In a letter sent to members of Kentucky’s congressional delegation on Monday, the Kentucky Chamber of Commerce expressed concerns about the Health Insurance Tax provision in the Affordable Care Act and the impact it will have on small business in the state and requested permanent repeal of the provision.
The Health Insurance Tax acts like a sales tax on health-insurance policies purchased in the market by individuals and employers. While the tax, when implemented, is supposed to be paid by the insurance companies, the real cost will be passed on to the customers who pay for the insurance.
“Kentucky families depend upon a growing economy and a strong private sector to ensure they can meet their needs today and reach for their goals tomorrow. When a tax or regulation targets the business community, it doesn’t just hurt the entrepreneurs and owners: whatever holds the businesses back also holds back their employees and the people who might have become employees,” Kentucky Chamber Vice President of Public Affairs Ashli Watts wrote.
In the letter, Watts pointed to concerns of the impact to Kentucky’s small businesses and their employees.
According to the National Federation of Independent Business, the tax will cost nearly 250,000 jobs – with 59% of the job losses falling on small businesses. Large employers will also experience considerable job loss, resulting from the residual effect of initial cutbacks made at small businesses.
“Collectively, these impacts on jobs and growth, coupled with fewer investments, will cause a ripple effect on the already fragile Kentucky economy,” Watts said.
Watts also stated that the tax will lead to higher premiums for individuals and their families as a study by the Joint Committee on Taxation states that “a very large portion” of the tax will “be borne by consumers” in the form of a 2 to 2.5 percent increase in premium cost. As a result of the tax, families could experience a $5,000 increase in the cost of their premium over a decade.
“Washington must take swift action to repeal this significant tax that is increasing the cost of health care for businesses, individuals and families. Repealing the Health Insurance Tax must be the first order of Congressional business to help our country’s businesses, as well as individuals and families,” Watts said.
For more state government news go to the Kentucky Chamber of Commerce’s The Bottom Line blog.