Washington Rules

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 every business 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 Lungren said unless this is repealed, small business owners will face an onerous tax reporting burden, and it will discourage companies from dealing with small businesses.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 basically ignoring 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.

CLIP OF THE WEEK

National Federation of Independent Business

This week's "Clip of the Week" comes from the National Federation of Independent Business, and uses multicolor boxes to illustrate how ObamaCare's numerous taxes will quickly build up for small businesses.
Watch now >>

GALEN IN THE NEWS

States Face Their First ObamaCare Test

Grace-Marie Turner, Galen Institute
The Wall Street Journal, 04/29/10

States have until today to let Washington know if they plan to participate in one of the first government programs to be launched under ObamaCare — new high-risk pools for the uninsured. Deciding whether to sign up for the high-risk program is an important early test for states to tell Washington who is in charge, Turner writes. What states already know should give them pause. Georgia calculated that the high-risk program would cost more than the $177 million the federal government is expected to allocate for its program. In addition to the cost, states are worried about the strings attached to the program. If more states opt not to join the federal program, Congress will have to acknowledge that there has been a public repudiation of the federal program. That could create pressure to give states what they want — block grants to increase their existing high-risk pools, or for states that don't have them, money to set up new ones.
Read More »

Health Care: Don't Repeat the Mistakes of the States

Grace-Marie Turner, Galen Institute
Richmond Times-Dispatch, 04/25/10

Because Congress failed to address rising costs in any meaningful way in its health overhaul law, the task of controlling spending, especially in the expanded Medicaid program, will continue to fall to the states, Turner writes. But the experiences of Tennessee and Maine illustrate how hard that task will be and the high price of bad policy decisions. Dubbed DirigoChoice, Maine's program was developed in 2005 with the goal of providing coverage for all 128,000 uninsured Mainers by 2009. Despite spending $155 million on the program, only 8,000 state residents were enrolled as of this January, and the state's uninsured rate has barely changed. Costs under Tennessee's Medicaid expansion program, TennCare, rose by a whopping 146% while Medicaid's per-capita cost increased by 71% in the U.S. overall between 1994 and 2004. As they contemplate their options, officials would be wise to study these health policy blunders as cautionary tales. Shortsighted programs can backfire with bigger costs in the long run, especially when bureaucrats try to play doctor.
Read More »

HEALTH REFORM

The Insurance Mandate in Peril

Randy E. Barnett, Georgetown University
The Wall Street Journal, 04/29/10

The health overhaul law includes what it calls an "individual responsibility requirement" that all persons buy health insurance from a private company. Congress justified this mandate under its power to regulate commerce among the several states. In this way, the statute speciously tries to convert inactivity into the "activity" of making a "decision," writes Barnett. By this reasoning, your "decision" not to take a job, not to sell your house, or not to buy a Chevrolet is an "activity that is commercial and economic in nature" that can be mandated by Congress. The Supreme Court has never upheld a requirement that individuals who are doing nothing must engage in economic activity by entering into a contractual relationship with a private company. Such a claim of power is literally unprecedented. Are there now five justices willing to expand the commerce and tax powers of Congress where they have never gone before? Yes, the smart money is always on the Court upholding an act of Congress. But given the hand Congress is now holding, I would not bet the farm, concludes Barnett.
Read More »

ObamaCare: Impact on Businesses

John Ligon
The Heritage Foundation, 04/27/10

Businesses across the country are growing more and more discontented with the health overhaul law — and for good reason, Ligon writes. It will impose new compliance regulations, employer mandate taxes, taxes on business "flow-through" and investment income, and numerous indirect costs on small- and medium-sized companies. Altogether, these constraints will dramatically affect companies' per-employee costs, firm-level allocation of labor, desire to take on health coverage, and motivation to grow both in terms of income and employment. Congress should repeal this massive statute, start over, and get health care reform right.
Read More »

ObamaCare and New Coke

Patrick Caddell and Scott Miller
The Wall Street Journal, 04/24/10

The introduction and quick demise of New Coke 25 years ago could provide some lessons for politicians regarding ObamaCare, write Caddell and Miller, who advise Democratic political candidates and were working with the Coca-Cola Company at that time. Just as most Americans were happy with the old Coke, 85% of Americans were happy with their own health care plans at the time that ObamaCare was introduced. Faced with a successful launch but growing and vocal public resistance, Coca-Cola Company's leadership reversed themselves and returned classic Coca-Cola to supermarket shelves just 77 days after the debut of New Coke. After Scott Brown's Senate victory in Massachusetts, the administration had just such an opportunity. In February's bipartisan health care summit, President Obama could have listened to the American people and reshaped his health care proposal in response. Instead, the administration and the Democratic leadership decided to steamroll their plan through Congress. Coke's lesson of transferring ownership of classic Coca-Cola back to the people — and the resulting success of that brand — has unfortunately been lost on those in Washington. They will pay a steep price for ignoring this example.
Read More »

Sign of the Times Under ObamaCare: 'The Doctor Is Out — Permanently'

Sally C. Pipes, Pacific Research Institute
Investor's Business Daily, 04/23/10

What doctors should know and patients will soon understand is that the push for reform is really a return to HMO-style managed care — this time called "coordinated care" and explicitly dominated by the federal government, Pipes writes. This system, tried in the 1980s, was disliked by patients and physicians alike. Academics and bureaucrats liked and still like it. So it's back with a new name. The problem: where will the docs come from? America's primary care system is already under stress. Half a century ago, one in two doctors practiced general medicine. Today, 7 in 10 specialize. In 2009, the American Academy of Family Physicians warned that we'd be short 40,000 family doctors in a decade, if present trends continued. If supply is constant — or goes down — and demand increases, one of two things must happen. The price paid per unit of service must increase. Or bureaucrats will control prices, lines will form, services will disappear and rationing will result.
Read More »

Events

Health Insurance Reform and You
Department of Health and Human Services Webinar
Friday, April 30, 2010
2:30pm Eastern

Grace-Marie Turner on The Drive Time Happy Hour Show
WSKY-FM Radio Broadcast
Friday, April 30, 2010
4:00pm
Gainesville, FL

Grace-Marie Turner on The Brad Davis Show
Talk o
f Connecticut Radio Network Broadcast
Tuesday, May 4, 2010
7:50am
Hartford, CT

Reinventing Primary Care: Urgent Prescriptions
Health Affairs Event
Tuesday, May 4, 2010
8:30am – 2:30pm
Washington, DC

ObamaCare: Historic, but Is It Constitutional?
Cato Institute Policy Forum
Wednesday, May 5, 2010
12:00pm
Washington, DC

Hospital to Home: Improving quality and savings through innovative transition care
Philips Webinar
Wednesday, May 12, 2010
12:00pm – 1:15pm Eastern

SHARE THIS ARTICLE

About the author