timing. Swift action is required to stave off the worst impacts of the HIT. Constituents across Maine are looking to Sen. Susan Collins to provide the leadership necessary to achieve a HIT delay before it’s too late and plans begin rolling out for 2018.
There is little time left. Individual insurance customers are beginning to enroll in health plans. The high costs they see may deter some families from purchasing insurance, thereby putting their financial security and well-being at risk. Seniors on Medicare Advantage will also be charged higher premiums very soon, which could be destabilizing for their finances.
And right now, small businesses are receiving insurance quotes inflated by as much as $500 per employee. To compensate for the steep price increase, many are putting a freeze on new hires, cancelling raises for workers, or halting business investments that no longer fit the budget, thanks to the HIT.
Other companies will soon begin deducting more from employee paychecks to pay for health insurance or will select a less generous health plan with higher out-of-pocket costs. Some will inevitably drop coverage altogether. None of this will be good for our middle-class families.
As a small business owner, in addition to serving in the Maine State Senate, I understand the challenge these companies face. I know what it’s like coping with market ups and downs while trying to pay good wages and provide high-quality benefits for employees. It’s a constant struggle. More taxes won’t help, especially when added on top of already out-of-control health insurance premiums.
Should the HIT return, the decisions by individual small business owners to tighten their belts will be multiplied across our state’s economy. These companies are our economic lifeblood. They represent nearly 97 percent of our employers and provide jobs for over 57 percent of Mainers. Our state has been suffering from sluggish growth that trails the rest of New England, and the HIT would only further reduce prospects for job creation and wage increases.
We must find ways to stimulate — not stifle — small businesses. Easing the burden of health care costs is one of the most direct and impactful ways to drive expansion and hiring and put more money in the pockets of working families. And stabilizing the health plans individual consumers and senior citizens rely on would be another key benefit of a HIT delay.
Sen. Collins has recognized the impact on small business in the past, and been supportive of efforts to suspend in previous years. As a small business owner and state senator, I hope that she will work with her colleagues to immediately suspend the tax for 2018, so Congress can get back to work on long-term solutions to bring health care costs down for all Americans.
This article first appeared in the Morning Sentinel and can be accessed online via centralmaine.com