Small business owners and organizations are rightfully extremely leery over the attempts by the Obama administration to ram a largely unwanted healthcare bill down the throats of American citizens.

What is especially disconcerting for small business owner is the endless changes and adaptations seeming to come forth on an almost weekly basis which makes it impossible to know where the healthcare legislation is going and how it will have an effect on small business specifically.

Rather than get into the complexities of the overall healthcare bill as it relates to small business, I want to focus on one aspect today – insurance taxes; probably the most controversial part of the so-called Baucus bill.

What is the insurance tax?

The insurance tax is an excise tax under the current bill which would be in part laid upon health insurance companies.

At a glance this doesn’t seem to be any big deal in relationship to small business, but we always have to keep in mind that there is never anything such as a free lunch, and something that costs the insurance companies extra – or any company for that matter – will eventually be passed on to others in order to manage profits and operational costs.

So even though the gold-plated type of health insurance targeted by the bill seemingly wouldn’t apply to most small businesses, there can be no doubt insurance companies will pass on the extra costs of the excise tax onto small business via higher premiums in order to pay for those higher costs. The insurance industry wouldn’t just silently absorb those costs or only pass them on to those companies offering the high-level insurance. Just like everything else in the insurance industry, everything is passed on to others in order to determine the pricing of the amount the premium to be paid. So an added tax cost will be spread around to all small businesses through increased premiums, making the cost of doing business higher, and in return, small business will pass those costs on to the consumer, making prices of goods and services higher as well. Everyone loses in this case based on the largely fictional need to change the healthcare system, which the vast majority of Americans are very happy with.

As the chair of the National Small Business Association, Keith Ashmus recently stated, “The tax will be part of the entire cost structure of the insurer. [So] the trigger will be a high-cost plan by company Y, but the impact will be felt by everyone.”

Here is just one area of the healthcare reform bill as it stands today would negatively impact small business. Small businesses and their representatives need to keep a close watch on what is going on in this debate, as the unintended consequences always accompanying those with good intentions cab be devastating, and that’s how it’s shaping up for small businesses who have a strong chance of being hurt from this misguided effort of the Obama administration