As 2020 approaches, threat of Health Insurance Tax looms


With the fourth quarter underway, small-business owners in Maine and across the country seem to be holding onto an optimistic outlook for the economy. Consumer confidence remains high heading into the holiday season that is often make-or-break for many businesses. Yet the entrepreneurs I speak with in my district are less certain about 2020 and beyond.

Their primary concern? The cost of rising health insurance premiums, an issue that is up in the air as Congress has not yet decided on the fate of the Health Insurance Tax (HIT) for next year, which is currently suspended but is set to go back into effect come January. 

The HIT is one of the largest tax increases under the Affordable Care Act, and it has increased in cost each year since the law was passed in 2010. Without a delay, it will add an estimated $16 billion to the cost of health care coverage in 2020 alone. And over the next decade, the total amount collected from the HIT is projected to soar to over $260 billion.

Congress has twice come together to provide relief to small business owners from the tax, and it must do so once again before the end of the year. There is solid bipartisan support in Congress for legislation that would extend the current suspension of the HIT through 2021. Therefore, Congress must act before the end of the year to ensure the HIT does not come back in 2020.

Although the HIT is levied on the health insurers, they manage the fully insured marketplace used by approximately 88 percent of small businesses to purchase coverage for their employees. That means the HIT amounts to a huge tax directly affecting 1.7 million small businesses nationwide, including many here in Maine. It also disproportionately impacts the self-employed.

If allowed to take effect once again, the financial strain the HIT would place on small businesses could be potentially ruinous for some and force others to make tough choices. In fact, it is estimated that the HIT could result in as many as 286,000 jobs lost.

Allowing the HIT to be reimposed would be devastating for middle- and low-income families. More than half of the entire tax is paid by those with incomes between $10,000 and $50,000 a year, and the HIT would cost families, on average, about $5,000 in higher premiums over the next decade. A 2020 HIT could force 142 million Americans to pay higher insurance premiums.

The economy may be booming right now, but we must remember a significant part of that growth has occurred with the HIT postponed. Another couple of years with an active HIT could undermine everything, as strong markets are boosted by predictability. Small businesses need the certainty that S. 172 and H.R. 1398 would bring on top of cost savings, and keeping the HIT delayed by passing that legislation this year would be reassuring for consumers while they do their holiday shopping.

Small-business owners and working households are focused on their bottom lines this time of year, and the HIT has them second-guessing what is next. Balancing tight budgets while taking care of their daily responsibilities is enough to struggle with; a burdensome HIT could be the proverbial straw that breaks the camel’s back.

On the other hand, suspending HIT through 2021 allows them to look forward, perhaps prompting some owners to reinvest and expand their businesses, or encourage consumers to plan their family vacations or replace much-needed household items.

Let’s not waste the economic opportunities before us now. Delaying the HIT for 2020 onward should be a no-brainer for both Republicans and Democrats in Congress. Taxes are too high across the board, and health care is the last place lawmakers should be looking to raise them.


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