1099 repeal gets trickier with House bill

The Ways and Means Committee approved a 1099 repeal bill today that would increase the maximum amount the federal government could recapture from individuals participating in new state health exchanges whose income disqualifies them from receiving a subsidy. The most recent “doc fix” patch to stave off cuts in Medicare physician reimbursements also boosted the penalties for recapturing exchange subsidies.

“This is essentially the same provision Democrats used to pay for [the doc fix],” committee Chairman Dave Camp (R-Mich.) said.

When health insurance exchanges open in 2014, the federal government will provide subsidies to families making under a certain threshold amount. The Ways and Means bill, which passed the committee on a party-line vote Thursday, would require consumers earning more than 400 percent of the poverty line to pay back the subsidy.

Republicans said their bill returns the recapture penalties closer to the healthcare reform law’s original language, but Democrats said it would remove a provision that protects people from having to pay the IRS the entire tax credit.

“It’s absolutely the wrong way to pay for legislation,” Rep. Shelley Berkley (D-Nev.) said. “The people most affected by this are poor and middle-class families already struggling to make ends meet.”

The Ways and Means Committee on Thursday also approved a bill that would repeal the 1099 requirement without paying for it. 

It’s uncertain when the bill will be sent to the House floor, but it’s bound to set up a new fight in the Senate, which earlier this month approved a 1099 repeal with 81 votes. 

The Senate version, included as an amendment to the Federal Aviation Administration reuthorization, pays for the repeal by authorizing the Office of Management and Budget to identify unobligated federal funds for elimination.

Rep. Ron Kind (D-Wis.) said that the House should take up the Senate-approved version.

“When you get 81 votes on anything in the Senate these days, it’s tough to move them off that position,” Kind said.

However, Budget Committee Chairman Paul Ryan (R-Wis.) ripped the Senate pay-for as a “gimmick.”

“The pay-for itself violates the pay-go system, it doesn’t work and it’s a fraudulent pay-for, because one-time discretionary cuts for long-term revenue changes does not add up,” Ryan said.

Senate Republicans were the first to offer a bill that was paid for with the unused federal funds in the fall and, at first, Democrats balked at the idea, stalling passage of the bill. 

Most recently, Democratic Sen. Debbie Stabenow (Mich.) offered an amendment, which mirrored the bill sponsored by Sen. Mike Johanns (R-Neb.), updated the cost from $19 billion to $22 billion, according to an estimate from the Joint Taxation Committee, and gained approval of the amendment that uses unused federal funds to pay for the measure. 

On Wednesday night, Johanns filed a bill with the Ways and Means language, using the overpayment offset.  

“If advancing the House bill means this looming mandate is repealed sooner rather than later, then let’s get it done,” Johanns said in a statement.

The Obama administration has repeatedly backed 1099 repeal in recent months, but has avoided endorsing an offset.