Health Care Blog

Another Health Care Court Victory

Since the enactment of health reform legislation in March, several state Attorneys General and others opposed to the law have filed lawsuits challenging the constitutionality of the Affordable Care Act.  Legal challenges like this are nothing new.  Challenges to the Social Security Act, the Civil Rights Act, and the Voting Rights Act all failed.  

Now, challenges to the health care law are failing in court.  In October, a federal judge in Michigan found that the Affordable Care Act is constitutional. Today, a federal judge in Virginia dismissed a lawsuit brought by Liberty University that challenged the constitutionality of the health reform law. The judge upheld the law and said that the requirement that individuals maintain health insurance is constitutional, writing:

“I hold that there is a rational basis for Congress to conclude that individuals’ decisions about how and when to pay for health care are activities that in the aggregate substantially affect the interstate health care market…Nearly everyone will require health care services at some point in their lifetimes, and it is not always possible to predict when one will be afflicted by illness or injury and require care…Far from ‘inactivity,’ by choosing to forgo insurance, Plaintiffs are making an economic decision to try to pay for health care services later, out of pocket, rather than now, through the purchase of insurance. As Congress found, the total incidence of these economic decisions has a substantial impact on the national market for health care by collectively shifting billions of dollars on to other market participants and driving up the prices of insurance policies.”

The judge’s ruling today only underscores the importance of the law’s individual responsibility provision. In order to make health care affordable and available for all, the Act regulates how to pay for medical services – services that account for more than 17.5% of the national economy. This law came into being precisely because of the interconnectedness of our health care costs.   People who make an economic decision to forego health insurance do not opt out of the health care market, but instead shift their costs to others when they become ill or are involved in an accident and cannot pay. 

We do not leave people to die at the emergency room door – whether they have insurance or not.  Those costs – $43 billion in 2008 alone – are borne by doctors, hospitals, insured individuals, taxpayers and small businesses.   According to a recent study, this cost-shift added on average $1,100 to family premiums in 2009 and roughly $410 to an individual premium.

In the weeks ahead, there will be additional court cases examining this matter and the health reform law. We can’t predict the outcome of each case, but we are confident that we will ultimately prevail in court and continue to deliver the benefits of reform to the American people.

Stephanie Cutter is Assistant to the President for Special Projects

Supporting Small Businesses in the Senate

This evening, Senators will have the chance to support small businesses when they vote on a plan to eliminate a requirement that businesses report to the IRS all purchases that exceed $600. Known as the 1099 provision this policy, which had bipartisan support, helped pay for the new health reform law. The provision was intended to narrow the gap between taxes owed and taxes paid.  And while our Administration is deeply committed to closing the tax gap, the new rule places too great a burden on small businesses. Our Administration has already taken a number of steps to alleviate the burden, including exempting transactions completed with a debit or credit card.   In June, the Small Business Administration sent a letter to small business owners regarding some of their efforts to minimize the burden of this new rule.   And in November, the President said:

“You know, for example, I know one of the things that’s come up is that the 1099 provision in the health care bill appears to be too burdensome for small businesses.  It just involves too much paperwork, too much filing.  It’s probably counterproductive. It was designed to make sure that revenue was raised to help pay for some of the other provisions, but if it ends up just being so much trouble that small businesses find it difficult to manage, that's something that we should take a look at.”

Today, Small Business Administrator Karen Mills issued a memo to small business owners on the Administration’s support for repealing this provision. A copy of the memo is below.

SUBJECT: Senate voting today on 1099 reporting requirement repeal

November 29, 2010

Dear Small Business Owner,

Last week I wrote to you expressing the Obama Administration’s support for the repeal of the expanded 1099 reporting requirement that was included in the Affordable Care Act. As you know, earlier in the year we asked you for feedback on this requirement and what we heard was that will involve too much paperwork and will be overly burdensome.

As the Senate votes today on whether or not to roll back this requirement, I want to again express the Administration’s support for repealing the expanded 1099 reporting requirement.

Thank you again for your feedback on this important matter and I look forward to continuing to work with you to ensure you have the tools and resources you need to grow your business and create jobs.

Sincerely,

Karen Mills
Administrator

 Stephanie Cutter is Assistant to the President for Special Projects