Small Business, Trade Groups Push for Repeal of Health Insurance Fee

May 24, 2011 2:25pm

ABC News' Huma Khan reports: A coalition of small business groups and trade associations have launched a campaign calling for the repeal of a provision in the health care law that they say will sharply escalate costs for small companies.

The group is opposing an annual fee that health insurance providers have to pay under the Affordable Care Act, starting in 2014. The fee, which is based on the provider’s net premiums, is one of the chief ways the federal government will generate revenue from the new law. 

The Congressional Budget Office estimates it would rake in $8 billion in 2014 and $14.3 billion in 2018 and revenues would rise subsequently every year.

But the coalition argues that the fee will be passed on to small businesses, in turn increasing their costs.

“This tax will be almost entirely passed on to consumers in the fully insured marketplace, where nearly all small businesses and the self-employed purchase their coverage,” states a fact sheet by the group. “This new tax on small business will raise insurance costs for already struggling small businesses and is contrary to the goals of health care reform.”

The coalition, which includes lobbying heavyweights like the U.S. Chamber of Commerce, the National Small Business Association and the American Farm Bureau Federation, is already garnering some attention on Capitol Hill. 

On Monday, Sen. Jon Kyl, R-Ariz., introduced a Small Business Health Relief Act that would eliminate this fee on insurance companies. In the House, the group has found support in Rep. Charles Boustany, R-La., who introduced similar legislation in his chamber.

A spokesperson for the group said outreach to members of Congress is an important part of the campaign, but the coalition will also engage its members on a grassroots level. It also plans to use targeted advertising to get its message across, though the group would not provide specifics.

The push comes at a time when Americans are slowly warming up to the new law, even though many remain confused about what it means for them. A new poll released Monday found that more people approve of President Obama’s handling of the issue than in recent months.

The latest Associated Press/GfK survey, conducted May 5-9, found that 54 percent of Americans approve of the way the president has handled health care, versus 46 percent who disapprove. The number is a significant jump from September, when only 42 percent approved.

Americans were equally divided on which party they trust to do a better job of handling health care, but more than half of those polled said they trust Democrats more specifically on Medicare.

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