What the 1099 Logjam Says About the Future of Health Reform

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Of all the controversial pieces of the Affordable Care Act, the one that seems ripest for rollback is a new requirement that businesses file tax forms on every purchase over $600. Yet, despite calls for its demise from both sides of the aisle and seemingly every business group in America, this provision lives on, which raises an important question: If the Senate can’t repeal this, can it realistically repeal any piece of health care reform?

Last evening on the Senate floor, two amendments to the Food Safety Bill that would have struck the tax-filing rule were offered. Both failed. The reason for the failures is the same reason many provisions in the ACA will be extremely difficult to roll back. Doing so costs money. The tax filing provision generates some $19 billion in revenue for the federal government over 10 years. (Forcing businesses to generate more tax forms, like the provisions requires, encourages more businesses to pay taxes.)

The first amendment proposed yesterday came from Republican Sen. Mike Johanns – it would have rolled back the amendment and paid for its related costs with spending cuts made by White House officials. A second amendment was offered by Democratic Senate Finance Chairman Max Baucus, the original author of the provision. Baucus’s plan would have rolled back the filing requirement without offsetting the accompanying cost.

Baucus’s argument that the government could afford to lose $19 billion because the health care bill could still reduce the deficit by more than $100 billion – according to the Congressional Budget Office – wasn’t very convincing. His amendment failed 44-53. Johanns amendment, which some Democrats said gave too much power and responsibility to the White House, failed 61-35. Under normal Senate rules, this margin would have been enough for passage, but under an agreement between Democratic and Republican leadership, amendments to the Food Safety Bill needed 67 votes to pass.

Those championing rollback of the tax reporting provision say it will happen eventually and it might. But with the federal deficit a dominant force in almost everything Congress does right now, what about other pieces of health reform that generate revenue or reduce government debt?

According to the CBO, the Independent Payment Advisory Board, a new panel of bureaucrats charged with keeping Medicare spending growth under control, will save some $16 billion over the next 10 years. Cuts to Medicare Advantage will save more than $100 billion. Cuts to Medicare payments to doctors and hospitals save even more. Taxes on high-cost insurance plans will generate more than $30 billion. Fees levied on insurance companies, device makers, drug companies and other health industry sectors will add more than $100 billion to government coffers. Repealing any of these, as Republicans may try to do, will require offsets that could be even more unpopular than the provisions themselves.

Repealing health reform provisions that cost money aren’t likely to garner enough public or political support to force repeal. Such provisions include closing of the Medicare prescription drug donut hole and new subsidies to help low and middle-income Americans buy health insurance.

It’s hard not to look at these hard truths and see stasis at the end of the line. Yes, there is some funny math in the Affordable Care Act. If relatively vague cost control experiments in the bill don’t work out, the law could end up costing much more than economists now predict. But it does make real cuts in spending while building new structures to generate revenue. In today’s Tea Party-influenced, deficit-focused political climate, for better or worse, this may be the ACA’s best insurance policy.

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