Michigan Job Providers Oppose Eleventh Hour Health Claims Tax Increase

November 27, 2012

The Michigan Chamber of Commerce has joined forces with five other statewide business organizations to oppose efforts to increase health insurance costs for Michigan businesses and consumers by expanding the newly-enacted Health Insurance Claims (HICA) Tax.

SB 1359 (Senator Roger Kahn, R-Saginaw) would vastly expand the HICA Tax from a one percent tax on paid health insurance claims to a variable rate tax, whereby unelected Treasury officials will determine the tax rate in order to collect enough revenue to meet the Medicaid “base need” plus the medical rate of inflation. SB 1359 also repeals important safeguards in current law that allows for a proportional credit/refund if revenues exceed projections.

HICA was passed in 2011 as a replacement for the HMO Use Tax, which was the subject of federal scrutiny. The revenue from the HICA Tax is used to meet federal match requirements to fund Michigan’s Medicaid program. While this tax has been in place less than one year, it has not met revenue expectations. Data has not been analyzed to determine why the HICA Tax is collecting less than projected and it is unclear whether the state has done due diligence in collecting the current tax from all taxpayers.

The Michigan Chamber, Grand Rapids Chamber of Commerce, Michigan Manufacturers Association, NFIB – Michigan, Michigan Business and Professional Association and the Small Business Association of Michigan are opposed to SB 1359 because it provides for a completely uncapped, unlimited and unpredictable tax rate and because of concerns that the state has not fully enforced the current tax law.

The Michigan Chamber, Grand Rapids Chamber, MMA, NFIB, MBPA and SBAM are urging legislators to oppose efforts to pass the legislation during the Lame Duck legislative session.