Colorado families depend upon a growing economy and a strong private sector to ensure they can meet their needs today and reach for their goals tomorrow. Small and medium-sized businesses are widely recognized as the engines that provide the thrust necessary for the economy to take off through innovation and employment opportunity.
When a tax or regulation targets those growing companies, it doesn't just hurt the entrepreneurs and owners: Whatever holds the businesses back also holds back their employees and the people who might have become employees.
That's why we are deeply concerned by the Health Insurance Tax provision within the Affordable Care Act. The Health Insurance Tax acts like a sales tax on health-insurance policies purchased in the market by individuals and employers. While the tax, when implemented, is supposed to be paid by the insurance companies, the real cost will be passed through to the customers who pay for the insurance.
It's pretty simple: when every insurance company is required to pay the same tax and their customers have no other alternative but to pay for the policies, the tax will be added to the cost of the policy. No insurance company is going to absorb the estimated annual cost of more than $500 per insured family per year. The insurance companies will simply pass it along as a price increase.
In many small businesses, $500 per employee would buy everyone a new computer or send everyone to a training session to learn about a new technique for working smarter or faster. Those are the kinds of investments that businesses make when they're trying to grow and become more effective in the competitive marketplace.
Targeting this tax at those very same small businesses means that they're being saddled with new expenses instead of being encouraged to invest for new opportunity. That starves them of the fuel needed to become those important engines of economic growth. Thank you for your time and consideration of these concerns we have about how the Health Insurance Tax will negatively impact Colorado’s companies, consumers and, ultimately, citizens.