COLUMN: Stop the HIT

Congress Must Repeal the Health Insurance Tax to Ensure Small Business Growth in Arkansas

By Lt. Governor Mark A. Darr

As the Lieutenant Governor of Arkansas, I speak with residents every day about what inspires them about this great state and those issues and concerns that keep them up at night. It will probably come as no surprise that the hope of most Arkansans is that they are able to provide a good home for their family, a strong education for their children and the highest quality health care for any needs that arise. It is also their collective concern, however, that some of these aspects of life may be out of reach. Whether it is high taxes or regulations, or the runaway cost of health care coverage, many fellow residents are concerned about the warning signs ahead that may inhibit them from fulfilling their dreams to the fullest potential.

Take health care for an example. If a son or daughter needs a particular medication or procedure, we want to ensure we can afford to provide that care. Speaking as a parent and a former business owner, I know affordable health care is vital to building strong families and durable communities. Unfortunately, the cost of the average family's premiums has increased by $3,065. It will get even more expensive next year thanks to the Health Insurance Tax (HIT).

The HIT, as it is often referred to, is a hidden tax in the President's new healthcare law and is set to be implemented in January 2014. The tax will be initially directed at health insurance companies, but the costs of the HIT will almost entirely be passed along to small businesses, their employees and the self-employed. In fact, a study by former CBO director Douglas Holtz-Eakin showed that families may pay $5,000 in additional premiums over the next decade.

Though framed as a fee on health care insurance companies, the HIT will undoubtedly be absorbed by small business owners and their employees. The HIT will impose more than $100 billion on the fully insured market place where 88 percent of small businesses purchase their insurance. Any Arkansan will tell you that small businesses are the drivers of our economy here in our state - we have more than 240,000 small businesses employing more than one million workers. I should know - I owned pizza restaurants in Little Rock and Rogers for several years, with about 50 employees at any given time. I know first-hand how difficult it is to keep a company operating in the black when faced with rising taxes and greater regulations. If I were still a business owner today I can state undeniably that the HIT would be one factor into planning for my business, and not in a positive way.

As more and more people from across Arkansas learn of this hidden tax, they are growing increasingly concerned that the HIT will be a barrier to businesses that want to grow and will even affect future hiring decisions. Quite simply, with the HIT on the horizon threatening to hold businesses back, it decreases incentive and ambition.

Clearly, we need to fix this problem so we do not end up reversing the progress we've made in re-building our state's economy. Fortunately, a fix has been proposed in the form of two federal bills that were recently introduced to repeal the Health Insurance Tax. The House bill, sponsored by Representative Boustany (D-LA) and Representative Matheson (D-UT) and the Senate bill, sponsored by Senator Barrasso (R-WY) and Senator Hatch (R-UT), will eliminate the mandatory fee on health insurance companies that gets passed on to consumers. A similar bill introduced in the House last year garnered 226 co-sponsors, well above the majority needed to pass. Clearly there is momentum for change and we must do our part in reaching out to our representatives in Washington to let them know that we want to Stop the HIT.

Arkansans have always been "can do" folks who press on even where there is adversity. But through adversity, we also learn the power of joining together to tackle a problem that impacts us all. In Arkansas, we are driven by a strong entrepreneurial spirit and we deserve the opportunity to harness that power to our state's advantage, not stifle it to our certain detriment. We must repeal the HIT.