Harry Reid in February 2010 (Photo: reid.senate.gov)
New reports suggest that the fears expressed yesterday by Ezra Klein— that Senate Democrats were leaning toward the potentially disastrous House GOP 1099 repeal—are well-founded.
The Affordable Care Act included a funding provision that required all businesses to file 1099 tax forms on transactions of more than $600, creating an overwhelming amount of paperwork for small businesses, and huge opposition. It was a clunky mechanism that has bipartisan opposition.
The House plan would pay for this repeal by penalizing middle-class recipients of health insurance subsidies under the new law. Families at 400 percent of the federal poverty level who still qualify for the subsidies to purchase health insurance who have any bump in income that would put them into the next income bracket would have to refund the entire subsidy they received, amounting potentially to thousands of dollars.
According to TPM's Brian Beutler, Senate Majority Leader Harry Reid is all for it.
"The 1099 is something we're going to look at," Reid said at his weekly Capitol briefing with reporters. "Me personally I like the House payfor better than ours, so we'll have to see."
....
The Senate agreed to pay for it by rescinding billions of dollars in yet-to-be-identified discretionary spending. Reid prefers the House plan, which health care reformers and worker advocates really hate. They pay for 1099 repeal by requiring people who receive federal health insurance subsidies to reimburse the IRS with substantial penalties if they earn higher-than-expected compensation. This could amount to thousands of dollars if a family gets a pay hike that bumps them past the 400 percent of federal poverty threshold.
Most Democrats will buck Reid on this. But Republicans -- who are still eager as ever to chip away at the health care law -- will fight for the House position. The question now is whether they settle on something acceptable to both parties.
Hopefully Beutler is right and Dems will oppose Reid on this. The subsidies are too critical a part in both the policy and the politics of the Affordable Care Act. Forcing people to buy insurance is problematic and unpopular enough. Creating additional worry for many families that participation in the program will land them in debt to the government is unnecessary and would help to galvanize opposition to the program (which is in large part why the Republicans settled on this approach). Reid's just wrong on this one.