An Obamacare tax that will be implemented on insurance providers is reportedly scaring the daylights out of some small-business owners who fear the tax will drive them out of business or force them to eliminate coverage for their employees.
“Insurers have confirmed back to me that the tax will be passed down to consumers, and the direct impact will be staggering,” Ryan Thorn, owner of a small insurance planning firm, said at a congressional hearing Thursday, according to the Washington Post. “It disproportionately hits individuals and small-business owners, the people who have been hurt most by these challenging times.”
Thorn read letters to Congress from his small-business–one wrote the tax “scares the daylights out of us” while another, the Post noted, said the Obamacare tax would “hasten the decision to move away from providing group coverage for our employees.”
According to the Post, while Obamacare was supposed to lower their health-care costs, the federal government will impose a fee on “health insurance firms based on the plans they sell to individuals and companies,” which is known as the fully insured market. Obamacare, though, “exempts health-insurance plans that are set up and operated by businesses themselves,” which is called the self-insured market.
As the Post notes, since “most large corporations self-insure their workforce, experts warn that insurance companies will pass the costs directly to small businesses,” the vast majority of which “purchase coverage in the fully insured market.”
Proponents of Obamacare said that the tax was necessary to expand health insurance coverage for other groups. The National Federation of Independent Business, though, estimates the Obamacare tax “could reduce private-sector employment by several hundred thousand jobs over the next decade, more than half of which would come from small businesses” and the impact on the gross domestic product could be as high as $185 billion.