Irrational Exuberance? Not!

It was a cold day in early February and hundreds of meetings on Capitol Hill between members of Congress and Council executives were abuzz.

It’s our association’s annual gig, and, as usual, it was a success. No surprise there. But to sum up in a word the political interactions on Capitol Hill? “Schizophrenic.”

On property-casualty issues—flood insurance, terrorism reinsurance, nonresident agent/broker licensure—the congressional responses were uniformly friendly and bipartisan. Not that everybody agrees with our commercial insurance brokerage particulars, but they were all receptive.

But on the subject of benefits—the Affordable Care Act specifically, more than three full years after its enactment—the partisan divide was as palpable as ever. Recognizing that it’s an election year and “fixes” to Obamacare aren’t going anywhere, we tried to keep our agenda discreet. We asked, for example, for sponsorship of legislation that would limit the ability of federal regulators to do violence to small-group self-insured plans. The response from GOP offices: Sure, but let’s make sure it’s a part of upending the entire ACA. The response from Democratic offices: Thanks, but we’re not so much interested in anything that will put brakes on the administration as it muddles through all of the implementation battles.

The day of Council Hill visits coincided with the release of the Congressional Budget Office’s new estimates that the ACA could cost upwards of two and a half million jobs as a consequence of the employer penalties, full-time/part-time adjustments, and new subsidies. Like everything else about the ACA rollout (including the announcement a week later of yet another delay in the employer mandate), it was an instantly polarizing talking point. Editorialists around the country sputtered to the administration’s defense. Said The Washington Post: “Claiming the safety net is a disincentive to work—again, whatever you think of the substance of that argument—is politically a hard case to make.”

As Ronald Reagan once said, “If you’re explaining, you’re losing.”

So there is no question that our advocacy efforts with respect to the ACA are limited, with virtually zero opportunities for bipartisan political agreements before the November elections. The delay of the employer mandate announced on Feb. 10 only poured more blood into those political waters.

But what about beyond? Despite what the administration says, there is a strong political element to the employer mandate decision, particularly since the GOP has a highly realistic chance of retaking the U.S. Senate in the midterm elections. Republicans need a net of six seats to win back the chamber. Democrats are defending six more seats than the GOP and have caught some unlucky breaks.

Even if Mitch McConnell is the Senate majority leader next year, though, Republicans won’t come anywhere close to the 60 votes necessary to get significant health reform laws to the finish line—much less the two-thirds majority necessary to overturn a presidential veto.

Republicans have another problem, too, in that they haven’t rallied around any single comprehensive alternative to Obamacare. The week before The Council’s Legislative Summit, three prominent Republican senators—Orrin Hatch of Utah, Tom Coburn of Oklahoma, and Richard Burr of North Carolina—released a big package of reforms. A central feature? Rolling back the “employer exception” from taxation (from 100% deductible to 85%). That’s the backbone of the employer-provided group health insurance marketplace. That may be popular with ideologues (interestingly, both on the right and the left), but this will be adamantly opposed by not only us, but the U.S. Chamber of Commerce and all of organized labor to boot.

Mike Turpin of USI wrote a compelling Leader’s Edge cover story last month forecasting the scenarios before us. But the collective experiences of brokerage leaders interacting with members of Congress in February leads me to one inexorable conclusion: There will be no bipartisan agreements on big-ticket healthcare reforms for the rest of the Obama presidency.

The law might be upended, particularly if the administration’s knees continue to go wobbly and most particularly if the courts ultimately rule that subsidies in the federal exchange are unconstitutional (unlikely, but not out of the realm of possibility). Adverse selection in the exchanges, over time, could threaten the viability of the exchanges, notwithstanding all the generous subsidies to low-income individuals. The list of headaches and challenges for the administration are, to put it lightly, extensive.

Love it or loathe it. It could sink or it could muddle on through like Medicare Part D except on a much grander scale. We’ll have plenty of work cut out for us with the regulators and throughout the implementation process. But the big-picture, grand-bargain, multi-trillion-dollar political compromise that rationalizes healthcare? Not going to happen.