By Katherine Lugar Beginning last year, a new tax built into the Affordable Care Act was placed on the health care plans of small-business owners and their employees. Largely overshadowed in the national dialogue, it was framed as a tax on insurers, but the truth is, the health insurance tax is increasing premiums for the nearly 90 percent of small businesses that purchase plans in the fully insured marketplace. In 2015 alone, the tax will collect $11 billion from small business balance sheets and that sum will increase to $159 billion in new taxes over the next decade. For the hotel industry — which is largely composed of small businesses — these costs threaten our ability to continue to grow jobs and provide career opportunities.
On top of the financial hit to the business’ bottom line, the HIT also signifies a significant impact on employees and their families. According to analysis by former Congressional Budget Office Director Douglas Holtz-Eakin, the HIT will generate $5,000 in higher premiums from the average family in just ten years and that amount will continue to increase over time. This is an added cost many of the millions of Americans employed by small businesses simply cannot afford.
The hotel industry is proud of the benefits we offer our team members. In fact, the 2014 National
Survey of Hotel Wages & Benefits found 85.9 percent of hotels offer medical insurance to hourly employees. However, with the implementation of the ACA, providing affordable health care coverage has become increasingly difficult, which is why we raised this issue directly with lawmakers during our annual Legislative Action Summit in April.
But it’s not just hotels. Small-business owners across every industry from construction companies to retailers will be feeling the effects of the HIT.
Although promised as the opportunity for more affordable health care options, the small businesses in the hotel industry and across the economy are instead seeing costs rise. These hard-working men and women are looking to their elected officials to help level the playing field and fortunately, Congress is taking notice.
In a clear sign Congress understands the need for action, 218 bipartisan members of Congress recently signed onto legislation introduced in the House by Reps. Charles Boustany Jr., R-La., and Kyrsten Sinema, D-Ariz., that seeks to repeal the HIT. This widespread bipartisan group is representing the best interests of the American people by finally addressing an issue of top concern for small business owners: keeping the rising costs of health care down.
Additionally, momentum to repeal the tax has also been growing in the Senate as the Jobs and Premium Protection Act of 2015 was introduced by Sens. John Barrasso, R-Wyo., and Orrin G. Hatch, R-Utah, and has the support of 29 of their colleagues. Collectively, 250 legislators are supporting the repeal of the HIT and this momentum cannot be ignored.
For the more than 52,000 hotels in the U.S. and the 1.86 million people they employ, this is a welcome advancement for reining in the increasingly unaffordable cost of health care. And as a generator of $164 billion in revenue last year alone, the lodging industry is a significant contributor to our nation’s economy and that of small businesses in communities across the country. Taxes such as the HIT are only making it harder for companies to sustain this important role.
With so many of our elected officials from states across the country pledging their support to eliminate this harmful and short-sighted tax, it’s time Washington takes action for small businesses once and for all.
Katherine Lugar is president and chief executive officer of the American Hotel & Lodging Association.
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