Following sweeping Republican gains in the 2010 midterm election, Senate Minority Leader Mitch McConnell (R-Ky.) underlined his belief that the election was a referendum against health care reform. "That means that we can — and should — propose and vote on straight repeal, repeatedly," McConnell said of the Patient Protection and Affordable Care Act in a Nov. 4 speech at the Heritage Foundation.
Although McConnell acknowledged that such a feat would be unlikely given President Barack Obama’s veto power and Democrats’ retention of the majority in the Senate, this type of rhetoric is not productive in bringing about meaningful change to health care reform, according to Alan Katz, principal of the Alan Katz Group and past president of both the National Association of Health Underwriters and CAHU.
“If the Republicans view this as a mandate to destroy health care reform as passed by the last Congress with no compromise then most of what was passed in the last Congress will remain in force,” says Katz. “Whereas if they work with the administration and with the Democrats who run the Senate, they can make changes that will actually improve the bill.”
However, Cyndy Nayer, president of the Center for Health Value Innovation sees nothing but gridlock in the near future. “What I’m more worried about is the chaos now because people are going to wonder, are they going to roll back anything? I think that’s what people are very unclear of and I don’t think we’re going to have any vision of that until [at least] the end of the first quarter of 2011,” she says.
During a press conference the day after Republicans gained at least 60 seats in the House and six in the Senate, Obama addressed the issue of working across party lines to improve health care reform. One potential area of change Obama mentioned during his press conference was the provision of PPACA that, beginning in 2012, will require businesses to file a 1099 form for purchases greater than $600. “It just involves too much paperwork, too much filing. It’s probably counterproductive,” the president said. “It was designed to make sure that revenue was raised to help pay for some of the other provisions, but if it ends up just being so much trouble that small businesses find it difficult to manage, that's something that we should take a look at.”
It’s a minor concession compared to the major issues that must be addressed, says Bob Shupe, director of the Shupe Center for Healthcare Reform. Altering the 1099 provision “is like changing a light bulb that is not blown out,” he says. “The issue of exchanges, employer mandates, auditing self-funded plans, lack of serious concentration of wellness and disease management incentives, and busting up the managed care nightmare should be the focus of what Congress addresses in the very near future.”
Rob Lieblein, managing partner with Hales & Company, believes Republicans will use the threat of repealing PPACA as a jumping-off point to modify the law. “Exactly what that will be is very hard to predict because of the various stakeholders involved and the lobbying effort that will be taking place behind the scene,” says Lieblein.
If Republicans are able to tweak the legislation to include more elements such as cost containment and malpractice reform, “we can wind up with a far better bill,” says Katz. But, he also warns against Republicans’ efforts to repeal the individual mandate — “it is the most misguided component of the Republican health care reform strategy.”
There are currently 21 lawsuits questioning the legality of the individual mandate. “Here are Republicans who claim to want to move forward in a business-like way and seem not to understand the nature of adverse selection,” adds Katz. “If the Republicans repeal the individual mandate and don’t replace it with some other incentive for people to buy coverage or some way for carriers to avoid adverse selection they’re going to do more to destroy the health care system than current health care reform. It’s the single biggest danger in my mind to a responsible health care system.”
However the Republicans act to slow down or reverse provisions of PPACA [click here for five ways it could happen], Lieblein expects a “major fight” from Democrats to protect Obama’s flagship legislation. “Health care repeal may sound like a good political sound bite but at the end of the day, the economy and unemployment are the key issues to the American people,” he says. “The Republicans (and Democrats) realize that if they do not make progress in these two key areas by 2012, then they could just as easy lose the gains they just picked up.”
As for how the Republican gains could impact brokers and advisers, Tom Schuetz, co-president of Iowa-based Group Services, doesn’t expect much to change. “We are already experiencing commission reductions and I don’t think anything that happens in Washington, D.C., is going to reverse that trend,” he says. “I think we in the broker community will have to continue to remake our agencies, our relationships with our clients and the value we bring to the marketplace.
“I think our industry will continue to experience significant change and consolidation — and that’s not all bad. Perhaps the level of regulatory activity will slow down so we can actually start to focus again on serving our clients and actually getting paid for the time we spend serving our clients.”
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