Health Reform on Life Support, but Refuses to Die

The January 19 election of a Republican Senator from Massachusetts broke the Senate Democrats’ filibuster-proof 60-vote majority, and brought the partisan health reform effort to its knees. Democrats—who still need 60 votes to enact health reform—are now scrambling to determine how to salvage more than a year’s worth of work and find a way to enact some kind of health reform bill.

The situation on Capitol Hill remains very fluid more than a week after the watershed Massachusetts election. But here are the strategies currently under review:

• The House could vote to pass H.R.3590, the Senate-passed bill, “as is.” To date, there are not enough House members willing to do that to make it a viable strategy. But leadership is working on a separate bill—which the Senate would pass either before or after the House votes on H.R.3590—that would address issues that are preventing House approval of H.R.3590. Issues that may be addressed in this second bill include:
• Modification of the tax on high value health insurance. The modifications include:
• A transition rule to give collectively bargained plans until 2017 to come into compliance with the new rules
• Exclusion of dental and vision coverage from the aggregated value of employer-provided health insurance coverage
• An increase in the thresholds (to $24,000 for family coverage and $8,900 for individual coverage) above which the tax (40 percent of the amount over the threshold) would kick in
• Elimination of the special deal that would result in the federal government picking up all of Nebraska’s increased Medicaid costs
• An increase in the Hospital Insurance (HI) tax – the proposals under consideration would both raise the rate, and make the HI tax payable on income from capital gains

This strategy is problematic because skeptical House members are not ready to accept that the Senate actually could approve the second bill, which House members view as a necessary to win their vote on H.R.3590.

• The House-Senate leadership could finalize their agreement on melding the House-passed H.R.3962 and the Senate-approved H.R.3590, and then try to pass the agreement, possibly by using the budget law’s reconciliation procedure. This would be difficult for two primary reasons:
• First, there are a number of 60-vote procedural hurdles (e.g., a motion to proceed) so it’s unclear that the Senate could even get to a vote on a reconciliation package; and
• Second, only provisions that affect federal revenue within a 10-year window “fit” in a reconciliation bill (adding provisions that don’t “fit” require a 60-vote waiver). Thus, important elements of the reform bill (e.g., exchanges, insurance reforms) could not be included in a reconciliation bill

• Congress could craft a scaled-back bill (likely, insurance reforms), either as a new bill or as an agreement derived from the already-passed H.R.3590 and H.R.3962 (to avoid more committee action). Some House Democrats dislike this approach as they view it as a disappointing and possibly unacceptable alternative to the more systemic reform effort.

In short, Congress and the White House are still reeling from the political impact of the Massachusetts election. They are still analyzing its political lessons. (Early reactions are all over the lot; for example, some say the vote was a repudiation of the health reform bill; others point to deficiencies in the Massachusetts Democrat’s campaign; still others view it as an anti-incumbent message.)

The bottom line is that health reform is not (yet) dead. Regardless of the strategy Congress ultimately adopts to enact a health reform bill, certain issues of key importance to NAIFA members remain very open. These include the hard-fought victory on assuring the agent’s role (appropriately compensated) in exchange-based insurance sales, rejection of the attempt to eliminate or scale back the health/medical malpractice insurance industry’s limited antitrust exemption, and prevention of new taxes that would adversely affect employer-provided health insurance. These issues will require NAIFA government affairs (in Washington and at the grassroots level) to stay alert and weigh in as Congress tackles these issues in the new political landscape that is currently dominating Washington.

NAIFA Staff Contact: Diane Boyle, Vice President – Federal Government Relations, at (703) 770-8252.