Lawmakers plot health overhaul tax provision change, other provisions under fire

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Sep 13 2010

National Journal: Senate aides expect Republicans and Democrats to offer competing amendments to change a tax-reporting provision in the health law. "The provision requires businesses to report to the Internal Revenue Service purchases over the course of the year that exceed $600. Shop owners and the companies they do business with are required to file a detailed 1099 tax form that allows the IRS to better track the flow of money from one business to the next. Federal actuaries say they expect the requirement, which begins in 2013, to raise some $17 billion over 10 years from tax payments on income that contractors and other providers of goods and services are not now reporting." Small businesses say the provision will add burdensome paperwork. "Politically, many Democrats fear that altering or scrapping the 1099 reporting provision will lay the law open for more changes. … [But, in] an attempt to win over the always important small-business community, Senate Democrats are pushing to change the 1099 provision so that it hits fewer businesses. Republicans want to scrap it altogether" (DoBias, 9/10).

The New York Times: As fights develop over the meaning of the health law, lobbyists are hiring GOP staff to influence the larger health reform debate. "If Republicans succeed in regaining control of the House and perhaps even the Senate [in midterm elections in November], firms seeking influence over federal policies are looking to gain an edge by tacking toward the right. That will become particularly important, they say, if Republicans try to roll back some of the major initiatives in health care, business regulation and other areas that Democrats have pushed through Congress in the last year" (Lichtblau, 9/9).

The New York Times, in a reported column: Other debates include the role health insurance brokers will have after the health overhaul is enacted. "In modern economies, however, brokers are forever vulnerable to two developments, even in the absence of government regulations that may impinge on their economic turf. One development is the standardization of the good or service being traded; the other is the power of electronic-information technology to gather and structure information at substantially lower cost. The recently passed Affordable Care Act seeks to further both developments and adds a third: the regulatory requirement that insurers must limit the fraction of premiums spent on marketing and administration" (Reinhardt, 9/10).

Other provisions of the health overhaul, and what could make it better, are also still being hotly debated — even after passage and enactment. The Hill's Healthwatch Blog reports that GOP Rep. Michael Burgess, the chairman of the Congressional Healthcare Caucus, said malpractice reform will not be a "silver bullet" for health spending. "The comments swirl around a new report, published this week in the journal Health Affairs, estimating the annual cost related to medical liability is $55.6 billion — or 2.4 percent of the nation's total healthcare spending. Many Capitol Hill Republicans, Burgess included, say the findings bolster the case for Congress to limit malpractice claims. … Burgess argued this week that cost savings shouldn't be the only consideration as Congress jousts over whether to overhaul the medical malpractice system. In Texas, he said, limiting claims has led to a host of other benefits. 'In Texas, medical liability reform has attracted thousands of new doctors to the state — over 15,000 since reform passed in 2003. Before reform, doctors were leaving the state,' Burgess said" (Lillis, 9/9).

Pittsburgh Tribune-Review: Meanwhile, in Pennsylvania, Republican Senate candidate Pat Toomey said Thursday that the new tax from the overhaul on medical devices will hurt the industry and stifle new advances in the field. "The 2.3 percent tax on medical device sales, set to take effect in 2013 to help pay for the health care overhaul Congress passed this year, is expected to generate $20 billion. Toomey, a Lehigh Valley congressman from 1999 to 2005, said the increased cost could deter investors from an industry in which products take as long 10 years to develop" (Wereschagin, 9/10).

The Pittsburgh Post-Gazette: "Mr. Toomey is running against Democrat Joe Sestak to replace Arlen Specter in the U.S. Senate. … In a statement responding to the Toomey event, a spokesman for the Sestak campaign contended that the Republican's words of concern for the medical manufacturers was at odds with his voting record while a member of Congress. The campaign argued that Mr. Toomey had cast votes unfriendly to the industry in supporting budget cuts for the Food and Drug Administration. The Sestak campaign also pointed out that Mr. Toomey voted in 2002 to raise fees on medical device manufacturers" (O'Toole, 9/9).

The Hill's Healthwatch Blog, in a separate story: The General Accountability Office has said the Obama administration did not violate prohibitions on "publicity and propaganda" when it published a four-page brochure on Medicare changes in the health overhaul. "'Although the HHS brochure contains instances in which HHS presented abbreviated information and a positive view of PPACA [the health reform law] that is not universally shared, nothing in the brochure constitutes communications that are purely partisan, self-aggrandizing, or covert,' the 15-page report states." Republicans used portions of the report to charge that the brochure overstates some of the law's benefits, and that it does not present a holistic view of the Medicare changes in the law (Pecquet, 9/9).

Charleston (W.Va.) Daily Mail profiles Jane Cline, West Virginia's insurance commissioner who has also been thrust in the the national health debate because she serves as the president of the National Association of Insurance Commissioners. That group is advising the federal Department of Health and Human Services on regulations for the health overhaul. "Cline said it has been an interesting year for insurance regulators. She said the national association has 14 groups working on different aspects of the health care reform legislation Congress enacted earlier this year. ... There is some talk of having the federal government regulate insurance. Cline said some of that talk comes from big insurers who would prefer to deal with one regulator rather than many" (Hohmann, 9/8).

This article was reprinted from khn.org with permission from the Henry J. Kaiser Family Foundation. Kaiser Health News, an editorially independent news service, is a program of the Kaiser Family Foundation, a nonpartisan health care policy research organization unaffiliated with Kaiser Permanente.