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Guest Article

What Chance of Repealing Health Care Reform in the New Congress?

By Alvin D. Lurie
December 30, 2010

Bismarck is famously quoted as comparing the making of legislation to the making of sausages: "It's something you don't want to see," he said. Whatever he saw in the late 1800s was as nothing compared to what we've witnessed in Washington since the Fall of 2009, when Democrats and Republicans in Congress and the White House first engaged in a fierce donnybrook over the health care reform legislation proposed by the Democrats, that ended with passage and enactment in March of last year without Republican votes. Bipartisanship was the first casualty of that battle.

What followed as a direct consequence was essential gridlock in Congress until the elections in November, each party vilifying and demonizing the other, the President too joining in this blood sport. Forgotten were his bold campaign words "to change the way Washington worked." What we got instead was a Washington that wasn't working.

It seemed that the President and the Democratic leadership in Congress made a decision to pass a massive health reform law even though they knew it did not have support in the country. That was doubtless the key strategic error leading to their defeat at the polls in November, and a startling miscalculation, given mounting evidence that should have alerted them. An opinion piece in the Wall Street Journal last June 21st, authored by three professors of the Hoover Institution, described their studies of voters' attitudes about health reform and how it affected their likely votes. The Hoover article, based on voter surveys in January and May 2010, disclosed opposition to reform to have been "an important determinant of voting intention... particularly for political independents," and as having "a statistically significant and electorally important impact on intention to vote against the Democratic candidate for Senate." Voters opposed to health reform were found "around 20 percentage points more likely to vote for the Republican candidate."

The study concluded, nearly half a year before the election: "Given the stability of public opinion in close states, our analysis suggests that the President faces an uphill battle." In the weeks before the election, all polls — even those reported by Democratic pollsters — were predicting that the electorate would punish the President and his party by turning the House and very possibly the Senate over to the Republicans. As we now know, the polls were right on, with the Republicans overwhelmingly victorious in the House and achieving in the Senate not quite a majority, but enough additional seats to frustrate any possibility of the Democrats closing down Republican filibusters, which the Democrats would have had the votes to achieve during most of the health reform maneuvering in the Senate. Of course, the anti-cloture mathematics (presently requiring only 41 votes to prevent shutting down debate) will only empower the Republicans to block any Democratic measures vulnerable to the filibuster tactic, but not with enough firepower to pass their own legislative initiatives. (Theoretically the Democratic-controlled Rules Committee in the next Senate could reduce the magic 60-vote cloture count, to blunt Republican use of the filibuster; but that 60 number is generally regarded as sacrosanct in both parties.)

As damaging as the voting outcome was to the Democratic party, even more damaging to the Nation was the political wrangling between the parties that was engendered by the Democrats' determination to push through health reform against all opposition of Republicans and without regard to Republican views on the legislation. That battle engendered seemingly irreconcilable hostility between the parties and a complete breakdown of the normal conduct of the business of Congress. That led to widespread despair in the country that Congress had become effectively dysfunctional, and a growing sense among the citizenry that America itself had lost its way.

The election results did little to dispel the despair. How a GOP controlling the Lower House and able to block action in the Senate, while a bruised and battered President brooded in the Oval Office over his self-described "shellacking," might break the logjam was hard to envisage. That only seemed to augur more of the same — if not worse — political paralysis. The most optimistic scenario for Republicans to achieve their legislative agenda would be to build on their control of the House by cobbling together a Senate majority with just a few votes from across the aisle — say, two from Democrats and one from the Independent, Senator Lieberman. But then there was the little matter of a Presidential veto. And while that too might be overcome, it would require a two-thirds majority of the members voting in each of the Houses to override the veto. That would seem beyond the Republican grasp; but only by that tactic, it would appear, could Republicans hope to accomplish their goal of repeal of what they came to call, pejoratively, Obamacare.

The Republicans had vowed in the campaigns leading up to the November elections to make such repeal one of their first priorities, and the House members even incorporated the commitment in their political manifesto, "A Pledge to America." Immediately following the election the Republican congressional leadership in both houses made clear that was indeed their intent.

Was it possible that the law which the 111th Congress passed, and that the President has trumpeted as one of the principal accomplishments of his Administration, could be voted out by a divided 112th Congress? A lot would depend on how the President reacted to the election results. In the furious final weeks of campaigning for Democrats around the country by Mr. Obama, as he attempted to hold his shaky Congressional majorities in place, his sharp attacks on the rival party gave no hint that a softer, gentler President might emerge from the wreckage, ready to do business with the Republicans, especially in respect of his signature issue, health care reform. There was, consequently, great interest from all quarters in his post-election, televised, November 3rd press conference. What viewers saw was a chastened, if not wounded, warrior, apparently eager to show a conciliatory mien, prepared to work with Republicans, even to the point of compromising on specific aspects of health reform that Republicans might suggest, if not undercutting his essential goals.

In answer to specific questions by reporters, he gave, as examples of what was nonnegotiable, elimination of denied insurance coverage for pre-existing conditions and mandatory continued insurance coverage for policyholders' children up to age 26. That didn't seem to pose an obstacle. He also volunteered that paperwork burdens imposed on small businesses by requirements of the present law (for example, the need to provide so-called 1099 Forms to all vendors of goods and services whose annual bills exceed $600) could be considered for repeal. While that particular provision of the new law has evoked strong hostility from the business community, there is much else in the law that will similarly impose great burdens and expense on businesses large and small, but which Obama did not mention.

The present law is infinitely detailed and extensive in its requirements. As one example, calculations must be made separately for each employee to determine ratios between wages and poverty levels, that directly affect the benefits that must be provided to an employee under the law. Businesses large and small will be subjected to enormously burdensome and costly bookkeeping, accounting, computing, staffing, paperwork and other compliance requirements, and to new mandates, penalties and taxes, some that the new law has already imposed, with more to come in each of the next several years.

The law, as presently written, will spawn a tremendous new bureaucracy, with resultant financial impact on federal and state government budgets, but also on businesses and even individuals, wholly apart from the actual medical and hospital costs associated with expanded coverage and benefits. All businesses will have to cope with exposure to a steady outpouring of regulations and enforcement actions of three separate government agencies, that will add considerably to legal and associated costs. It will also add to the inadvertent noncompliance with the law, as hundreds of thousands of small and midsized businesses are overwhelmed by the process. Ameliorating these burdens and expenditures, especially for small and midsize companies, by legislative and regulatory fiat, would make an enormous difference, without giving up the substantive benefits of the new law.

The fact is that much more substantive simplification could be accomplished in an atmosphere of constructive bipartisan negotiations, because many of the goals, if not the details, of health care reforms that the Administration properly claims for the new law have been publicly acknowledged as desirable in Republican statements. Obama has identified, as progressive features of the law, subsidies to help low- and middle-income persons purchase insurance, required insurance coverage of anyone irrespective of pre-existing conditions, the barring of higher insurance premiums and cancellation of coverage because of existing or prior illnesses, and elimination of annual or lifetime ceilings on insurance benefits.

Similarly, the Republicans' Pledge to America promises to make health care "accessible for all, regardless of pre-existing conditions or past illnesses," to expand high-risk pools for uninsurable people, and to encourage state reinsurance programs where the state would subsidize claims exceeding certain limits. Common themes and concerns can readily be observed, and more can certainly be discovered in fair-minded discussions between the parties. The product of such negotiations would obviously be an overhaul, not repeal, of the law. The Republican rhetoric continues to speak of "repeal." It is reasonable to assume that repeal will not be their objective when push comes to shove in the negotiations.

It was clear that the message the President wanted to convey at his November 3rd press conference, in the immediate wake of the election outcome, was that the door was open to health care modifications that Republicans might propose. More was obviously at play than the Election Day results. With his plummeting approval ratings, let alone his reelection bid in 2012, surely not out of mind, was he eager to show a new face to the public? Was this the first step in a makeover? Was he sending a signal that he was ready to make a fresh start at doing the people's business, and might forego his veto weapon in favor of reaching accommodations with the Republican leadership in order to achieve an acceptable reworking of the health care law? Obviously one could not know from his measured comments at the press conference.

But events in recent weeks have suddenly cast things in a much clearer light. With the so-called Bush tax cuts about to expire, the White House and the Republican leadership put together an $801 billion package of income, estate and payroll tax cuts — reportedly negotiated by Vice President Biden and Senate Majority Leader-elect McConnell — that passed both houses with substantial majorities during the lame duck session in December, on the votes of large blocks of both Republicans and Democrats. The bill also fulfilled Democratic demands (principally, greatly extended unemployment insurance benefits), but not without attracting sharp attacks on the President from some liberal Democrats in the House, who actually attempted unsuccessfully to tack an amendment to the legislation that would curtail the estate tax relief; and they garnered the votes of almost 200 members.

The new law is called by the encyclopedic title Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act. The White House and Republican leadership called the Act a prototype for future compromises, foreshadowing a new era of bipartisan actions. Other important legislation was enacted during the lame duck session to the great surprise of most observers — presumably including many members of Congress — with the votes of key Republicans.

There soon will be a test of whether this new spirit is broad enough to encompass an overhaul of the health care reforms, because the Republican leadership lost no time, following the passage of the tax cut bill, to renew their promise to pursue repeal of the legislation. Rep. Boehner, House Majority Leader-Designate of the next Congress, said in a prepared statement following passage of the tax relief bill: "Stopping all tax hikes is a good first step in our efforts to reduce the uncertainty family-owned businesses are facing, but much more needs to be done, including . . . repealing the job-killing health care law."

The President also praised the efforts that led to the tax relief act, and acknowledged that next year's legislative compromises will prove even tougher. But he observed, without singling out specific measures, "We'll have to work the issues when the time comes." That sounds like a change in the way Washington has been working.



Copyright 2010, A.D. Lurie

Alvin D. Lurie is a practicing pension attorney. He was appointed as the first person to administer the ERISA program in the IRS National Office in Washington. He is general editor of Bender's Federal Income Taxation of Retirement Plans (LexisNexis), a 2-volume treatise and he is also editor of the annual compendium of articles published under the title New York University Review of Employee Benefits and Executive Compensation.(LexisNexis). Mr. Lurie is the first recipient of the Lifetime Employee Benefits Achievement Award sponsored by the Employee Benefits Committee of the American Bar Association Tax Section. He can be contacted at Alvin D. Lurie, P.C. in Larchmont, New York, at (914) 834-6725 or via email: allurie@verizon.net. He is also of counsel to The Wagner Law Group in Boston.
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