The Week in Health Care Reform

Comments

1/20/2010

Democrats Pursuing Health Reform Law Despite Losing Senate Seat in Massachusetts

• Download this week's podcast
• Download a PDF version of this update

Voters in Massachusetts yesterday elected the Republican candidate, Scott Brown, to the U.S. Senate to fill the unexpired term of the late Senator Ted Kennedy. Brown, who is expected to be certified to take his seat in Congress within two weeks, has announced his opposition to the Democrats’ health care reform legislation and his intention to vote against passage if he has that opportunity. With this development, Democrats in the U.S. Senate will lose their 60-vote filibuster-proof supermajority once Senator-elect Brown takes his seat.

The Obama administration and Democratic leaders in Congress remain committed, however, to passing historic health care reform legislation despite this political setback. Congressional Democrats have a number of procedural options available (see below), any of which would result in enactment of a health reform law. Consequently, employer health plan sponsors should continue their efforts to understand the strategic and financial implications of this legislation for their organization, their employees and their competitors. For employers, the significant financial, accounting and other consequences of passage do not afford them the luxury of assuming that health care reform won’t happen.

Democrats’ next steps

Even before the Massachusetts Senate election, Democrats were working to find a compromise between the separate health reform bills passed in the House in November (H.R. 3962) and in the Senate in December (H.R. 3590). While not completed, those negotiations have yielded progress, including reported changes to the 40% employer excise tax on high-cost health coverage. Prior to the election in Massachusetts, the Democrats’ plan over the next several weeks called for the House to incorporate all agreements into the Senate bill, pass that amended version and send the bill back to the Senate, where a 60-vote supermajority would be necessary to avoid a Republican filibuster of the bill. Senate approval would then allow the President to sign the bill into law.

While the Senate Democrats are about to lose that 60^th vote, they appear to have several options under Congress’s arcane procedural rules, which, alone or in combination, would still result in enacting a health reform law, including:

• Hurry up the current process. Complete the current House-Senate negotiations on a compromise bill and pass it before Mr. Brown is seated. This “beat the clock” option is receding as a practical and political option. Mr. Brown’s election will quickly be certified by Massachusetts election authorities, and Senate Democratic leaders have committed to seat him as soon as possible. He is likely to take his seat before February 4.
  
   
• Pass the Senate bill. The President and Democratic leaders may ask House members to simply pass the Senate bill (by a simple majority vote) and send it to the President. This is the simplest procedural option and does not require another vote in the Senate. However, it is uncertain if House Democrats would support the Senate bill “as is” with provisions that are at odds with the House version of health care reform.
  
   
• Secure a 60^th vote in the Senate from a Republican. Democrats could seek to persuade Sen. Olympia Snowe (R-ME), for example, or another Republican Senator to vote for a final compromise bill. This option would allow a Republican Senator to exact considerable adjustments to a final bill — if such bipartisan cooperation can be achieved.
  
   
• Employ the budget reconciliation process. One approach would have the House pass a limited version of the Senate bill, removing a number of reform provisions that do not affect the federal budget (e.g., insurance market reforms). A Senate vote on such budget reconciliation legislation generally requires only a simple majority; however, this process is akin to starting over on the legislation. Procedural variations on this option are also available; however, budget reconciliation could take several months to complete and would delay the administration and Congress from moving on to address other pressing issues, such as the economy and unemployment. Moving to a budget reconciliation approach could be positioned by the Democrats as “stepping back — when in fact it would represent an alternative strategy to enact health reform into law.

Continued vigilance

Over the coming days, we expect that the Democratic leadership will select one or more of these options as “Plan B.” Then they must successfully execute that strategy under Congressional procedures. The President’s State of the Union Address to Congress, now set for January 27, will likely become a forum to explain this choice and to express his strong support for whichever path to enactment is chosen by the leadership.

Employers should bear in mind that, while health reform legislation continues to face political challenges, the Democrats remain committed to pursuing enactment. Thus, employers should remain vigilant and seek to understand the implications of this legislation for their organizations, their employees and their competitors.