May 24, 2021
Dear Governor Lamont and Members of the Connecticut General Assembly,
As we near the end of the legislative session and you work to finalize our state’s budget and policy priorities, we urge you to abandon the health insurance tax (HIT) proposal in SB 842 and HB 6447.
Simply put, this HIT tax is not necessary in order to expand affordable health coverage in our state. In fact, if passed a new state HIT tax will cause significant financial strain on middle class families, workers, and local businesses who purchase their coverage on the fully insured marketplace.
We have had months to understand how this HIT tax would impact Connecticut employers, workers, and their families, and unfortunately what we have learned is deeply troubling. The most recent data shows this HIT tax could cost $6,100 dollars annually for the average business in Connecticut. In addition, major employers in the state could face increased expenses of over $60,000 per year.
We urge you to consider the financial uncertainty this HIT tax could create in Connecticut. Consider, for example, the business on the threshold of reaching 50 employees, for whom this tax could be their deciding factor in whether or not to hire new employees, offer expanded benefits, or increase their productivity. Functionally, this HIT tax will stunt hiring and economic recovery for Connecticut after the devastating coronavirus pandemic, when we need growth more than ever.
By making health insurance less affordable in our state, the HIT tax will also put Connecticut at a competitive disadvantage regionally, especially for local business whose operations cross borders into Massachusetts, New York, and Rhode Island. The tax could force local businesses to stop providing health insurance coverage, or even drive businesses out of Connecticut to states without this HIT tax. None of these outcomes are in the best interest of our state.
Our state is currently experiencing a budget surplus, and we have another $10 billion in federal stimulus aid coming from President Joe Biden and Democratic leaders in Congress. At least $85 million of that aid is going to fund expanded healthcare subsidies on the exchange, allowing Connecticut to open a special enrollment period. We do not need to implement an additional tax that will restrict healthcare coverage for Connecticut’s working class and create greater economic uncertainty.
It’s important to remember we have real data as to how a HIT tax impacts affordability. The federal HIT tax was repealed in Congress with overwhelming bipartisan support, including from national Democrats, expressly because this policy was driving up costs for hard-working Americans. That policy change delivered $500 in savings for the average worker covered by a family health insurance plan, and premiums in Connecticut went down. We respectfully ask that you protect those dollars saved, recognizing that reinstitution of even a portion of the HIT tax will only drive up costs in our state.
We applaud your efforts to expand healthcare coverage, but taxing working families and local businesses is the wrong approach. We ask you to honor the commitment made not to raise taxes this session.
Local businesses and the working families they support are the backbone of Connecticut’s economy, and the cultural heart of our local communities. We need our healthcare coverage now more than ever.
Please protect local businesses, our workers, and our state’s competitiveness. We ask you to oppose any further consideration of instituting a health insurance tax in Connecticut.
Connecticut Business & Industry Association
Connecticut Retail Merchants Association
Connecticut Farm Bureau
Connecticut Food Association
National Federation of Independent Business Connecticut Chapter
Connecticut Restaurant Association
Connecticut Veterinary Medical Association
Connecticut Construction Industry Association
American Rental Association
Credit Union League of Connecticut
Independent Electrical Contractors of N.E.
New England Tire & Service Association
CT Association of Community Pharmacies
Lumber Dealers Association of Connecticut
Connecticut Benefit Brokers
Greater New Haven Chamber
Waterbury Regional Chamber of Commerce
Home Care Association of America, Connecticut
Greater Danbury Chamber of Commerce
Greater New Britain Chamber of Commerce
Connecticut Lodging Association
Northwest CT Chamber of Commerce
Connecticut Bus Association, Inc