Health care funding provision could be cut

WASHINGTON – Five months after the adoption of the sweeping new health care law, momentum is building to modify and possibly repeal one of its funding sources. The sums in question are small in comparison with the total trillion-dollar tab for the health care overhaul, but some see the move as an opening for further changes to a law Democrats had been determined to leave untouched.

The provision, which takes effect next year, will require businesses to file 1099 tax forms reporting any purchases they make of goods or services above $600 from any individual or business, including corporations. Currently, businesses only need to file 1099s when they buy services – and only when the vendor is an unincorporated person or business.

The move – designed to clamp down on tax evasion – was projected to raise $17.1 billion over 10 years toward the cost of the health care law.

But the measure has prompted alarm from small businesses, who complain that it could prove exceedingly labor-intensive and expensive.

Members of Congress from both parties have taken notice, and the Senate is scheduled to vote Sept. 14 on two amendments to an unrelated bill: One would eliminate the 1099 provision; the other would exempt businesses with fewer than 25 employees, raise the reporting threshold to purchases above $5,000, and exclude those made with a credit card. A 60-vote majority would be required in both cases.

Democrats contend that this represents the usual tweaking of major new statutes and say even removing the 1099 provision would not mark a step toward repealing the larger law because the 1099 measure doesn’t directly involve the health-care system.

But Douglas Holtz-Eakin, a former Congressional Budget Office director and top economic adviser to John McCain’s presidential campaign, warned, “I think this is the first of many provisions of this legislation people will find to be unworkable in practice – we’re going to see more of this.”