The results of the 2010 midterm elections have important implications for health care reform implementation. Repealing the health care reform law was a popular promise on the campaign trail, but repeal — and even significant change — is unlikely while President Obama wields the veto pen. Nevertheless, health care reform will remain a leading issue for the new Congress, creating an uncertain environment for employers as they plan for implementation of the law’s major provisions in 2014.
Affected Plans: Group health plans.
Timing: The new Congress will convene in January 2011 and govern through the end of 2012.
Key Implications: Repealing health care reform is unlikely, but the law will remain under discussion. Expect the new Republican majority in the House to increase oversight of the regulatory and implementation process, attempt to deny the funding needed to implement and enforce the law, and work to increase opposition to the law leading into the 2012 elections.
General Discussion and Observations:
Significant changes ahead for Congress and the President
Although some races are likely to remain undecided for days (or weeks), the election brings significant changes to Capitol Hill. Republicans will hold a majority in the House of Representatives during the 2011- 2012 legislative term. Democrats have retained control of the Senate, but they will be operating with a much smaller majority. Much work remains before the new Congress gets organized. The legislative environment for the 2011 – 2012 legislative terms will depend on many factors. Will a divided government encourage cooperation — or confrontation? Will President Obama adapt his policy priorities to the new legislative environment? Many questions will remain unanswered until the new legislative term is under way, but health care reform is certain to remain under discussion.
No repeal, but continued focus on health care reform
Repealing health care reform may have been a popular (and successful) campaign slogan, but lawmakers and political experts consider it unlikely. Although the Republican majority in the House will have the ability to move legislation that would repeal the law, such legislation would face a Senate that remains under Democratic control. And if health care reform opponents were able to attract enough Senate Democrats to approve the legislation, it would face a certain veto. President Obama would also be expected to veto any legislation he perceived as significantly undermining the law.
With repeal unlikely, the new Congress will launch a massive assault on the health care reform law. Republican lawmakers have said they will intensify oversight of the government agencies implementing the law and deny funding for implementation.
Republican-controlled committees in the House will likely hold frequent oversight hearings to question high-ranking witnesses from Departments of Health and Human Services, Labor and Treasury. Such hearings could provide an important forum for health care reform stakeholders — including employers — to share their views, experiences and expectations under the law. A strategy to defund health care reform could involve broad attempts to deny funding for implementation and enforcement, and for the establishment of health insurance Exchanges. Lawmakers could also target specific controversial provisions, such as the Center for Medicare and Medicaid Innovation or the Patient-Centered Outcomes Research Institute.
Obstacles will limit the chance for significant changes to the law
Lawmakers hoping to make substantial changes to the law will face significant obstacles. In addition to President Obama’s veto power, a divided legislature will likely cause significant gridlock, making it difficult for health care reform opponents to move bills through the legislative process.
Republican lawmakers ran on a platform of fiscal austerity. This could make it difficult to move revenue-losing legislation. Some provisions targeted by health care reform proponents are revenue raisers. Since health care reform was enacted, lawmakers have introduced bills to repeal the Medicare unearned income contribution, and the new taxes on health insurers and medical devices, and have launched attempts to repeal the law’s new requirements for filing Form 1099. In a legislative environment governed by deficit concerns, undoing such provisions could be difficult. The excise tax on high-cost health plans scheduled to take effect in 2018 is a critical issue for employers, but it is not yet clear how much attention this tax might receive during the next two years.
Another potential obstacle: Some voters have begun receiving benefits and protections under the new law. Their numbers will increase as implementation continues, which could make them feel that changes to the law are takeaways. By the 2012 elections, for example, most Americans with employer-sponsored coverage will have the right to cover their children until they turn 26. They may enjoy first-dollar preventive care, restrictions on annual and lifetime dollar limits, and other protections. What’s more, Medicare beneficiaries will experience a smaller Part D donut hole. Millions of Americans will be approaching eligibility under the new Medicaid rules. This will make it difficult for Republican candidates to undo such provisions of the law. Indeed, the House Republicans’ Pledge to America proposed keeping some of the market reforms enacted this year — including eliminating rescissions, prohibiting preexisting condition exclusions, and eliminating lifetime and annual dollar limits. Furthermore, sustaining the market reforms will depend on some of the provisions Republican lawmakers oppose, including the individual and employer mandates.
Looking forward — politically and practically
The new political environment creates uncertainty for health care reform even as employers develop strategies for continued implementation. It is impossible to predict what the new Congress may enact, but much of the health care reform activity during the 2011 – 2012 legislative term could boil down to setting the stage for the 2012 elections. Opponents and supporters of the law will use this period to highlight their views, hoping to drive voter support and make the 2012 elections a referendum on health care reform.
In the meantime, the Obama administration will continue to implement the law. Some provisions have already begun to take effect; others will begin to take effect before the new Congress convenes. States are beginning to explore their approaches for implementing health insurance Exchanges. These activities have implications — for health care costs and for providers, vendors and the health care marketplace — that employers cannot ignore. Although some stakeholders — including some employers — may hope for significant change or repeal of the health care reform law, it remains important for them to analyze and plan for continued implementation of the law, even as they keep an eye on the changing political landscape. Health care reform is a significant business issue, and will require continuing analysis and assessment in the years ahead.
Source: Towers Watson
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