Federal Health Care Reform Overview: 2011 Wrap-Up and 2012 Outlook
In terms of federal health care reform, many social, economic and political forces are shaping how the Patient Protection and Affordable Care Act (PPACA) is being implemented. This Legislative Alert highlights some of the 2011 milestones and makes some key 2012 predictions.
Last year, the nation’s financial condition dominated public policy discussions, with members of the U.S. House of Representatives and U.S. Senate debating taxation rates, spending authorizations and proposals to jump-start a still weak economy. Although many key PPACA-enabled regulatory guidelines were finalized, many key health care reform activities also led to polarization and frustration.
Looking to the new year, it’s apparent the House, Senate and White House remain on different pages with varying agendas for the U.S. economy and health care system. Without a doubt, a key decision point in 2012 will be the U.S. Supreme Court ruling on PPACA’s constitutionality.
Looking Back: A Year in Review
Many key PPACA provisions were debated, revised and finalized in 2011 – with at least one notable requirement being repealed.
House Actions in 2011
The Republican Party held a clear majority in the House in 2011. Much of the year was spent in an attempt to repeal PPACA. On January 5, Rep. Eric Cantor (R-VA) introduced H.R. 2, the Repealing the Job-Killing Health Care Law Act, to repeal PPACA. The bill passed shortly after it was introduced, only to be voted down in the Senate.
The Republicans next turned their attention to the repeal of certain PPACA provisions that even the Democratic minority agreed were proving problematic. A provision requiring businesses to file IRS forms on transactions of $600 or more was struck down by both the House and Senate, and then signed into law by President Obama. Another PPACA fix was a revision to the eligibility standards for federal assistance that would have provided health insurance coverage for a family of four, with an income less than $60,000, seeking coverage through a state health insurance exchange.
In addition, several unsuccessful attempts were made to strip funding from the 2011 spending authorizations included in PPACA.
GOP members also challenged provisions of PPACA-inspired Title XXVII, the Public Health Service Act, in 2011. Rep. Michael Rogers (R-MI) was the principal sponsor of H.R. 1206: Access to Professional Health Insurance Advisors Act of 2011, which would amend Title XXVII that protects Brokers’ commissions by moving commissions out of the administrative bucket of the Medical Loss Ratio (MLR). This legislation gathered some bi-partisan support, but still languishes in committee.
The Senate in 2011
The health care reform agenda in the Senate was nearly diametrically opposed to that of the House. Even with a slim majority of 51-47 (with two Independents caucusing with the Democrats), Democrats used Senate rules requiring that bills pass with a 60-vote majority to hinder the Republican minority. The goal of Senate Democrats was to forestall any attempts by the Republican House or the minority Senate Republicans to repeal or weaken PPACA. As expected, the vote to repeal PPACA was defeated on party lines. The Senate did repeal the $600 IRS filing provision and passed the amendment addressing the provision allowing families of four with incomes of $60,000 to receive full premium assistance for health insurance coverage obtained via the state health exchanges. All other attempts on the part of the Senate Republicans to amend PPACA, including revising the MLR provisions, failed.
The White House in 2011
The White House stayed above the legislative fray in 2011, other than occasional statements in support of PPACA. Most of the heavy lifting in the Executive Branch came from the U.S. Department of Health and Human Services (HHS), which was given broad rulemaking authority to implement PPACA legislative mandates. Under HHS, rules concerning the creation of state health insurance exchanges, state health information technology exchanges, accountable care organizations, consumer co-ops, essential benefits, health insurance premium rate review mechanisms and a host of other programs have been implemented.
2012 Outlook
Looking forward, we can expect to see more of the same type of activities from Congress and the Executive Branch. As with 2011, the nation’s leaders will partake in recurring votes to extend the borrowing authority of the federal government, promote the economy and address health care reform.
The House in 2012
The Republicans currently hold a 241-191 majority, and they will use that strength to pass bills that support a “smaller government” mentality. Efforts to repeal PPACA will continue with legislation similar to H.R. 2, or by defunding PPACA’s spending authorizations. However, any bill that passes the House will face stiff resistance from the White House and Senate Democrats.
The Republican agenda also includes a more aggressive use of the House’s investigative powers. Some political experts are predicting an increase in House investigative panels seeking political advantage by raising sticky issues for the White House. Republicans may find considerable political gain by placing administration officials under oath and forcing them to defend the spending levels of their departments.
Late last year, Congress passed a 60-day patch in 2012 to prevent a significant increase in the payroll tax rate. A major order of business early this year for the Republican House will be to find an acceptable compromise to extend the current tax rate. Another primary issue the House must address is the Sustainable Growth Rate (SGR), which will forestall a 27% decrease in physician payments for Medicare services.
Failing to pass extensions on the payroll tax will result in higher payroll taxes for all, and failure to pass the SGR fix will culminate in a potential significant exodus of physicians who will find the new reimbursement rates to be below their cost of providing care to Medicare beneficiaries. At some point, the House will have to take action on increasing the government’s borrowing authority as well. Once again, compromises will have to be found, and there will be extensive political posturing right up to the deadline.
The Senate in 2012
The Democratic Senate majority need only maintain the status quo in 2012 to be perceived by many as winning the battle for their constituents. Democrats will likely use their majority to prevent almost all of the Republican agenda from becoming law. The Senate will focus on the payroll tax extension and the SGR fix. The Senate has not passed a budget in more than two years, and perhaps they will not pass one in 2012. At times, the Democrat leadership has appeared to be to the left of the President, and it will press for more aggressive spending on job creation and unemployment benefits.
The White House in 2012
The Obama Administration will gear-up for the election by pushing for more job creation legislation and extension of the payroll tax. Due to a legislative gridlock on Capitol Hill, the President will likely use his executive powers and rulemaking authorities to enact as much of his domestic agenda as possible.
The President is on record as favoring a re-election strategy similar to that of Harry Truman, which means running against a “do nothing” Congress. Theoretically, he could prevail in the upcoming election regardless of congressional action. Specifically, the passage of his agenda would strengthen his policy record, whereas congressional inaction would provide a convenient scapegoat for the current state of the union.
Assessing Future Variables
Perhaps the most significant variable to watch in 2012 will be the economy. If the U.S. economy rebounds, a greater percentage of Americans will likely approve of the President’s performance which in turn will improve his re-election prospects. However, if the economy continues to limp along, the President’s re-election prospects will dwindle, leaving Republicans empowered to pursue their agenda.
The future of health care reform could change dramatically depending on a number of different confounding variables in addition to the performance of the economy and President Obama’s staying power. For example, if the U.S. Supreme Court overturns the individual mandate provision, the remaining provisions in PPACA could saddle the insurance industry with the unsustainable obligation to cover anyone who applies with no pre-existing exclusion authority, unless other remedial action is taken by public policymakers.
Another game-changer could be a default on the part of Greece, Spain or Portugal, or the collapse of the Euro, which would create financial chaos in the world’s banking sector. Conflict in the Middle East could also cause a major disruption to the nation’s energy supply.
Under most scenarios, the balance of power between the House, the Senate and the White House will likely remain the same for the entire year. A power shift could occur due to the November 2012 election results. If the Republicans take a majority position in the Senate or win the White House, the current pattern of gridlock may come to an end by the end of the calendar year. Currently, given that the Republican House, the Democratic Senate and the President will view every action through an election-year filter, it is hard to see how the three stakeholder groups will be able to work together.
Throughout the year, BenefitMall will continue to publish Legislative Alerts and blogs to keep you update on important information impacting Brokers, consumers and other interested parties.
Please visit www.benefitmall.com to view past Legislative Alerts. Or, you may visit www.HealthcareExchange.com for blog posts, polls, surveys and numerous resources.
The views expressed in this Legislative Alert do not necessarily reflect the official policy, position, or opinions of BenefitMall. This update is provided for informational purposes. Please consult with a licensed accountant or attorney regarding any legal and tax matters discussed herein.