Blog and News

Washington Rules

By Grace-Marie Turner

The more people delve into the details of this monstrous health overhaul law, the more shocked and appalled they become.

Today's case in point: A new requirement that would bury small business in a tsunami of paperwork and that has virtually nothing to do with health care.

Here's an example of how it works: The Galen Institute is required to file a Form 1099 for payments to independent contractors to whom we pay more than $600 in a year. Basically, this applies to the several consultants who provide valuable services to us. It's a hassle to file these forms, but manageable.

But the law now will require us to file a 1099 with the IRS for everybusiness transaction totaling more than $600 -- everyone from Staples to United Airlines to FedEx to the catering business that brings in box lunches for our conferences.

Congressional staffers looked in every corner of the tax code to find money to pay for their $2.5 trillion expansion of government control over our health sector, and they found this change that would raise $17 billion over ten years. But imagine what the compliance costs will be for businesses!

Rep. Dan Lungren (R-CA) has come to the rescue with a beautifully simple bill (HR 5141) that repeals this ridiculous provision. He has at least 34 co-sponsors since he introduced the bill on Monday.

In his Dear Colleague letter, Rep. Lungren said unless this is repealed, small business owners will face an onerous tax reporting burden, and it will discourage companies from dealing with small businesses. "Businesses will think twice before purchasing goods and services from smaller companies ... It will be easier to rely on a single large supplier," he wrote.

"Small businesses are the economic engine of our nation, creating 65% of new job growth. Imposing yet another tax burden on them is bad medicine for Americans." The National Federation of Independent Business has endorsed the legislation.

This 1099 rule is just one example of the avalanche of changes in the health overhaul law that show Washington's complete disregard for its impact on private sector America.

Ignoring the law: Even the Federal government is finding out how difficult it is to comply with ObamaCare. Last week, we reported that the office that administers health benefits for federal workers is basicallyignoring the law and plans to keep its program operating as is, even though the Congressional Research Service seriously questions the legality of doing so.

Now we hear that while private employers are being forced to add 26-year-old "children" to their parents' policies by September, the federal government isn't going to get around to doing that until next year.

And now this: HHS was required to publish on its website by last Friday a list of all of the authorities provided to the Secretary under the health overhaul law (Sec. 1552). But what Sec. Sebelius' office did was basically cut and paste the table of contents from the Act onto the site. Here is the link that an intern at AEI finally found on Monday.

Remember Nancy Pelosi saying they had to pass the bill to find out what was in it? Well it's now passed and HHS either doesn't know or is unwilling to write down the full list of "authorities" because of how long and sweeping the list will be.

If Congress and the administration aren't going to comply with the law, how do they expect everyone else to?

The president keeps talking about the "mess" of an economy he inherited. What about the "mess" he has created with his health overhaul law?

One small victory: The Wall Street Journal writes that the House Energy and Commerce Committee has backed down and acknowledged that companies including AT&T, Verizon, and Caterpillar "acted properly and in accordance with accounting standards" when they reported future earnings reductions based upon the tax hits in ObamaCare. So far, the corporate writedowns total $3.4 billion.

You will recall that Committee Chairman Henry Waxman had summoned the companies to testify before what was expected to be a public grilling for filing the report, which is expressly required by the Security and Exchange Commission. Commerce Secretary Gary Locke called their reports "disingenuous" and accused companies of peddling "overheated rhetoric." The committee was trying to portray the reports as a "nefarious CEO conspiracy" to embarrass the Obama administration, the Journal said.

But Rep. Waxman cancelled the hearing. His staff acknowledged, "The companies acted properly ... These one-time charges were required by applicable accounting rules."

"This may be the first time in history that Mr. Waxman has admitted a mistake," the Journal noted.

Heading for the exits: The Republican staff of the House Committee did its own investigation and found that each of the large employers under investigation warned months before passage that the health care law would trigger reporting requirements about pending losses.

And equally important, the committee found that: "Internal company documents indicate that there will be an incentive to drop employer health care coverage because the cost of providing coverage will be much larger than the penalty imposed by the health care legislation."

This is coming, folks. Employers are shocked at the reporting requirements, mandates, and risks of continuing to provide health insurance. This, combined with the huge risk and uncertainty of how the government will implement the regulations, makes it increasingly obvious that employers will begin to get out of the business of providing health benefits as soon as they can.

Here's a resource for you: It's a list that the Republican staff of the House Commerce Committee put together that details just the deadlines for action under ObamaCare until 2018. It is 53 pages long but a detailed and valuable list!

Risk Pools: We are waiting to hear what states decide to do in this first test of ObamaCare, as I wrote yesterday in The Wall Street Journal. So far, about half a dozen have said they have no intention of being contractors to the federal government to set up its high-risk program and likely be on the hook for funding the program after the money runs out. If it's Washington's program, let Washington set it up.

States, companies, and citizens do not work for the federal government, but that is the attitude woven into this health overhaul law. States should be the first to stand up and say who is in charge.