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NAW News

Health Care Reform

- April 2011

With the enactment of the Patient Protection and Affordable Care Act (“PPACA”) and the Healthcare and Education Reconciliation Act in the spring of 2010 (together the “Affordable Care Act” or “ACA”), the attention of stakeholders has necessarily turned to the regulatory process by which “ObamaCare” is being implemented, although the legislative process has remained active as well.

First, following through on the Republican promise made during the 2010 mid-term congressional election campaign to attempt to repeal the ACA, the House of Representatives, featuring a newly-elected GOP majority, passed H.R. 2, “Repealing the Job-Killing Health Care Law Act” on a 245 – 189 vote. Companion legislation was then offered in the U.S. Senate by the Republican Leader, Sen. Mitch McConnell (R-KY). The McConnell Amendment, needing 60 votes for passage, was defeated 47 – 51.

A second area of particular interest is Section 9006 of PPACA substantially expanding the IRS Form 1099 reporting requirement imposed on businesses, to cover virtually all business-to-business transactions of $600 or more, beginning in 2012. 1099 reporting has nothing to do with health care, but was added to the $1 trillion bill as a $17 billion “pay-for”. This issue has generated considerable opposition from the business community
generally and the small business community in particular and NAW joined in the comments of the Small Business Coalition for Affordable Health Care directed to the Internal Revenue Service (IRS) calling for repeal.

The Senate voted 81 – 17 to approve an amendment offered by Sen. Debbie Stabenow (D-MI) to an unrelated bill that would have repealed the new 1099 mandate and paid for the revenue loss by directing the Office of Management and Budget (OMB) to rescind unobligated federal funds. The House subsequently passed by a vote of 314 – 112 H.R. 4, “Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayments Act of 2011” which pays for repeal by re-capturing future overpayments of health insurance subsidies made in the exchanges. On April 5th, the Senate yielded to the House position when it passed H.R. 4 on a bipartisan vote of 87 – 12. 1099 Repeal will go into effect when the President signs H.R.4 into law which as Staff Reports goes to press is thought to be imminent.

One final issue bears mention at this point because it involves all three branches of the federal government, and that is the status of PPACA’s individual mandate which goes into effect in 2014. This provision, under which most people are required to have a government-designated level of health coverage or pay a penalty – is the subject of constitutional litigation before the federal courts. At issue in these cases is whether the Commerce Clause of the U.S. Constitution empowers the Congress to require citizens to purchase a commercial product as part of a regulatory scheme affecting an interstate economic market. To date, three Federal District Courts in the District of Columbia, Michigan and Virginia have upheld the requirement and two; the U.S. District Court for the Eastern District of Virginia and U.S. District Court for the Northern District of Florida, have stuck it down. Critically, the federal court in Florida ruled that the individual mandate is not severable from the rest of the ACA thus striking down the entire statute. The Florida case (Florida et al v. U.S. Department of Health and Human Services) is now pending in the U.S. Court of Appeals for the 11th Circuit (Atlanta) where a three-judge panel will hear oral arguments on June 8th. The “competing” Virginia cases (Virginia v. Sebelius (U.S. District Court for the Eastern District of Virginia) and Liberty University v. Geithner (U.S. District Court for the Western District of Virginia) are on appeal to the U.S. Court of Appeals for the Fourth Circuit (Richmond). The Fourth Circuit’s consideration of these cases is expected to be coordinated and oral arguments are expected to be heard at some point in June.

As the pending litigation winds its way through the federal courts to the U.S. Supreme Court where it will likely be resolved, the future of the ACA is at best uncertain. Consequently, Sen. Kay Bailey Hutchison (R-TX) has offered an amendment to a bill reauthorizing certain small business programs, to impose a moratorium on implementation of the ACA until the pending litigation is complete.