Michigan Chamber to Testify in Opposition of Health Insurance Tax Increase

March 9, 2015

The debate over whether to increase the Health Insurance Claims (HICA) Tax will begin this week before the House Department of Community Health Appropriations Subcommittee.  The Michigan Chamber will be testifying before the Subcommittee in opposition to the Governor’s proposal to increase the HICA tax from a .75 percent tax on paid health insurance claims to a 1.3 percent tax to bring in an additional $162.8 million in revenue for Michigan’s Medicaid program in Fiscal year 2016.

The Michigan Chamber agrees that there is a need to adequately fund Medicaid to meet the health needs of our state’s most vulnerable citizens. However, we cannot support achieving this goal by continuing to levy higher and higher taxes on health insurance claims to support this program. Doing so would increase health insurance costs for Michigan businesses and individuals, making the voluntary effort to provide health insurance that much more difficult to maintain. Making matters worse, as more employer and individuals drop insurance coverage because it is too expensive to maintain, the HICA tax base will continue to erode, meaning the tax on those continuing to offer coverage will need to increase. This will also be the case as the Medicaid program continues to grow more expensive.    

The Michigan Chamber will be voicing strong opposition to this budget provision and exploring alternative funding mechanisms to fill the funding gap. We do not expect any final decisions to be made this week and will keep you posted on our progress. 

For more information, please contact Wendy Block at wblock@michamber.com or (517) 371-7678.