The Senate has two votes planned this morning on HR 4, a bill already passed by the House that would repeal the 1099 reporting provision that would have required all businesses as of 2012 to report all vendor purchases over $600 to the IRS. This would have increased tax collection, according to the CBO, by around $22 billion, but businesses large and small decried it as an impossibly burdensome requirement.
The Senate has passed this bill a half-dozen times, sometimes attached to other bills, and more recently as a standalone. The pay-for that the Senate uses differs from the House’s. But instead of a House-Senate conference, the Senate, unbelievably, will vote on the House bill today.
The 1099 repeal that passed the Senate earlier this year, sponsored by Sen. Debbie Stabenow (D-Mich.), would pay for the repeal by using untapped federal funds. It would also exempt the Social Security Administration, Medicare, the Defense Department and Veterans Affairs from potential cuts as a way to pay for repeal.
The version that passed the House, meanwhile, would pay for 1099 repeal by forcing greater repayment of health insurance subsidies for families whose income unexpectedly exceeds certain thresholds.
The version that will be voted on in the Senate on Tuesday will be the House-passed version, which Sen. Mike Johanns (R-Neb.) has introduced in the upper chamber; a 60-vote threshold is necessary for passage.
This is incredible for a host of reasons. First of all, throughout the last two years, we’ve seen the Senate pass a bill and then tell the House, “that’s the best we can do” and jam them with it. The House became almost an appendage to the Senate, with the Senate version of bills always taking precedence. Here we have the exact opposite, now that Republicans control the House.
Second, you have a bill introduced by Mike Johanns getting a final vote over a bill introduced by Debbie Stabenow in a Democratic Senate.
Third, the pay-for that everyone will accept, then, will try to extract money from individuals who need help paying their health care bills, if their job situation changes even slightly in the middle of the year. Instead of rewarding good fortune and increased wages, this bill punishes it. And it makes the exchange subsidies less attractive. As Ezra Klein has said, this undermines health reform:
Under their proposed policy, a family with income at 225 percent of the poverty line who needed subsidies for the first half of the year but canceled them mid-year when the husband got a better job could get a bill for more than $4,500 at the end of the year.
A more worrying example goes the other way: Imagine a family where the breadwinner makes much more than 400 percent of poverty, but loses his job late in the year. He tries to apply for subsidies so the family can keep getting health insurance but is told that he shouldn’t bother — because his total income that year will still be above 400 percent of poverty, he’ll get a bill at the end of the year forcing him to pay back the money.
The Affordable Care Act, unfortunately, already includes a “payback” policy along these lines — the House Republicans are just proposing to make it much, much worse. This will do two things: make people hate the Affordable Care Act for bait-and-switching them, and keep people from entering the exchanges because they’ve heard horror stories of huge bills. It’s clear why the GOP wouldn’t mind that outcome, but there’s no reason for Democrats to accept it.
They’re accepting it.
In fact, there’s only one safety valve, proposed by Sen. Robert Menendez (D-NJ). His amendment, which will get a vote today, would submit the offset, the forced repayment of exchange subsidies, to a study by the Department of Health and Human Services. This is a common delay tactic. If HHS finds that the offset would increase health insurance costs or coverage cuts for small business, the offset would be cancelled out. I think they’re looking at the wrong things in that study, but it could garner enough support to pass.
If it doesn’t, Democrats will help put a booby trap on the exchange subsidies today.