GUEST COMMENTARY: Health insurance tax will hurt small businesses

These days it is difficult, if not impossible, to escape news of the upcoming implementation of the Patient Protection and Affordable Care Act. Lately, it seems like exceptions and delays to the law are being handed out to different groups on an almost-daily basis.

But as the co-owner of ProComm Alaska, a two-way radio communications company located here in Anchorage, I am discouraged that one element of the health reform law that will deal a big blow to local small businesses has not yet been addressed.

The health insurance tax, or HIT, is a little discussed aspect of the health care law. While it was initially billed as a fee on companies that sell health insurance policies on the fully-insured market, small businesses and their workers will be the ones that pay the price for it.

Eighty-eight percent of small businesses purchase insurance policies subject to the new tax, and the non-partisan Congressional Budget Office (CBO) has stated it expects that the costs insurance companies incur from the HIT will “be largely passed on through to consumers in the form of higher premiums.”

Over the years, our company has been witness to the increasing cost of health insurance, and the HIT will only add to the sticker shock. Some experts say that when the HIT takes effect beginning in January, it will increase health insurance costs for the average family by $500 per year for the first 10 years of the law.

Over that same time period, the HIT is expected to raise more than $100 billion nationwide. During the second decade, that cost of this new small business tax is projected to double, much of it coming from the hardworking employees of small businesses in Alaska and elsewhere in America.

Local family-owned small businesses are the key to the economic health of our nation, employing roughly half of America’s workforce. The importance of small businesses is magnified in Alaska. ProComm Alaska is just one of our state’s 68,000 small businesses, which together employ over 280,000 Alaskans — nearly 40 percent of the entire population.

Policies like the HIT will stifle economic growth and hurt companies like ours. According to a recent NFIB Small Business Economic Trends poll, just 9 percent of small businesses plan to increase employment, and more people think the economy will get worse over the next six months than improve.

It is easy to see why local businesses in Alaska are concerned about rising health care costs. Small businesses already operate with tight budgets and the HIT forces them into difficult decisions about how to allocate resources. Paying the HIT instead of passing the cost onto their employees could mean not hiring additional staff or not opening a second store.

While the clock is ticking before the HIT takes effect in 2014, some lawmakers are working on behalf of their small business constituents to address this problem. Bipartisan legislation has been introduced in the U.S. House of Representatives to repeal the HIT. Between that bill and a similar one in the U.S. Senate, a total of 250 members of Congress support removing this new tax burden from small businesses.

I recently had the opportunity to host Sen. Mark Begich at ProComm Alaska and discuss my concerns about the HIT with him. I know Sen. Begich has the best interest of all Alaskans at heart, and I certainly hope he will join with the rest of our Congressional delegation in pushing for a solution to this looming problem and do right by Alaska small businesses.

Linda Peters is the owner of ProComm Alaska.  She can be reached at [email protected].

08/22/2013 - 8:07am