1099 Repeal a Metaphor for Larger Obamacare Debate

The U.S. Senate voted on Wednesday to get rid of a small part of the Obamacare bill.

The eliminated provision was a requirement that all businesses submit a 1099 tax form on all purchases of goods and services of more than $600. It was designed to ensure that businesses actually keep up with and pay the taxes they owe.

Your probably asking what the heck this has to do with healthcare. Good question. The answer is absolutely nothing. In fact, the only reason it was included in the Obamacare bill at all is that it was expected to generate $17 billion in new tax revenue that Democrats wanted to use to lower the cost of their spend-happy bill.

The problem is, not long after the bill was passed, almost everyone agreed that it was a terrible, no good, very bad idea. The US Chamber of Commerce said that the new regulations would amount to “oppressive regulations” that would cause an “avalanche of new paperwork for small business owners.” As Time blogger Adam Sorenson wrote today,

Basically, it wasn’t well thought out and shortly after passage, both Democrats and Republicans agreed they wanted it gone. Forget today’s 81-17 vote for a moment. Max Baucus, who wrote the freaking thing to begin with, introduced language that would have nixed it last year. Repealing it was even a bullet point in President Obama’s State of the Union corporate pep talk on how to Win the Future.

The 1099 measure is pretty much a metaphor for the entire Obamacare bill: poorly thought out, bad for business, and in dire need of repeal.

The 1099 provision was passed with the hope that it would reduce the number of businesses who either mistakenly or purposefully cheat the system. In true government fashion, it does this by making a complex tax code even harder to comply with. In other words, the Democrats saw a real problem, and then proceeded to make it worse by piling on more government. The unintended consequences quickly became clear – the increased cost of compliance would have cost businesses money and dampened job growth.

Obamacare does the exact same thing. To its credit it came in response to a true problem; healthcare costs are rising much faster than inflation and will soon put families and the federal government in a tough financial situation. Rather than offer true reform, went to their go-to maneuver – add more government to the mix.  The results, even if unintended, have been disastrous.

Older generations have been hurt. Obamacare led to 700,000 seniors losing the Medicare Advantage plans because of insurance companies quitting the business. Children have been hurt. Health insurers in 34 states have stopped selling child-only policies because insurance companies have dropped out of the market citing higher costs. High risk patients have been hurt. Obamacare’s high risk pools have attracted a mere 8,000 people , well short of the 375,000 expected, in large part due to higher than expected costs. Frankly, everyone has been hurt! Health insurers across the board say they will be forced to raise premiums 1-9% to pay for new mandated benefits under the law.

It’s not just the 1099 provision whose unintended consequences demand that Congress rescind it, it’s the entire Obamacare monstrosity. Susan Eckerly of the National Federation of Independent Business wrote in a letter to Senators about the 1099 reporting requirement, “At a time when we need small businesses to help our economy grow, saddling them with expensive new requirements and paperwork burdens will only further hamper their ability to aid in our economic recovery.” She may as well have been talking about the entire bill.

by Brandon Greife, Political Director of the College Republican National Commitee

XPosted: http://speakout.crnc.org/blog/2011/02/03/1099-repeal-a-metaphor-for-larger-obamacare-debate/