A proposed $50 million health insurance tax is catching flak from business groups and Republican lawmakers alike.
Over 20 employer organizations and associations sent a letter yesterday asking legislators to drop the health insurance tax (HIT) proposal in SB 842 and HB 6447.
If passed, the letter said, the new tax “will cause significant financial strain on middle class families, workers, and local businesses who purchase their coverage on the fully insured marketplace.”
Signatories include the CBIA, the Connecticut Retail Merchants Association, Connecticut Restaurant Association, the Connecticut Lodging Association, the Greater Danbury Chamber of Commerce, and the state chapter of the National Federation of Independent Business.
The letter continued: “The most recent data shows this HIT tax could cost $6,100 annually for the average business in Connecticut. In addition, major employers in the state could face increased expenses of over $60,000 per year.”
“By making health insurance less affordable in our state, the HIT tax will also put Connecticut at a competitive disadvantage regionally,” it said, “especially for local businesses whose operations cross borders into Massachusetts, New York, and Rhode Island. The tax could force local businesses to stop providing health insurance coverage, or even drive businesses out of Connecticut to states without this HIT tax. None of these outcomes are in the best interest of our state.”
The coalition also pointed out that the state is projected to enjoy a $1.6 billion budget surplus and is receiving $10 billion in federal stimulus money, including $85 million, which will help fund expanded health care subsidies on the Access Health CT insurance exchange.
“At a time when our state is enjoying its largest rainy-day fund in history, and tax revenues continue to exceed revenues to the benefit of our state budget, a new tax on health insurance is both unnecessary and irresponsible,” said CBIA President and CEO Chris DePentima. “Instead of adding on more taxes, lawmakers should instead look towards policies that will help local businesses thrive.
“If we don”™t,” DiPentima added, “Connecticut will continue to rank among the bottom of the nation in recovering from our country”™s last recession, and we will lose any chance we have to come out of this current pandemic ready to grow and create jobs.”
The protest comes on the heels of news that the controversial effort to create a state-run public option health insurance plan would not be going forward. Unlike that endeavor, however, the HIT is supported by Gov. Ned Lamont.
The governor repeated his assertion during his daily briefing yesterday that the $50 million raised by the tax would make health care more affordable by ensuring that “our poorest folks don”™t have big co-pays and deductibles.”
That assertion, as well as the HIT in general, came under fire from Senate Republican Leader Kevin Kelly (R-Stratford) and Sen. Tony Hwang (R-Fairfield), ranking member of the Insurance and Real Estate Committee.
“Gov. Lamont has repeatedly said he does not support tax increases, yet he and Democrat lawmakers are still backing a $50 million new tax on health insurance,” the pair said in a statement. “CT Republicans have a better way to reduce health care costs for working and middle class families without a new tax and without a job-threatening government-run public option.
“If Democrats truly want to make health care more affordable,” they continued, “we have a comprehensive plan and path to get there.”
Details of the Republican plan can be found here.
It is uncertain whether the HIT proposal will be passed by the Democrat-controlled Senate and House. The current legislative session is scheduled to conclude on June 9.
