The "Health Insurance Tax": How an anti-tax HIT squad employs the press

The small-business community has revved up its campaign to repeal a tax on insurance companies intended to help finance subsidies for the uninsured, a part of President Obama's healthcare reform that would take effect in 2014.

Congress expected the tax to raise some $87 billion over the 10 years the subsidies were funded. It is aimed at insurance carriers, but the small-business advocates argue that it will really fall on business owners, since insurers will pass it along in the form of higher premiums to owners and their workers. They don't like that one bit, and have labeled it HIT, as in Health Insurance Tax.

All this might be unremarkable-just another story about businesses complaining about taxes-except that the press figures heavily into the group's campaign strategy. Amanda Austin, federal public policy director for the National Federation of Independent Business, is quite frank about it: "We see the media as a conduit for us," she explained. Her group is spearheading a coalition of 35 members to repeal the tax.

"We have tried to provide much validity to the issue by citing multiple data sources, and we hope that the media look at that as an opportunity to report on our issue." Translation: The "Stop the HIT" campaign aims at us. "The media give a voice to small business owners that don't have one without you," Austin told me.

To that end, the campaign uses a variety of tools to reach reporters. Over the past two months, for example, I have received 11 press releases or alerts from the coalition, whose members include such trade associations as the American Farm Bureau Federation, the Society of American Florists, and one of the biggest stars in the trade group universe, the U.S. Chamber of Commerce. The Chamber is a master at issue advocacy campaigns that enlist millions of businessmen and women in their causes. During health reform, the Chamber worked its grassroots connections to defeat a public option. Austin claims the coalition can ultimately tap six million businesses and 15 million self-employed people "as a greater voice."

They're good at this, too. The press releases are short, snappy, and designed to grab the attention of reporters in need of a quick story. They supply lots of figures to bolster the coalition's case. Among its claims: the tax "will lead to $30 billion in lost sales annually for small businesses by 2021"; it will "reduce private sector employment by up to 249,000 jobs" by 2021; it will add "$500" to the cost of a family policy for an average worker at a small business; it will raise the cost of employer-sponsored insurance "by 2 to 3 percent."

Those "facts" are repeated in many of the releases, reinforcing the message that the tax must go. Some releases are pegged to news events, like the Labor Department's unemployment reports. The headline for an April press release advises journos that the "Jobs Report Reminds Small Businesses That HIT Will Hurt." The headline for a release sent around tax time noted that "Small Businesses Urge Repeal of Health Insurance Tax on Tax Day." And when President Obama spoke at the State University of New York this week, the coalition issued a release urging the president to address the "threatening tax in New York."

The campaign also uses "fly-ins"-locals who are flown to Washington to chat with their Congressional representatives or testify at hearings. One press release advised that the Vice CEO of a home building firm in Rockville, MD, told Congress that "any additional cost item that's placed on us such as that will make it difficult for us to continue and survive." Fox News covered the hearing before the House Small Business Committee, reporting on the testimony of a tax consultant for small businesses who said that proposed tax increases in the Affordable Care Act will change the way businesses view each expenditure and cause them to be risk averse. Translation: the tax might deter them from hiring.

The coalition, says Austin, has had "good success with roundtables and the press has covered them." Roundtables where local business people discussed the implications of the tax got good play in Nebraska, where KHAS-TV in Hastings sent a reporter to cover one, where it quoted a business owner who said the tax "should be a concern to everyone that's a citizen in this country." The New Britain (CT) Herald covered a similar event and produced a similar story, passing along the sentiments of the head of the local Chamber of Commerce.

How large a budget does the coalition have? "I'm not sure we want to share that," Austin said. "Lean and mean is our mantra. We're pitching things and hope people run it. We're not paying for ads." That brings up the matter of the insurance industry and its money. Students of health reform might should recall that AHIP, the insurers trade group, secretly channeled $86 million to the US Chamber of Commerce to fight health reform and defeat the public option.

America's Health Insurance Plans, AHIP's full name, is not an official member of the coalition-at least it's not listed as one on the coalition's website. But it, too, is fighting the tax. Last summer insurers announced a partnership with the National Federation of Independent Business "to get out the facts about the impact the premium tax will have on the cost of coverage, and to build bipartisan support to prevent it from going into effect in 2014." That objective includes raising awareness through new media. AHIP wouldn't talk about its efforts-its PR guy said "our blog should have the information you need." He offered links to studies the group has made public.

How to cover all this? Unfortunately, the stories I saw about this appeared to be mere conduits for the Coalition's point of view. Being a conduit for press releases on an advocacy issue is a no-no, and so is passing along quotes from opponents without balance, analysis, and context. This story deserves a lot of reporting and context. What are other experts saying about the tax, not just those which the coalition cites? Reporters might start at the Kaiser Family Foundation, which studies this stuff. They might want to research the legislative history of the bill, to see why lawmakers wanted the tax in the first place.

Meanwhile, if the HIT squad is successful in repealing the tax, that raises a much bigger question: who will pay for the subsidies for the uninsured-the heart of health reform-if opponents succeed in whittling away the funding sources (and if the Supreme Court upholds the law)?

I asked Austin that question. She answered by raising another. "Are we under the impression the law is fully funded? It will probably need more money whether the tax goes away or not." And that, dear colleagues, gets to an under-reported question the media need to address.

Reprinted with permission from the Columbia Journalism Review.