Republican victories in the November 2010 midterm elections made significant changes to the composition of the U.S. Congress and the balance of power in Washington, D.C. However, what this implies for the future of employer-based health benefits, and health care reform specifically, is uncertain, with gridlock the most likely outcome, according to a December 2010 policy forum in Washington, D.C., sponsored by the not-for-profit Employee Benefit Research Institute.
Having regained a majority in the House and slimmed the Democrats’ margin in the Senate, Republicans, who voted unanimously against the Patient Protection and Affordable Care Act (PPACA)—and made repealing the law a major midterm campaign issue—are likely to challenge the law’s implementation in many ways.
The House Republican leadership’s “Pledge to America,” released in September 2010, outlined a "repeal and replace" approach to the PPACA, where the individual and employer mandates and other portions of the law would be repealed and provisions such as the ban on the exclusion for pre-existing conditions would be retained. House Republicans have called for replacing much of the law with other mechanisms that they say will reduce costs and increase competition in the marketplace, such as enacting medical liability reform, allowing consumers to purchase coverage across state lines and expanding health savings accounts.
Legislation to repeal the health care reform law is expected to be one of the first things the Republican-controlled House passes early in the 112th Congress. Still, total repeal is unlikely given that Senate Democrats would filibuster such an attempt and President Barack Obama holds veto power. And some provisions of the law that have been implemented—the expansion of dependent care coverage and a ban on pre-existing condition exclusions for individuals under age 19—have proven popular.
“Repeal and replace will not make any difference, because it won’t even be considered in the Senate,” said Joe Antos, a scholar in health care and retirement policy at the American Enterprise Institute, a conservative-leaning Washington think tank. “The only thing Republicans can do is hold hearings—oversight,” he said at the policy forum.
In addition, Republicans are expected to use the appropriations process and procedural mechanisms to disapprove some regulations issued by the administration and to continue political pressure on the implementation of the health care reform law leading into the 2012 presidential election.
Political fighting over health care reform will continue,
leading into the 2012 presidential election.
There will likely be a heavy focus on the legislation’s impact on premium increases and employer coverage. In addition, attention will be placed on whether the Internal Revenue Service (IRS) and the U.S. Department of Health and Human Services (HHS) have the capacity to handle expanded enforcement responsibilities under the act. Numerous oversight hearings in the House Ways and Means Committee and the House Energy and Commerce committees are expected. The Congressional Review Act is another tool Republicans might seek to use to overturn health care reform regulations.
Senate Republicans used the Congressional Review Act in September 2010 to vote on a resolution disapproving the regulations relating to grandfathered health plans under the health care reform law. Although the resolution failed, Republican senators used the forum to highlight the law’s employer mandates and the complexity of the regulations.
“A more significant threat in the short term will be repeated efforts aimed at changing specific provisions in the law that are less popular or that serve as a linchpin to the overall new system that we’re building,” said Barbara Coufal, assistant director of legislation for the American Federation of State, County and Municipal Employees (AFSCME), which lobbied for the health care reform law’s passage.
Some of the Republican threats to provisions that will impact employers include eliminating the individual mandate, eliminating the employer penalty, reducing subsidies and changing the terms of the employer penalty, Coufal said.
“Many of these actions would affect employer-based coverage,” she noted. “At AFSCME, we’re counting on the individual mandate and the subsidies to reduce cost shifting, to take some of the pressure off of the plans that cover our members. Obviously, reducing the employer penalty will have an effect on what employers choose to do.”
Power of the Purse
Another method of impeding the health care reform law is to deny funding to the agencies tasked with implementing many of the act’s provisions. Incoming House Majority Leader Eric Cantor, R-Va., has said that he wants “to see a defund vote go across the floor as soon as possible.” Such a vote would be largely symbolic, given Senate Democrats’ ability to filibuster and the president’s inevitable veto.
In addition, Republicans could refuse to provide funding for discretionary grant programs authorized by PPACA, such as appropriations for the state health insurance exchanges, or they could attempt to restrict funding for the IRS to hire the employees necessary to enforce the individual and employer mandates.
One snag in that plan is that HHS already exists, Antos said. “HHS already has thousands of employees. They already have hundreds of millions of dollars in their budget. That’s not going to change. And they can direct the resources they have within fairly broad parameters,” he pointed out.
By the same token, Senate Democrats could refuse to consider any appropriations bill that does not include health care funding, setting up a showdown between the chambers.
The battle over health care reform will not be limited to the federal stage. Republican gains in governorships and state legislatures are expected to yield state challenges to implementation of the law.
Implementation will be affected by state politics, budget shortfalls and insurance market pressure, Coufal said. New Republican governors and insurance commissioners will have great influence over key provisions of PPACA, such as establishing insurance exchanges and enforcing market reforms, she added.
“We are worried about the health insurance exchanges,” said Coufal. “How these exchanges are run will be critical to the success of health care reform and for delivering on its potential to make coverage more affordable.” State officials in Utah have called for broad flexibility in federal rules for exchanges and have raised concerns that HHS will not certify Utah’s current exchange because it gives insurers broad leeway to define benefits rather than requiring standardized benefits packages.
Another hot-button issue is likely to be the medical loss ratio standards requiring insurance companies to spend 80 to 85 percent of premiums on patient care. Beginning in 2011, insurers must report the medical loss ratios of their plans, and in 2012 those that do not meet the medical loss ratio standards will be required to pay premium rebates (on a prorated scale) to consumers. Maine, Iowa and Florida have requested waivers from the requirement because of concerns that it could destabilize the individual health insurance markets in their states.
Some changes to the law might receive bipartisan support. For example, both parties have tried to repeal or amend the PPACA provision requiring businesses, charities, and state and local governments to file 1099 forms when they purchase $600 or more in goods from another business after Dec. 31, 2011. It was expected that this issue will resurface soon after the 112th Congress convenes.
Repealing the Independent Payment Advisory Board set up to reduce the per capita rate of growth in Medicare spending, restoring some of the payment cuts to Medicare Advantage plans, dealing with the long-term physician payment problem and addressing a host of technical corrections to PPACA might be additional possibilities for bipartisan legislative action as implementation of the law continues.
Roy Maurer is a staff writer for SHRM.
Individual Health Care Mandate Ruled Unconstitutional, Appeal Planned, SHRM Online Legal Issues, December 2010
Navigating Health Reform's Ambiguities and Unclear Mandates, SHRM Online Benefits Discipline, December 2010
Employers Hope to Alter Health Care Reform, SHRM Online Benefits Discipline, November 2010
112th Congress Likely to Emphasize Oversight of Health Care Reform, SHRM Online Legal Issues, November 2010
SHRM Online Benefits Discipline
SHRM Online Health Care Reform web page