Guest Column

A $2B health care tax increase? Let’s find a better solution

January 15, 2016
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Health care costs will rise for employers and individual purchasers if the Michigan Legislature passes a proposed $2 billion health care tax increase later this year.

The Michigan House of Representatives voted in favor of an eight-year extension of the job-killing Health Insurance Claims Act tax in December, prolonging the life of the Michigan-only tax designed to help fund Michigan’s Medicaid program.

We call on the Senate and the Snyder Administration to find a more effective Medicaid funding solution that reduces the risk to Michigan’s economy.

The state’s current mechanism for funding Medicaid keeps Michigan manufacturers competitive, and we should stay the course with that effective solution.

The 2014 legislation eliminated the HICA tax by 2018 and reinstated a Use Tax on Medicaid managed-care organizations. To switch directions and extend the HICA tax now would mean going back to a failed response to unfounded and premature concerns raised by the federal government.

The Use Tax approach meets the letter of federal law and makes Michigan competitive with other states and across the global economy. Michigan leadership should work with the federal government to secure fair funding options for Medicaid, rather than unnecessarily burdening Michigan job-providers and individuals that purchase health care.

Businesses and individuals alike are being forced to swallow double-digit premium increases year over year, spiraling many toward choosing against health care options vital to long-term state growth. Add to that the new taxes being charged under the Affordable Care Act, and employers and individuals face a health care climate that is simply unaffordable.

Tacking on a $2 billion health care tax that only affects Michigan companies adds insult to already excessive injury. Something has to change when employers and Michiganders are forced to conclude they cannot afford health care.

The last Legislature made the right choice to eliminate the ill-conceived and uncompetitive HICA tax and return to the more effective Use Tax approach. Michigan’s current leadership should continue that strategy.

We appreciate that the Michigan Senate did not rush to extend the HICA health care tax in 2015 after it was passed in the House. Michigan needs the Senate to continue that reasoned strategy when the HICA debate starts up this year.

Today our state is a national leader in job creation and innovation. Let’s continue to lead the nation forward and look for the most effective solution rather than the quick fix.

Michigan leaders should be looking for creative ways to alleviate the health care cost pain that businesses and individuals are experiencing — not compound the problem with an unnecessary and unaffordable health care tax increase.

We urge the Michigan Senate and the Snyder Administration to block the House bill that proposes multi-billion-dollar tax increases and any effort to further extend a failed solution.

Chuck Hadden is president and CEO of the Michigan Manufacturers Association.

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