WASHINGTON, D.C. – U.S. Senator Olympia J. Snowe (R-Maine) today joined Senators John Barrasso (R-Wyoming) and Orrin Hatch (R-Utah) in introducing legislation to protect Americans and small business from skyrocketing health care premiums. The Jobs and Premium Protection Act repeals the health insurance tax (HIT) included in the President’s health care reform law.
“Preventing the new health insurance tax is critical, especially in the current economic environment. As the cost of health insurance continues to rise unabated – another 9 percent on average this year – individuals and small businesses are struggling to afford coverage,” said Snowe. “Meanwhile, the Democrats’ health care law is set to impose this $60 billion tax and the Director of the Congressional Budget Office has confirmed this tax will be paid by the individuals and small businesses who buy health insurance. This tax could increase the cost of health insurance by 15 percent for small businesses, and kill hundreds of thousands of jobs. I am proud to be a sponsor of the Premium Protection Act, and remain committed to repealing the job-killing health care law, as well as to repealing its worst pieces.”
“Our legislation repeals President Obama’s unfair, hidden tax on America’s job creators, and will save thousands of jobs across the country,” said Barrasso. “With 9 percent unemployment, hardworking Americans cannot afford to be hit hard by even higher premiums. We need to stop the HIT on our economy now – before it starts. This tax is just another example of how the President’s trillion dollar health spending law is only making things worse for small businesses and their workers.”
“Chock full of tax hikes, mandates and government overreach, the President’s $2.6 trillion health spending law is an anchor around our economy’s neck,” said Hatch. “The health law’s insurance tax is especially damaging, undercutting our economic recovery by increasing the cost of health coverage. Money that could go to higher wages, new workers, or investment will instead go to pay this new tax. With insurance premiums already skyrocketing and unemployment hovering at 9 percent, this tax makes no sense. The President is demanding jobs legislation; he should start by supporting the repeal of this tax.”
BACKGROUND: The Jobs and Premium Protection Act repeals Section 9010 of the President’s health care law, known as the health insurance tax (HIT).
If the HIT is not repealed, starting in 2014, health insurance companies will be taxed based on their net premiums written in the fully-insured market.
- 87 % of small businesses purchase their insurance in this fully-insured market, and it is the place the self-employed and uninsured go to when they purchase insurance.
- The HIT will impose $87 billion in costs on businesses and their employees in the first ten years, diverting revenue that could be used for higher wages, new hires, and capital investment.
- Over the second ten years, this cost to businesses and their employees will be $208 billion.
Ultimately, the cost of this tax will be passed through to American workers. They will pay the tax in the form of lower wages or higher premium contributions.
According to a study released by former CBO Director, Douglas Holtz-Eakin, the average employee with a family plan will see their take-home pay reduced by $5,000 over the next decade due to this tax.
The Joint Committee on Taxation wrote in a letter to Senator Jon Kyl (R-AZ) confirming that eliminating the HIT would decrease the average family premium in 2016 by $350 to $400.
A recent NFIB study estimates that this tax will force the private sector to shed between 125,000 and 249,000 jobs between now and 2021—with more than half of those losses falling on the backs of small businesses.