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Johanns’ New 1099 Pay-Fors Prove How Hard Repealing The Health Law Really Is

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"Johanns’ New 1099 Pay-Fors Prove How Hard Repealing The Health Law Really Is"

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In August, Sen. Mike Johanns (R-NE) introduced a measure to repeal the 1099 reporting requirement in the Affordable Care Act — which requires small businesses to report any purchases over $600 to the IRS — and proposed paying for the $19 billion shortfall by eliminating $11 million from the Preventive Health Task Force and weakening the individual health insurance mandate. The amendment attracted seven Democratic Senators but did not receive the necessary 60 votes to move forward. Now, as the Senate prepares to re-consider repeal on November 29th, Johanns has introduced a different set of pay-fors that he hopes will attract additional Democratic support:

“My latest effort to repeal this costly mandate should easily win the support of my colleagues,” said Johanns. [...]

Johanns’ amendment directs the Office of Management and Budget (OMB) to identify $39 billion in unspent and unobligated accounts to replace the revenue that might have been generated by the 1099 paperwork mandate. This represents only about five percent of the total funds in unspent and unobligated accounts and gives the Administration discretion to ensure these funds do not affect ongoing and necessary programs.

A spokesperson at Johanns’ office told me that the Senator is only interested in repealing the reporting mandate and is no longer interested in making waves with controversial pay-fors that take away money from the mandate or prevention. Since President Obama, Senate Finance Committee Chairman Max Baucus (D-MT), and House Speaker Nancy Pelosi (D-CA) have all come out in support of stripping the provision, Johanns sees renewed momentum on the issue and hopes to build a coalition around removing the 1099 requirement.

But it’s unclear if this pay-for will be any less controversial. First, if Senators are hesitant to vote for specific cuts because they may target their favorite programs, they would also be hesitant to delegate the task of finding cuts to another agency — out of fear that it would target their favorite programs.

Meanwhile, CAP’s Michel Linden doesn’t think that the pay-for would score as deficit neutral. “Unspent and Unobligated balances are not real money sitting in some account, they are actually ‘budget authority’ – the ability for an agency to draw down funds from the treasury to turn into actual outlays,” he told me. “While canceling unobligated balances might save a little bit, I’m pretty sure the vast majority just goes away if its not used which means that canceling it won’t save any money.”

He makes the following analogy:

A parent says to their teenager, “You can spend up to $100 on school supplies this year.” The child then spends only $80. Now if the parent has promised the child that they get to keep the difference, then canceling that promise would actually save money for the family. But if the parent hasn’t made that promise – if instead the understanding is that the teenager can spend up to $100 but if he or she comes in low, then any change is expected to be returned to Mom and Dad – then “taking back” that other $20 has no real meaning for the family’s bottom line.

The very fact that Johanns feels the only way he can repeal the 1099 is if he farms out the task of identifying pay-fors to a separate agency, however, only reiterates the difficulty of actually going through with the GOP pledge of eliminating the entire law or even going provision by provision.

Baucus — who has introduced his own 1099 repeal bill — has yet to identify any pay-fors. His office has not returned my inquiries into this matter.

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