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Business, ag groups in Wisconsin calling for action on Health Insurance Tax

Wisconsin business and agriculture groups are calling on Congress to push back or repeal entirely a federal tax on health insurance plans due to take effect beginning in 2018.

The Health Insurance Tax, or HIT, is applied to health insurance plans purchased in the fully insured market, which includes many small business owners and farmers. Originally introduced as part of the Affordable Care Act, the tax was suspended for 2017.

According to a study from management consulting firm Oliver Wyman, families in the small employer market in Wisconsin would see an average premium increase of $577 in 2018 because of the HIT. The study found that the HIT will also cost Wisconsin’s Medicaid program $34 million in 2018 if nothing is done to stop it.

Karen Gefvert, director of government relations for the Wisconsin Farm Bureau Federation, says premium increases would hit farmers in the state especially hard, as they are “having a difficult time making ends meet.”

“We have farmers that are already paying significant amounts for health care coverage given the independent nature of the profession and the risks involved,” Gefvert said. “The impact of the HIT would be an additional financial burden on the backs of already struggling farmers.”

Chris Reader, director of health and human resources policy for Wisconsin Manufacturers & Commerce, says health care costs are already significant in Wisconsin, and anything that will increase those costs is a negative to the group’s members -- half of which are manufacturers, with the rest spread across other industries.

He says allowing the tax to activate is “not a path to prosperity or a path to competitiveness.”

“Employers would have to make cuts in research, training and hiring,” Reader said. “Overall, it’s an unnecessary tax increase.”

Reader also said there’s bipartisan support for delaying the tax another year.

The Healthcare Tax Relief Act, introduced by Republican Senator Cory Gardner of Colorado, would do just that. It’s been co-sponsored by Senator Ron Johnson and other Republican legislators.

“Hopefully lawmakers hear what we’re hearing from our members,” Reader said.

Reader and Gefvert spoke today as part of a conference call organized by the Stop the HIT Coalition, which was formed in 2011 with a goal of repealing the tax. The coalition now includes over 35 national groups which fight for the interests of millions of small businesses.

One such company, Electronic Specialties, was represented on the call by owner Steve White.

This Genoa City-based small business manufactures testing equipment for the automotive industry. It employs eight people, six of which are on the company’s health insurance plan, according to White.

He says he’s in favor of anything that will “curb the cost of health insurance” which has risen dramatically for his company in the past four years.

“We were at $369 a month per employee; that rose to $574 a month,” he said. “Premiums are not going anywhere but up.”

Because of that recent increase, he says he had to make the difficult choice to reduce employee benefits and have them start paying into the plan.

“I am definitely in favor of lessening the impact of these health insurance premiums,” White said. “It hurts us as a small company and makes us less competitive.”

--By Alex Moe


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