news

STATEMENT

of

Congresswoman Janice Hahn, Ranking Member

Subcommittee on Healthcare and Technology

House Committee on Small Business

“The Health Insurance Fee: Impact on Small Businesses”

Thursday, May 9, 2013

Thank you, Mr. Chairman.

Before we dive in to examining the possible impacts of this one part of the health care law, it’s important that we step back and remember for a moment what the Affordable Care Act has done as a whole to make health insurance more affordable, more dependable, and more meaningful for American families and businesses.

Under the Affordable Care Act, children can no longer be denied coverage because of a pre-existing condition. Parents can keep their son or daughter on their insurance until age 26. Insurance companies are forbidden from cancelling a policy for someone who has gotten sick or been hurt, just because they had a typo on a form a decade ago.

If an insurance company spends too much of the money it is paid on things that aren’t quality healthcare, it has to refund its customers.The ACA empowers small businesses in the health insurance market through the exchanges, and offers significant tax credits to support health insurance for some of the smaller small businesses. Millions of Americans are already feeling the benefits of the Affordable Care Act—in their health and their pocketbooks.

Now, there are of course places where we can improve this law. I for one think we might have to do something to bring these chargemaster list prices into the light of day. But as we move towards the implementation of some of the biggest components of the ACA next year, there may well be some things we need to do to adjust and correct issues that come along.

Today we are examining how one component of the law, the tax on health insurance companies, may have an undesirable impact on consumers, including small businesses, in the form of increased premiums. As we examine the problems this fixed fee could pose, it is important to understand the origins of the provision.  It was meant to raise $90 billion from insurance companies, not their customers. With the insurance mandate poised to deliver millions of new customers to insurance companies, it would seem fair to ask the insurance companies to pony up some of the cost of the law that was going to give them so many millions more customers.

However, these companies threaten to recoup the fee from consumers through increased premiums rather than absorb the fee themselves. Because higher premiums present a real risk to small employers in their ability to invest and grow, I’m glad we are investigating this issue. We are looking for feedback to see how likely increased premiums are due solely because of this section in the Affordable Care Act and what they would mean for businesses.  

But at the same time, we must recognize the difficulty presented of our task due to the number of major insurance market reforms that also become effective next year.  These consumer protections, in conjunction with exchanges, are expected to alleviate the continued rise in premiums over time. 

Market forces will have a major impact on how insurance providers react to being assessed a premium tax, while also being tasked with implementing other insurance reforms.  Accordingly, this hearing will not only explore the burdens of higher premiums but also how the health insurance tax will interact with other provisions contained in the ACA, like the medical loss ratio and rate review panels.

Just as with any other legislation that brings major changes, there has been much speculation about the positive and negative affects the ACA will have, particularly to small businesses. For this reason, it is important we consider all aspects of the health insurance tax before acting prematurely to eliminate it entirely.  At a time when we are facing budgetary burdens, we must work to come up with a realistic remedy.

The unintended consequences of the health insurance tax on small employers could affect their ability to provide affordable health insurance while also growing their business. This hearing serves as a starting point to examine this issue and start a dialogue so we can address it immediately.  

I thank all the witnesses for being here today and I look forward to your comments. Thank you and I yield back.

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