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Senate Passes 1099 Repeal; Goes to the President for Signature

The Senate, as expected, passed HR 4 today, the first revision to the Affordable Care Act, repealing a revenue-raising provision that would have required small businesses to report vendor purchases above $600. They paid for the measure with the House pay-for, which penalizes recipients of exchange subsidies who change jobs or increase their income in the middle of the year by clawing back their benefits.

Robert Menendez attempted to include a study of the pay-for, delaying its implementation, but that failed 41-58, with several Democrats opposing. The final bill passed 87-12. It goes to the President, whose press secretary released this statement:

“As the President said during the State of the Union, we are open to working with Republicans and Democrats to improve the health reform law and we are pleased Congress has acted to correct a flaw that placed an unnecessary bookkeeping burden on small businesses. Small businesses are the engine of our economy and eliminating the 1099 reporting requirement is the right thing to do. As we move forward, we look forward to improving the tax credit policy in this legislation to ensure we protect small businesses and middle-class families. And the Administration remains eager to work with anyone with ideas about how we can make health care better or more affordable for all Americans.”

Clearly, the President will sign the bill. The “improving the tax credit policy” sounds like a nod to the Menendez study, and given that the exchanges don’t come online until 2014 there’s time to deal with the clawback provision. But just think about this; we don’t really have a statutory clawback provision for executive bonuses of failed companies. There’s something in Sarbanes-Oxley that the Supreme Court ruled could give the SEC this power, but there’s nothing statutory that says, basically, if the government has to rescue a financial firm, we take the money that went to executive bonuses. But now, there is a clawback provision for poor people who need help paying for health insurance. And instead of this being a penalty for breaking the law, it’s a penalty if they succeed too much over the course of a year.

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David Dayen

David Dayen

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