The Senate today passed legislation repealing the much-criticized 1099 reporting provision in the healthcare reform law and sent the bill to President Obama for his signature.

President Obama is expected to sign the bill despite concerns raised by the President and other Democrats that the measure is a $25 billion tax on the middle class.

The 1099 provision would have raised $19 billion to help pay for health reform.

The provision would have required business owners, starting in 2012, to file a tax reporting document for all vendors from which they buy $600 worth of goods or services within a year.

The National Association of Insurance and Financial Advisors lauded the Senate decision. NAIFA also urged Congress as a next step to pass legislation that would exempt agent commissions from the medical loss ration of the healthcare reform bill, the Patient Protection and Affordable Care Act.

But, the bill’s chief Senate sponsor, Sen. Mike Johannes, R-Neb., cautioned in comments after the vote that repealing other provisions of the law may be an uphill climb.

In an interview with Politico, a political website, immediately after the vote, Sen. Johanns said, “This was a provision in the health care law that pretty quickly everybody agreed was foolish.”And yet we had over a dozen votes to get to this point.

“Can you imagine what kind of battle you would have on a key part of the health care bill?,” he added. “Once something becomes law in the federal government, it is very hard to amend it or tweak it unless there is unanimous agreement.”

The bill, H.R. 4, passed the Senate 87-12 after an effort by Democrats to strip the $25 billion measure failed, 41-58.

A bill passed by the Senate earlier this year called for paying for the $21.9 billion increase in the deficit through repeal of the provision by giving the Office of Management and Budget the ability to take away nearly $44 billion of discretionary budget authority – except from the Departments of Defense, Veterans Affairs and Social Security – to offset the loss from the 1099 repeal.

The House version, by contrast, would pay for the repeal by making consumers repay all of their insurance subsidies under the health care law once their income rises beyond 400% of the federal poverty line. House Democrats called that a tax increase on the middle class. And the administration agreed in a policy statement disclosed Tuesday night.

The revised legislation also repeals an additional Form 1099 information reporting requirement, imposed on owners of rental real estate.

In his statement, NAIFA President Terry Headley said the trade group “is happy with today’s Senate vote and commends the bipartisan effort in Congress to repeal the 1099 provision.”

He added it demonstrates that members from both sides of the aisle are able to come together to fix the parts of the PPACA that would hurt consumers and small business.

“Many NAIFA members are small business owners providing consumers with much-needed insurance and financial services in communities across America,” he said.

“The 1099 reporting rules would have required them to expend scarce time and resources on recordkeeping and paperwork rather than serving the needs of their middle-income clients,” Headley said.

But, he added, “Next, we would encourage Congress to consider the Rogers/Barrow legislation, H.R. 1206, which would remove agent commissions from the medical loss ratio calculation.”

He said the MLR provision “is another part of health reform that needs to be revisited in order to preserve consumer service.”

He added that many agents have seen commissions slashed by 50% or more. And they have had to curtail the customer services their individual and small-group clients have come to expect.