Healthcare costs are constantly on the minds of manufacturers. Almost three fourths of the companies responding to a recent NAM survey said rising healthcare insurance costs are a primary business challenge for them. So we’re glad to see that these concerns are resonating in Congress where House Small Business Health and Technology Subcommittee Chair Chris Collins (R-NY) today held a hearing to take a look at the impact on small businesses of the new fee on health insurance fee, set to kick in next year.

The fee, which was included in the healthcare reform law, will raise some $100 billion from health insurance providers over the next ten years. And since many small businesses obtain their employees’ health care coverage from these insurance companies, these additional fees are likely to be felt in premium costs. Indeed, the fee could raise the cost of employer-sponsored insurance by 2 to 3 percent in 2014, imposing a cost of nearly $5,000 per family by 2020 according to a study released earlier this year by the National Federation of Independent Business Research Foundation.

Fortunately, Congress still has an opportunity to avert this crisis before it starts. On the House side, Rep. Charles Boustany has introduced bipartisan legislation –H.R. 763 — to repeal this annual fee on health insurers and a similar bill — S.603—has been introduced in the Senate by  Sen. John Barrasso (R-WY). Manufacturers urge lawmakers to repeal this job killing tax ASAP.

We were pleased to read a bi-partisan op-ed by Senator Orrin Hatch (R-UT) and Congressman Jim Matheson (D-UT), who have recently introduced legislation to repeal the Health Insurance Tax (HIT) provision of the Affordable Care Act (ACA), highlighting the escalating costs of health care on small businesses and the adverse relationship this tax will have on their ability to grow jobs in our economy.

As nearly 70 percent of the NAM’s small and medium-sized manufacturers buy health insurance in the fully insured marketplace, the HIT tax will significantly drive up the cost of coverage which comes on top of the nearly 10 percent average increases in premiums that companies’ experienced last year. While the tax technically falls on insurers, CBO has confirmed that it “would be largely passed through to consumers [small business owners and their employees] in the form of higher premiums for private coverage.”

Manufacturers believe it is critical that Congress take action to repeal the HIT tax to help make health care coverage more affordable and to encourage employer provided health insurance for employees before it goes into effect beginning in 2014.

Effective in 2014, the Patient Protection and Affordable Care law will impose a new tax on health insurance companies in the fully insured marketplace. Unfortunately, this punitive tax—known as HIT— will also drive up the cost of premiums paid by employers for their employees’ health insurance coverage, according to the non-partisan Joint Committee on Taxation.  Many smaller manufacturers will be among the employers paying more to provide health insurance for workers. According to a recent NAM survey, nearly 70 percent of NAM’s small and medium-size manufacturers buy health insurance in this market and would be subject to higher health care costs associated with the cost shifting.

We are pleased that Reps. Charles Boustany (R-LA) and Jim Matheson (D-UT) recognize that imposing a new tax on health care insurance is no way to encourage employers to provide health insurance coverage for their workers. Their new bill—The Jobs and Premium Protection Act of 2013— will repeal the HIT tax and help drive down health care costs that are currently rising for employers faster than the rate of inflation. In endorsing Reps. Boustany’s and Matheson’s bill in a February 19th letter, we noted that the additional cost of providing coverage from the HIT tax comes on top of average health insurance premium increases of nearly 10 percent experienced last year by NAM’s small and medium-size members. And it’s not just Manufacturers that are concerned. A February letter endorsing the bill was signed by 35 associations representing a cross section of industries in the business community that would also bear the burden of this new tax.

If policymakers are serious about driving down health insurance costs for employers and want to encourage employer-provided health insurance for employees, supporting this legislation would be a responsible step. Repealing the HIT would be a win-win for many manufacturers and their workers.