The health care reform bill has become so onerous that even the Obama administration is now in favor of repealing an important portion of it, the provision that requires businesses to submit a 1099 from transactions over $600.
The White House has come to the realization that the requirement constitutes an impossible burden on small businesses. More importantly, from the point of view of the Obama administration, the requirement would create an impossible burden for the IRS, which would be required to track this new documentation.
The administration is now signaling to congressional Democrats that it is in favor of raising the threshold to $5,000. Unfortunately, there are a number of problems.
First, the Republicans are in favor of jettisoning the reporting requirement altogether. They point out that small businesses will still be stuck with the burden of tracking transactions to determine which exceed the threshold and which do not.
Also, the reporting provision was supposed to raise $17 billion, the amount the administration estimated that was required to expand coverage to millions of uninsured Americans. Republicans are not disposed to raise other taxes to make up the difference.
The imposition of the reporting mandate and now the necessity of removing it demonstrate the perils of throwing together a monstrous bill like health care reform in the back, smoke-filled rooms, with special interests getting in their input, and then ramming it through by putting in sweeteners to buy the votes of various congressmen and senators. No one, outside of a few outside analysts, had actually read the entire bill and had thought through some of the implications of its various provisions.
One other example of an unexpected consequence was expanding Medicaid by several million people. Since Medicaid underpays the cost of health care, health care providers shift the cost to people with private insurance. Hence health care costs are rising, not falling, due to health care reform.
Throwing in requirements that children can be on their parents’ insurance until age 26 and that pre-existing conditions must be treated did not help either.
The half-billion cut out of Medicare means that tens of millions of seniors are going to have even more difficulty finding health care providers who will treat them, unless they supplement their Medicare with private, medigap insurance. Most costs.
The passage of health care reform was supposed to be the signature achievement of the left, desired since the administration of Theodore Roosevelt. Now it looks like health care reform is a huge, stinking pile of-er-stuff that will be many years being cleaned up.
Source: White House pushes bill to scale back tax-reporting law for small businesses, Noam Levey, Los Angeles Times, September 14th, 2010