Chipping away at the law…

Despite the high-profile challenges, the implementation of health reform is moving along here in California. But the law has the potential of being picked apart, starting with an upcoming vote in the Senate. As Brian Beutler at Talking Points Memo put in the title of an article last week, “How Republicans Can Dramatically Undermine the Health Care Law Without a Fight.

Some background: There’s some agreement among President and many members of Congress around a very specific change in the Affordable Care Act, around small business reporting that some have said are too onerous. Repealing the enhanced 1099 reporting provisions would, however, reduce some revenues, and the problem arises if finding our how to offset that money.

The House passed H.R. 4, which is authored by Northern California Representative Dan Lungren, to repeal the enhanced 1099 reporting provisions created by the ACA; and it pays for 1099 repeal by changing the rules for subsidies that families will get to afford coverage in 2014 and beyond.

It would increase the amount by $500, and sometimes more, that some low- and moderate-income families will have to repay at the end of the year if their income was higher than expected and as a result they received a larger premium tax credit in the Exchange throughout the year.

This pay-for is harmful to moderate-income families and undermines the ACA because it would:

· Increase the financial penalty on moderate-income families for having found a better job or gotten a raise. These new costs will impose financial hardship on already-struggling families.
· Reduce the number of people who will enroll in the advanced tax credits, since they will fear this type of unexpected financial penalty. This means fewer people will get the coverage they need.

House Republicans don’t seem to mind supporting this cost increase on working families, partially because they don’t support the ACA to begin with, and they think that those having to pay these charges will blame the ACA, rather than those who voted for this change.

More reporting on this has been done by Jonathan Cohn at The New Republic, in an article called “Stealing Health Reforms Subsidies”, and by Ezra Klein at the Washington Post.

The Senate will soon be voting on H.R. 4 soon. If the Senate does repeal the 1099 reporting requirement, it should do so in a manner that does not increase taxes on middle-class families and drive up the ranks of the uninsured. The Senate has passed a 1099 repeal measure by Senator Nelson (FL) that found revenues in a different ways, and it should stick to that or find another path.

As the Obama Administration notes, “H.R. 4 would result in tax increases on certain middle-class families that incur unexpected tax liabilities, in many cases totaling thousands of dollars, notwithstanding that they followed the rules.” Families’ financial security should be put in jeopardy simply by accepting a better job, working more hours, receiving an increased wage or bonus, or through a drop in household size. It could also result in more than a quarter of a million more Americans going uninsured. Individuals and families who fear facing potentially crippling repayment penalties will be more likely to remain uncovered. Finally, the loss of those subsidies make it harder to truly create the systems for seamless coverage that would make our health system work best.

There are specific, stringent enforcement provisions in the Affordable Care Act to combat fraud and abuse that have nothing to do with this issue—the concern relates to families that are trying to make ends meet and who will choose not to purchase coverage because of the concern with these penalties at the end of the year. The Senate should find an alternative to H.R. 4.

Health Access California promotes quality, affordable health care for all Californians.
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