Implementation of the Affordable Care Act (ACA), enacted by Congress in 2010 and scheduled to become fully operational in 2014, has many significant implications for employers who offer health care benefits to employees, including those in the roofing industry. NRCA continues to work in the regulatory and legislative arenas addressing issues related to the health care law.
One area of focus for NRCA with respect to the ACA is to develop support within Congress for legislation to repeal the new Health Insurance Tax (HIT) created by the law.
The HIT is one component of more than $500 billion in new taxes included in the ACA for the purpose of offsetting the estimated $1 trillion cost to taxpayers. The HIT likely will have a significant adverse effect on small and midsized businesses, as well as self-employed individuals, and is one of the key reasons NRCA opposed the ACA when it was under consideration in 2010.
Beginning January 2014, the HIT will be levied on health insurance premiums paid to insurance companies operating in the group and individual insurance markets based on their shares of the market. But insurance companies will pay the tax only in a nominal sense. Ultimately, this tax will be passed on to small businesses, their employees and self-employed entrepreneurs who purchase fully insured health care plans. Employers who self-fund health care benefits for their employees (primarily large corporations) will not be affected because they don't purchase coverage in fully insured markets.
According to the latest projections by the nonpartisan Congressional Budget Office (CBO), the HIT is estimated to raise a total of $101.7 billion during its first 10 years. Specifically, the tax is estimated to raise $8 billion in 2014 and will continue rising to an estimated $14.3 billion per year in 2018 and beyond. CBO confirms the tax "would be largely passed through to consumers in the form of higher premiums for private coverage." Former CBO Director Douglas Holtz-Eakin estimates the tax could amount to as much as a 3 percent increase, or nearly $5,000, in premiums for a family of four during 10 years.
These projections from a nonpartisan agency strongly indicate the HIT will raise the cost of health insurance for small businesses and the self-employed, many of whom already had problems affording health benefits even before the ACA was enacted. As a result, the HIT could seriously undermine one of the primary purposes of the ACA, which, according to its proponents, is to increase access to affordable health insurance.
NRCA and other business groups participating in the Stop the HIT Coalition began working in 2011 to lay the foundation for the HIT's eventual repeal. That year, legislation (H.R. 1370) to repeal the HIT was introduced in Congress and garnered substantial support. In fact, H.R. 1370 had 226 co-sponsors, including six Democrats, but it was not enacted because of partisan gridlock in the senate.
In February, legislation to repeal the HIT was reintroduced in the new Congress as H.R. 763, "The Jobs and Premium Protection Act of 2013." The bill has bipartisan support with leadership being provided by Reps. Charles Boustany (R-La.), Jim Matheson (D-Utah) and John Barrow (D-Ga.). NRCA and other coalition organizations now are working to expand support for this legislation among members of Congress.
Given continued control of the Senate by Democrats and President Obama's opposition to repeal any part of the ACA, passing legislation to repeal the HIT in the near future is unlikely. However, as the ACA is fully implemented beginning in 2014, it is possible Congress will begin focusing on repealing or making significant modifications to the law's individual components that prove especially problematic. If health insurance premiums for small business and individuals spike significantly during the first year of implementation, as some experts predict, bipartisan support to repeal key drivers of premium increases could grow. If this happens, legislation to repeal the HIT could be in play in 2014 or beyond.
Stop the HIT
Duane L. Musser is NRCA's vice president of government relations.