Lawmakers make things hard enough to ensure New Jersey is affordable and economically competitive, but now Congress is about to make things worse.
Congress failed to delay the return of the health insurance tax (HIT), meaning more obligations will be piled onto businesses and residents in a state already named as having “the worst tax climate in the nation for doing business” by the Tax Foundation.
The appropriately named HIT is imposed on health insurance premiums through the Affordable Care Act. This tax targets Main Street Americans, including small business owners, families, seniors and Medicaid beneficiaries.
Recognizing the devastating impact the HIT could cause, lawmakers, in a rare instance of bipartisanship, suspended the tax twice before. Now, the HIT is scheduled to return on Jan. 1, 2020, which would lead to higher health care costs that New Jerseyans cannot afford.
As Congress approaches the end of its legislative year, it is critical that members take immediate action to again delay the HIT before it is too late.
An analysis from actuarial firm Oliver Wyman estimates that the HIT would cost New Jersey taxpayers $750 million in increased premiums in 2020 alone – and $16 billion nationwide. Levied on participants in the fully-insured market, the HIT would have a particularly negative impact on small businesses, 87 percent of which purchase their health insurance through the marketplace. Small business owners have already been victims of increasing premiums in recent years and simply cannot afford another increase.
We need policies that protect hardworking individuals and families, while also bringing economic growth, job creation and prosperity to the people of New Jersey. According to the actuarial firm, if the HIT goes back into effect in 2020, premiums are anticipated to increase next year by about $485 per employee for large employers – a cost that would have to be covered by the companies or their employees. Families who have coverage through a small employer would be hit even harder, with their premiums expected to go up by about $564 next year.
These higher health care costs would be disastrous for employers and leave fewer resources for New Jersey businesses to invest in the growth of their companies and the state economy.
What’s worse, the HIT would make health care less affordable for vulnerable New Jerseyans most in need of relief, including Medicaid beneficiaries and seniors. Wyman’s analysis estimates that half of the entire tax increase would be paid by those with incomes between $10,000 and $50,000. In New Jersey, this would lead to an additional $254 million in costs for Family Care, the state’s Medicaid program.
The HIT would also put Medicare beneficiaries at risk, with higher premiums, increased cost-sharing and fewer supplemental benefits. Seniors and individuals with disabilities in New Jersey would see an increase in their Medicare Advantage premiums of more than $500 next year, according to the same independent analysis. With many of America’s seniors living on fixed incomes of less than $20,000 annually, these beneficiaries simply cannot afford to pay more for the critical health care they need.
The New Jersey Congressional delegation must protect its constituents from another costly tax increase that they cannot afford by advocating for a delay to the HIT.
Time is running out for 2020, but it’s not too late.
This is an opportunity for all New Jerseyans to call their Congressional representatives, and urge them to take immediate action and delay the HIT before the end of the year.
Michael Egenton is executive vice president, government relations at the New Jersey Chamber of Commerce in Trenton.