The Health Insurance Tax (HIT), a multibillion-dollar annual tax created by the Affordable Care Act, is set to return on Jan. 1, forcing nearly 100 million Americans — including employers, families and individuals — to pay for a 3 to 5 percent increase in health insurance premiums. It may not seem obvious, but this tax will strike the agricultural industry hard, hurting hundreds of thousands of farmers and employees in California’s fertile heartland and countless others nationwide.
In the Golden State, agriculture is a $54 billion industry that generates at least $100 billion in related economic activity, according to the California Department of Food & Agriculture. The California poultry industry alone produces sales in excess of $2.5 billion annually, making it one of the state’s agricultural leaders. It provides jobs for over 25,000 people throughout the state and indirectly contributes to tens of thousands more in affiliated industries including trucking and feed suppliers. Congress needs to delay this tax immediately, before it has devastating consequences on the economic vitality of our state and repercussions on food production nationwide.
The HIT delivers an unwelcome increase on the already high cost of doing business in California, and it impacts employers of all sizes. According to a study on the impact of the HIT by Oliver Wyman, a global management consulting firm, fully-insured large employers and their employees in California will see a $560 increase in premiums for family coverage. Health insurance will cost fully-insured small business owners and their employees in California an additional $467 for family coverage, the study found. And since agriculture is an economic driver in California, comprised of large and small producers alike, there’s no doubt this tax will be yet another pain point for farmers and their employees.
Consider the family-owned chicken farmer in the Central Valley. The costs of operating are rising due to the increase in the state’s minimum wage and the new and/or more stringent government regulations on the industry each year. The chicken company employs a variety of workers from farm managers to processing plant workers, researchers to accountants. All of them need health insurance to remain healthy and ensure the health of their family. And all of them could pay the price of the HIT.
California agriculture isn’t the only industry affected by the HIT. The tax is estimated to total $22 billion, and the trickle-down effect on premiums will create a strain on Americans who need access to health care the most – those battling life-threatening diseases, pregnant women, the disabled and the elderly.
On behalf of California’s poultry industry and millions of other hardworking and vulnerable Americans, we must call on our Congressional representatives to act in the best interest of our state and our nation. Delay this tax, as it threatens to diminish coverage resulting in increased out-of-pocket costs, lower wages and even job losses. We can and must prevent instability among our businesses, workers and their families.