Washington Watch - May 12, 2010


Washington Watch - May 12, 2010

Federal Government, States Working To Implement High-Risk Pools

In one of the first of many deadlines associated with the new health care reform law, states had until the end of April 2010 to inform the Department of Health and Human Services (HHS) of their decision to establish a high-risk insurance pool.

Seventeen states have said they will allow the federal government to establish its own high-risk pools in their states, while 29 states and the District of Columbia have said they will create their own pools using federal funding. Florida and Arizona have yet to respond to HHS about their decision despite the passage of the deadline, while Rhode Island and Utah have requested applications and additional information, and have indicated they will make decisions later.

The high-risk pool program has $5 billion in funding and is a temporary measure until 2014, when insurance companies will be prohibited from discriminating against people with pre-existing conditions. The pools must be in place by this summer to help adults with pre-existing conditions buy insurance coverage, as insurance coverage for these individuals is often prohibitively expensive.

“We…look forward to working together to provide people who have been denied coverage for so long, access to some much needed relief through the creation of temporary high-risk pools,” said HHS spokeswoman Jenny Backus in a statement. “Whether states create these pools or the federal government creates them for states, the pools will be paid for by 100 percent federal dollars and most importantly – uninsured people around the country will soon have access to another affordable coverage option.”

Department had assumed that some states, especially smaller states that could benefit from having their residents in a larger federal pool that spreads the risk among more people, would choose to allow the federal government to establish pools.  However, a number of states that turned down the opportunity to create their own pools cited concerns that the $5 billion HHS had set aside for the pools would not be enough and the states would have to cover the rest of the cost.  HHS told state officials in a recent conference call that they would not let this happen.

Alaska, Arkansas, California, Colorado, Connecticut, Illinois, Iowa, Kansas, Kentucky, Maine, Maryland, Massachusetts, Michigan, Missouri, Montana, New Hampshire, New Jersey, New Mexico, New York, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, South Dakota, Vermont, Washington, West Virginia, Wisconsin and the District of Columbia have chosen to run their own programs.

HHS will run programs in Alabama, Delaware, Georgia, Hawaii, Idaho, Indiana, Louisiana, Minnesota, Mississippi, Nebraska, Nevada, North Dakota, South Carolina, Tennessee, Texas, Virginia and Wyoming.

Tax Initiatives To Promote Growth

As the economy continues showing early signs of improvement, small business owners from a range of sectors called on lawmakers this week to help sustain the recovery through tax incentives that will encourage small firms to grow and hire new workers. Testifying before the House Committee on Small Business, entrepreneurs said targeted tax relief can be an important tool for stimulating job creation. 

“After the recession of 2001, micro-businesses alone generated one million jobs. Entrepreneurs will be just as important to bringing our nation out of today’s downturn—but only if they have the right tools,” said Rep. Nydia M. Velázquez (D-NY), the Chairwoman of the Small Business Committee, in prepared testimony. 

An NASE survey earlier this year showed that more than three-quarters of the micro-business owners (77 percent) are not planning on hiring workers. The majority indicate that they were not hiring because they were unable to pay the salary of or offer benefits to an additional worker. Of the twenty-three percent of respondents planning to hire workers this year, only 31 percent were planning to hire full-time workers.

The hearing also explored future proposals for small business tax help.  As many dislocated workers consider launching their own businesses, lawmakers discussed how modifying the tax code can reduce startup costs for new businesses. With existing businesses still struggling against tight credit conditions, much of the hearing focused on how tax relief can give firms greater flexibility in raising capital. Witnesses and Members of the Committee also examined proposals that would generate consumer demand for small businesses’ services and products.

Click here to view video of the hearing.

Congressman Seeks To Repeal 1099 Law

Congressman Dan Lungren (R-CA) introduced legislation to repeal a particularly harmful 1099 requirement on purchases of more than $600. The Small Business Paperwork Mandate Elimination Act will remove section 9006 of the new health law. Section 9006 would place an unprecedented burden on small business by requiring any business that purchases more than the allowable amount of goods or services from another business to submit a 1099 tax from to the Internal Revenue Service.

The new tax filing mandate is one of several funding streams to pay for health care and is reported to raise $17 billion. The mandate is to take effect in 2012.

The NASE supports the removal, as the threshold triggering a reporting requirement is such a low dollar amount, many daily operational activities that tend to be outsourced by small businesses will be affected such as ground and express mail services. This creates further paperwork burden for micro-business and could potentially enhance difficulties with compliance if the business has not been required to utilize the 1099 filing system previously.

"Large corporations have whole divisions to handle such transaction paperwork but for a small business, which doesn't have the manpower, this is yet another brick on their back. Everyone agrees that small businesses are job creators and the engine which drives the American economy. I am dumfounded that this Administration is doing all it can to make it more difficult for businesses to succeed rather than doing all it can to help them grow," Lungren said.

Read more about H.R. 5141 here

Kagen Receives High Court Nomination

President Obama has nominated Solicitor General Elena Kagan to fill the shoes of Justice John Paul Stevens, who is retiring from the Supreme Court.

Click here to read and watch the White House announcement or here for more about the career of Justice Stevens.

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Courtesy of NASE.org