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Congressman Connects With Small Business Owners On Tax Burden
Denham HIT
Modesto Chamber of Commerce CEO Cecil Russell (left) and Congressman Jeff Denham (right) address a group of small business owners about the effects of the health insurance tax under the Affordable Care Act. The tax has raised health insurance costs for millions of small businesses. RICHARD PALOMA/ The Leader


U.S. Congressman Jeff Denham joined local small business owners at the Modesto Chamber of Commerce on Tuesday, Oct. 14 to discuss how the health insurance tax, or HIT, is impacting their businesses and employees.

“The health insurance tax, or HIT, represents a real threat to California small businesses,” Denham said. “Small businesses are essential for a strong economy. We must do everything we can to ensure that Washington is not adding new burdens that will only stifle growth and threaten jobs. At the very least, small businesses need time and space to prepare for the HIT.”

Denham said that the health insurance tax was hitting businesses it wasn’t designed to hit. He plans on bipartisan work for “fixing some of the things that went wrong.”

According to Denham, the tax is an often-overlooked tax in the Patient Protection and Affordable Care Act that will significantly raise health insurance costs for millions of small businesses.

Under the law, the tax is imposed almost entirely on what’s known as the “fully insured market,” where 88 percent of small business owners purchase their health coverage.

The tax will raise the cost of health insurance premiums for families by approximately $5,000 over the next decade, according to an analysis by former CBO Director Douglas Holtz-Eakin.

Denham is co-sponsor of the Small Business and Family Relief Act, a bipartisan bill in the U.S. House of Representatives that would delay the HIT for two years. He has also cosponsored the Jobs and Premium Protection Act, which would repeal the tax.

“The fact is that the health care reform law has increased medical care costs for our employees by 50 percent, and cost over $1 million in added costs over premiums with no change in benefits,” said John Duarte, of Duarte Nursery in Hughson. “The uncertainty surrounding the health insurance tax makes it virtually impossible to prepare for these new added health care costs.”

Many business owners in the group commented about increased costs for health insurance that they couldn’t pick up the increased cost as a benefit and were unable to give raises if they passed the costs on to their employees to pay out-of-pocket.

Others commented about structuring back their business to avoid costs associated with the tax.

One business owner pointed out he had double-digit increases in his insurance costs, but because of various laws with health care, the insurance company refused to share the amount of money paid on employee claims.

“I expect to see a number of different bills to deal with the health care act,” said Denham about the next congressional session. “There’s still an opportunity to repeal this and other pieces of it (Affordable Care Act).

During the discussion, Denham touched on lawsuits regarding the American Disabilities Act hitting small businesses in the area.
“Don’t get me wrong, no one is against ADA,” said Modesto Chamber of Commerce CEO Cecil Russell, “but its serial lawsuits are causing us to go out of business.”

Denham characterized the legal actions as “drive-by lawsuits” due to the number of out-of-area lawyers that come into the cities for the specific purpose of finding violations and inhibiting small businesses.

The event was hosted by the Stop the HIT Coalition, a broad based group representing the nation’s small business owners, their employees and the self-employed.