Guest Article

(From the November 13, 2006 issue of Deloitte's Washington Bulletin, a periodic update of legal and regulatory developments relating to Employee Benefits.)

What Will the New Congress Mean for Employee Benefits?

When the 110th Congress convenes on January 3, 2007, a lot of new, but familiar, faces will be taking control of the committees with jurisdiction over employee benefit plans. For the first time since the 103rd Congress, Democrats will have majorities in both the House and Senate and thus will set the legislative agenda for the next two years. As always, the House Committees on Ways and Means and on Education and the Workforce, and the Senate Committees on Finance and on Health, Education, Labor, and Pensions (HELP) will be in charge of developing and moving legislation relating to employer-sponsored health, retirement, and fringe benefit plans. However, the new chairmen of these committees likely will have different priorities than the Republicans they are replacing.

Nothing is certain yet, but the probable new chairmen of these committees will be Representatives Charles Rangel (D-NY) [Ways and Means] and George Miller (D-CA) [Education and the Workforce], and Senators Max Baucus (D-MT) [Finance] and Edward Kennedy (D-MA) [HELP]. All are long-serving members of their respective committees, and of the Congress. (Among these four, Senator Baucus has the shortest tenure. He was first elected to the Senate in 1978.) Furthermore, all have played significant roles in the legislative battles relating to employee benefit plans during the last several years, and are well-versed in the relevant issues.

It is much too early to know what legislative priorities these new committee chairman will set. In addition to employee benefits, each committee has jurisdiction over other issues that will compete for their attention. For example, the House Ways and Means Committee and the Senate Finance Committee have exclusive jurisdiction over all tax issues, plus jurisdiction over the Medicare program and trade and tariff legislation. Also, although committee chairmen historically enjoy a fair amount of autonomy, they usually strive to coordinate their priorities with House and Senate leaders. The process of setting priorities at these various levels already has started, and probably will continue over the next several weeks and months.

Of course, it is never too early to make predictions. One of the easier predictions to make at this point is that health policy issues will return to prominence in the 110th Congress. Specific priorities may include extending health coverage to the approximately 42 million uninsured Americans, with a renewed emphasis on implementing a universal health insurance system and/or employer mandates. Additionally, Medicare Part D could return to the spotlight. On the campaign trail Democrats talked about giving Medicare the authority to negotiate drug prices with pharmaceutical companies and using the savings to close the oft-maligned "doughnut hole" in current Part D coverage. If Congress re-opens Part D, other changes might be considered - including the 28 percent retiree drug subsidy for employers.

Other health issues that might come up include expanded mental health parity and genetic nondiscrimination. The so-called "Patients' of Bill of Rights" also could be resuscitated, although the issues that originally prompted such proposals in the late 1990s have largely been addressed by states' external review laws, the Department of Labor's claims procedure regulations, and market forces.

With the leading edge of the baby boom generation approaching retirement age, retirement policy undoubtedly will be a concern for the 110th Congress. However, the chances for comprehensive legislation relating to employer-sponsored retirement plans during the next two years are slim due to the recent enactment of the Pension Protection Act (PPA) of 2006 (P.L. 109-280), which addresses a wide range of issues relating to defined benefit and defined contribution plans. Technical corrections to the PPA are needed, and that task may be left to the 110th Congress. It is possible the 109th Congress will take up a technical corrections bill during a lame-duck session in November or December, but unlikely.

The information in this Washington Bulletin is general in nature only and not intended to provide advice or guidance for specific situations. If you have any questions or need additional information about articles appearing in this or previous versions of Washington Bulletin, please contact: Robert Davis 202.879.3094, Elizabeth Drigotas 202.879.4985, Taina Edlund 202.879.4956, Laura Edwards 202.879.4981, Mike Haberman 202.879.4963, Stephen LaGarde 202.879-5608, Bart Massey 202.220.2104, Laura Morrison 202.879.5653, Martha Priddy Patterson 202.879.5634, Tom Pevarnik 202.879.5314, Carlisle Toppin 202.220.2067, Tom Veal 312.946.2595, Deborah Walker 202.879.4955. Copyright 2006, Deloitte.