Wednesday, March 9, 2011

Oh, What a Tangled Web Government Weaves, When Tax Dollars It Seeks To Retrieve

The Obama health reform law is running into self-imposed snarls as it tries to raise tax revenues to pay for its plan. The government is caught up in a spider web of its own design.

First to go was the 1099 gambit, which required business to submit 1099 forms for every $600 of expenses.

Then came the 1000 or so waivers granted to organizations, particularly political allies, and to small businesses, who complained they could not afford Obamacare.

Next came promises of concessions to the states, who were told they could design their own Medicaid plans as long as their plans met all federal requirements.

Finally, we have the Over-the-Counter (OTC) problem – a perfect example of the tangled web problem. The law requires that 33 million Americans with flexible savings accounts must have a doctor’s prescription before being allowed to deduct OTCs from their accounts. Congress's number-crunchers estimated the change would generate $5 billion over a decade. Hardly anyone noticed it, even as it stayed in the bill through passage in March 2010.

The law took effect for OTCs on January 1. Suddenly patients began loading up on OTCs before the end of the year, doctors bitterly complained writing prescriptions for common OTC drugs was a waste of their expensive time, and they feared if they did write them and complications occurred, they would be sued. The drug chains complained the new OTC required were a burden and tied up pharmacist times. The IRS said it would have to add agents to figure out which drugs could be deducted.

Federal laws have adverse, unintended, and costly consequences, unforeseen by the President, Congresspersons, and their staffs from their lofty perches on Washington.

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