Cancel The Champagne: Obamacare Tax Predicted To Hit Business Hard
April 2, 2014 by Franklin Center
MADISON, Wis. — Call it a case of premature celebration.
As President Barack Obama did his victory dance Tuesday amid better-than-expected (reported) enrollment in his namesake Obamacare, the Affordable Care Actâs health insurance tax looms in the shadows. Its $100 billion impact, business advocates say, could ultimately hurt the people Obamacare claims to help.
In a Wall Street Journal op-ed, Bernie Marcus, co-founder and former chairman and CEO of Home Depot, asserts small and mid-sized business will bear the brunt of the health insurance tax — known as HIT in business circles — and that âMany will be forced to raise their employeesâ share of premium payments or, worse, lay off workers to pay the escalating costs of health care for their core employees.â
Hard to party with those kind of possibilities ahead.
Yet Obama insists happy days are here again and here to stay, thanks to his signature legislation. The proof, the President said, is that some 7.1 million Americans have signed up for Obamacare as of the March 31 deadline, according to Administration numbers.
âThe Affordable Care Act is here to stay,â Obama triumphantly declared in a Rose Garden speech. Despite all the website âglitches,â the delays and the small matter of the Americans who have lost their insurance, the President calls it all âprogress.â He blasted Republicans and other critics of the big-government program.
âMany of the tall tales that have been told about this law have been debunked. There are still no death panels. Armageddon has not arrived,â he said. âInstead, this law is helping millions of Americans, and in the coming years it will help millions more.â
But the worst is yet to come, according to critics closely watching the impending healthcare tax.
The tax is expected to generate revenue of about $8 billion this year and as much as $14.3 billion by 2018.
The Congressional Budget OfficeÂ has saidÂ the tax will be âlargely passed through to consumers in the form of higher premiums.â
In his op-ed, Marcus writes that millions of Americans will be âpaying much higher premiums because of this tax, with the added cost rippling through the economy and stifling job creation.â
Marcus notes that âthe National Federation of Independent Businesses projects the health-insurance tax will add an additional $475Â per yearÂ for the average individually purchased family policy — nearly $5,000 over the course of a decade. Small businesses will take an even bigger hit, with the cost of an employer-provided family policy rising a projected $6,800 in the next decade.â
And NFIB projects the private sector will trim at least 146,000 jobs through 2022 due to the health insurance tax.
âThatâs like vaporizing some of the largest employers in the country. Just the low-end estimate — 146,000 jobs — is still more than the total number of employees currently working for companies like Costco,Â Microsoft andÂ Delta Airlines,â Marcus writes.
Businesses across the country are expressing concern about the impact of the Affordable Care Act.
A Wisconsin Manufacturers and Commerce survey of 341 Wisconsin CEOs released in January found more than one-fifth of respondents were concerned about health insurance, and 18 percent worried about government regulations.
According to the survey, 93 percent of respondents said they offer employer-sponsored health insurance coverage to their employees. Of those, 87 percent said their costs would increase. Forty-two percent said their premiums would rise between 11 percent to 20 percent; 40 percent said rates would rise between 1 percent to 10 percent.
Respondents say they will pass on some or all of their higher healthcare costs to employees. Specifically, 54 percent said they would increase employee contributions, and 22 percent said they would reduce benefits.
One executive, when asked âwhat is holding back the economy,â said: âI think most companies trimmed back in (2009) and have been reluctant to make any bold moves because of all the unknown big issues driven by the government,â according to WMC. Another said: âLack of trust, direction and leadership at the federal level.â
âThe jobs never created because of the health-insurance tax will be a âdeath of a thousand cutsâ on Main Street that adds up to a major wound for the economy,â Marcus wrote in the op-ed. âAs a result, NFIB predicts total gross domestic product in 2022 will be $23 billion to $35 billion smaller than it would have been absent the HIT.â
The President may want to cancel the champagne.