Obama meets with congressional leadership, 11/30/2010 | Official White House Photo by Pete Souza
There's one health reform repeal effort that has strong bipartisan backing: repealing the 1099 provision of the Affordable Care Act which requires all businesses to report all transactions with vendors of $600 or more. This is a key financing provision of the Act. Undercutting it, which Brian Beutler reports the GOP apparently intends to do, will undermine the funding structure for the law and the law itself.
How do they intend to do it? By raising taxes on the middle class, how else?
Under the House proposal, if you receive subsidies to buy health insurance based on a certain income level at the beginning of the year and your income subsequently increases during the year you would have to reimburse the government.
Here's how it works.
The health care law subsidizes insurance coverage for consumers who make under 400 percent of the federal poverty level. As currently written, people on the cusp of that 400 percent line are protected if they received a modest raise or bonus that bumps them into a higher income bracket. The House bill, which passed last week, would eliminate that protection, and require those consumers to pay back their entire subsidy -- a penalty that would amount to thousands of dollars.
The Senate, with its Democratic majority, has a different approach, "rescinding billions of dollars in federal spending." One good target for that would be the oil and gas subsidies that House Republicans are so fond of. Beutler reports, though, that many "Democratic sources say they're worried leadership won't pick a fight with the GOP over this because the 1099 provision itself is so unpopular."
But if the House position prevails, it would essentially write a significant tax on middle class consumers into the health care law.
"This bill would saddle hundreds of thousands of middle-income taxpayers with a hefty tax increase," said Rep. Sander Levin (D-MI), ranking member of the House Ways and Means Committee. "We all favor repealing 1099, but to do so on the backs of the middle class is irresponsible. With this legislation, Republicans continue their reckless overreach, this time by gouging middle-income taxpayers."
This is a critical fight to pick with the House, on policy and political grounds. Frame as what it is—a middle class tax hike, use the oil and gas subsidies again as the pay-for, and hit the House Republicans hard. The alternative is further eroding support of the health reform law by increasing the cost to a large chunk of consumers. That should be a no-brainer for Senate Dems.