MMA opposes legislation introduced by Senator Roger Kahn (R-Saginaw) that would increase the 1 percent Health Insurance Claims Act (HICA) Tax. The bill, SB 335, would require Department of Treasury officials to adjust the 1 percent Health Insurance Claims Act (HICA) Tax rate every 3 years to account for medical inflation. SB 335 would also eliminate the sunset that repeals the law on 1/1/14, placing the HICA tax burden on manufacturers indefinitely.
Beginning 1/1/12, a one-percent tax on all claims paid for health and medical services provided under health, dental and vision coverage. Ultimately, the cost of the tax is borne by the sponsor of that coverage — the employer or the individual who already pays for the coverage, falling disproportionately on manufacturers and self insured companies. While this tax has been in place less than one year, it has not met revenue expectations. The latest estimates peg the annual shortfall at $140 million. SB 335 is intended to address this shortfall but MMA opposes this legislation because it will increase employer health care costs and reduce the state’s ability to remain competitive.
“The HICA tax already represents a multi-million dollar tax increase to Michigan manufacturers,” said Delaney McKinley, MMA director of human resource policy. “This comes at a time when job providers are already struggling to continue to provide health insurance coverage to workers in the face of dramatic increases in health care costs and an apparently endless line of government taxes and regulations from federal health care reform.”
MMA succeeded in defeating a proposal last year that would have expanded the HICA to a variable rate. Manufacturers applauded the Michigan Legislature for standing against unlimited tax increases and hope to see a similar reaction to this proposed tax hike.
“There is a better way,” continued McKinley.