The House has passed the clawback provision, and Senate Republicans are prepared to adopt the same position, possibly as early as Tuesday afternoon. Menendez is stepping in to thwart the GOP. He's introduced a separate bill -- known as a second degree amendment -- that would require the federal government to study the impact of the clawback scheme on small businesses. If it was found to be too onerous, it would never go into effect.
"This step is simple--it directs the Administration to determine whether the Republican proposal would increase health insurance costs or cause cuts in health coverage for small businesses," Menendez said in a statement. "If so, we have the power to protect small businesses from higher health care costs and coverage cuts. That's the right thing to do, and I'll fight to support it."
Republicans are already blanching. And though the Obama administration hates the clawback plan, it also feels as if it must do away with the 1099 requirement no matter the consequences.
It's important to note that there's tremendous support on the Hill, and pressure on members, to do away with the 1099 requirement one way or another. But if Menendez's plan is scuttled, and Congress doesn't find another solution, there could be real financial consequences down the road for middle class insurance customers -- and thus for the long term popularity of the health care reform law itself.
Late update: Here's one potential wrinkle. If the Senate adopts the clawback provision today, it will be as an amendment to a larger small business bill. That's a problem for those who want to repeal the 1099 measure, because as a revenue measure, the Constitution says it must originate in the House. It'll be "blue-slipped" and have to be revisited later. That might actually make plenty of Democrats happy. More to come on this soon.