Senate Finds Health Care Reform Compromise Hard to Find

Congress is in its lame-duck session. One might think that with the mid-term election completed lawmakers might have a simpler time cleaning up some of the less controversial provisions of the Patient Protection and Affordable Care Act. (“Less controversial” is a relative term, of course. There’s so little agreement on the politics and public policy concerning health care reform I’m surprised there hasn’t been a law suit filed to determine whether the issue’s should be spelled as “health care” or healthcare.”)

President Barack Obama and a majority of Senators agree that the PPACA’s requirement that 1099s must be filed by businesses (including non-profits) and by local and state governments when expenditures with a single vendor or contractor  exceeds $600 is overly burdensome and needs to be greatly modified – or better yet, repealed. Yes, there would be a cost. This provision is expected to generate $19 billion in revenues over the next decade, according to Bloomberg.com. But Senators should be able to find a way to solve the problem without busting the bank, right?

Eventually, but not right now. 67 votes are required to pass an amendment stripping the 1099 requirement from the PPACA. The Senate could muster only 61 votes to save small businesses and others from the financial and administrative nightmare of preparing tax notices to Staples, Google, the local printer, the guy who waters the plants, and, well, you get the idea. 35 Senators voted against the repeal. This vote was on an amendment, offered by Senator Mike Johanns to a food-safety bill. This amendment would have also required the White House Office of Management and Budget to cut federal spending by $39 billion. Another amendment to the food-safety bill by Senator Max Baucus that did not include budget cuts failed on a 44-to-53 vote.

The New York Times reports that one reason cited by some Democrats for opposing Senator Johanns’ proposal was that it granted too much leeway to the administration to determine spending cuts. Such decisions should be made by Congress, they argued. Of course, anyone who has watched Congress over the past, say, 10 years, might question that bodies ability to cut spending on anything, but when the argument of being overly deferential to the Executive Branch is handy, some Senators will grab it. Republicans voted against Senator Baucus’ amendment because it did not offset the $19 billion in lost revenue. Given the unfunded proposals voted on by Congress with great regularity over the past, say, 10 years, that this is a sincere argument is also somewhat suspect.

The good news is that the odds are very good a compromise will be reached and the 1099 provision repealed before this Congress adjourns. At some point politics must yield to common sense and near unanimous agreement on an issue. Doesn’t it?

HHS Certifies MLR Rules Lack Commission Relief

The Department of Health and Human Services certified the rules surrounding the calculation medical loss ratios carriers will need to meet beginning in 2011. For the past few months there had been considerable concern expressed by state Insurance Commissioners, the National Association of Health Underwriters and other agent organizations, about the negative impact the MLR provisions of the Patient Protection and Affordable Care Act would have on broker commissions and, consequently, on consumers.

While the Department had engaged in considerable discussion on how to handle this, the medical loss ratio regulations HHS promulgated today does little to resolve the issue. Yes, they leave the door open for addressing the reality that the treatment of commissions under the MLR rules could “disrupt” the market, but they had the chance to do a lot more.

In future posts I’ll address the impact of this result, but for now, so readers know what happened, here is NAHU’s report on the HHS certification of the medical loss ratio rules.

(By the way, brokers reading this who are not members of NAHU should be ashamed. The most important legislation of your career is being reviewed, refined and revised. No organization speaks more loudly or effectively on behalf of brokers than NAHU. You owe it your clients, your profession and to yourself to support those efforts by joining NAHU today).

This morning, the Department of Health and Human Services issued interim final rules on the MLR provisions in PPACA. The rules include agent and broker commissions as part of the non-claims costs in the MLR calculation and does not allow for any portion of the agent and broker commissions to be considered a passed-through expense and excluded from the MLR calculation. NAHU is extremely disappointed in this result because, in our meetings with HHS, the White House and state insurance commissioners on this issue, all repeatedly acknowledged the potentially negative impact of the MLR calculation could have on agents and brokers as well as consumers’ access to affordable health plans.

However, the regulation does permit states to seek waivers from the MLR requirements, including the possibility of seeking a waiver to have agent and broker commissions taken out of the denominator of the MLR calculation for policies sold in that state. The regulation specifically states that the impact of the MLR standard on agents and brokers will be a factor in considering whether a particular individual market would be destabilized. Furthermore, the regulation establishes a process by which stakeholders will have input on the waiver decision-making process and specifically included agents and brokers among the stakeholder groups that must be included.

The interim rule is effective on January 1, 2011, but HHS is actively seeking comments on the regulation and will issue further guidance and a final rule later this year. HHS specifically requested comments on how this interim rule will impact agent and broker compensation and how that may lead to marketplace disruption, and NAHU will be submitting detailed comments on behalf of its members on this critical issue.

Over the next few weeks, NAHU will also be coordinating with the leadership of each state chapter and insurance commissioners in each state to encourage their participation in the medical loss ratio waiver process. We expect that many state insurance commissioners will wish to submit waiver applications based on the impact the MLR rules may have on broker compensation and individual and small-group market competition in their states. The states of Georgia, Iowa, Maine and South Carolina have already indicated to HHS their intent to do so, and Florida and West Virginia have indicated publicly that they are in the process of considering moving forward with a waiver application. NAHU expects that many more states will follow suit once they have finished analyzing the impact the 308-page MLR regulation will have on them.

Finally, NAHU has been working with a bipartisan group of lawmakers for the past few months on federal legislation to exempt agent and broker commissions from the MLR calculation. The regulation delays the time that MLR rebate payments must be made to policyholders until August 2012, providing some time for a legislative solution to be enacted. Pursuing a legislative strategy to permanently solve this problem will be NAHU’s top goal with the 112th Congress.

Tracking Commission Changes

The Medical Loss Ratio requirements contained in the Patient Protection and Affordable Care Act take effect on January 1, 2011. Even though the Department of Health and Human Services has yet to certify the recommendation concerning how carriers should calculate the percentage of premium they pay toward medical care and health quality measures, the carriers have to be managing their businesses to hit the MLR targets on January 1st.

And to hit their MLR targets most carriers offering individual coverage — and many providing small group coverage — will need to adjust their commission schedules. As noted previously here, reducing broker commissions is compelled by the math of the MLR requirements. The PPACA requires carriers to spend 20 percent of the premiums they receive from individual and small group clients on medical care and health improvement efforts (the MLR target is 85 percent for larger groups). A carrier with a mature block of business need 7-to-9 percent to keep the lights on, the staff paid, and other administrative costs. They look for a margin of roughly 4-to-5 percent (they may not always get it, but that’s what they’ll likely aim for). The remaining 6-to-9 percent can be devoted to broker commissions. In some states this is roughly what insurers are paying their producers now; in other states, especially in the individual market, this represents a substantial pay cut.

None of this is pleasant, but math often isn’t. What remains to be seen is whether carriers will move to different kinds of payments (paying a fixed fee for each member insured, for example, rather than a percentage of the premium). While changes to individual commissions are likely to be significant in some states, adjustments to small group payments is likely to be more modest. Some insurers may, for example, simply reduce the percentage of premium paid to brokers to offset coming rate increases (consequently, keeping brokers whole from a revenue stream standpoint). Others may make no changes at all to their small group commission schedules yet.

Whatever they’re going to do, carriers will be notifying brokers of any compensation changes about … now. The insurers will want to apply the new commission schedules to policies sold with January 1st effective dates. Given the nature of the sales pipeline, that means the “Dear Broker” letters should be hitting mail boxes any day now – if they haven’t already.

While I’ve heard rumors of changes I haven’t seen details yet. As this blog has a large readership in the broker community I’m hoping you’ll take a few minutes to share what’s happening. Please leave a comment indicating:

  1. Your state
  2. What product segment the commission change applies to (individual, small group or large group)
  3. What the old commission schedule was
  4. What the new commission schedule is
  5. Any other comments you might have (I’ll reserve the right to edit for civility and language)

Hang in there. Things could change as the National Association of Insurance Commissioners, HHS and carriers address the stark reality: brokers are needed for America’s health care system to function. So this is just a chapter in a long story – an unpleasant chapter, perhaps, but in the end, just a chapter.

Innovation Office Aims to Reduce Medical Costs

The most prominent elements of the Patient Protection and Affordable Care Act concerned insurance reforms.  Limits were placed on what carriers could (join exchanges come 2014) and, more significantly, could not do (term off children dependents under the age of 26, apply pre-existing condition limits on children under 18, rescission restrictions, etc.). Less well known are the cost containment features in the health care reform legislation. One reason is that most of these elements are in the form of studies, creation or expansion of commissions, pilot projects and the like.

Supporters of the reform bill would argue that the creation of exchanges will lower costs as will the PPACA’s requirement that carriers spend a specified percentage of premiums on claims and health quality, in essence limiting the amount of premium dollars that can be spent on overhead and profits. Whether exchanges will lower costs or simply add the cost of another layer of bureaucracy on coverage remains to be seen. And I have severe doubts the medical loss ratio requirements will result in lower premiums. Even if successful, these measures will bend the premium cost curve. But the real driver of premiums is the cost of medical care. So long increases in for the cost of services and products from doctors, hospitals, pharmaceutical  and other health care providers increases are substantially greater than general inflation, premiums are going to rise – and rise substantially – to keep pace. And given the nature of deductible leveraging and other factors only an actuary can love (and few people can explain) premiums will likely increase faster than medical inflation.

So if the cost of health care, and consequently the cost of health insurance, is to restrained, those studies, commissions and pilot programs better lead somewhere. One goal of these efforts is to shift payment from a fee-for-service model to a system that rewards providers for improving health. In his book “Health Care Reform Now!, Kaiser CEO George Halverson points out the clear correlation between paying doctors for providing services and those doctors providing more services. The same point was driven home by Dr. Atul Gawande who wrote an article for The New Yorker back in 2009.

Addressing ways to change this dynamic will be one of the causes taken up by the Center for Medicare and Medicaid Innovation Office, an office created by the PPACA.  of Health Care Innovation all the more interesting. The experiment rewards preventive care and coordination among providers rather than simply the volume of treatment delivered to Medicare patients. Eight states are in the program, including Maine. The cost for the demonstration project in that state comes to roughly $26 million over three years. The other states are Vermont, Rhode Island, New York, Pennsylvania, north Caroline, Michigan and Minnesota. Eventually nearly one million Medicare beneficiaries will be covered under the program. Supporters of the new model, which is referred to as the “patient-centered medical home” claim it will help reduce hospitalizations and medical complications, two major factors behind skyrocketing medical cost.

At this stage, this is only an experiment. Whether it works to cut overall costs without reducing quality won’t be known for a few years. But it is nice to know that the new health care reform law is driving some efforts to live up to the “affordable care” portion of its name.

MLR to Mean Greater – and More Interesting – Disclosure

Much of the debate over the Patient Protection and Affordable Care Act’s medical loss ratio provisions have focused on what expenses are to be considered claims and quality improvement spending, which are to be treated as administrative costs, and what carrier expenditures should be removed from the MLR calculation altogether. This blog alone has dozens of posts touching on the topic.

One of the primary goals of the PPACA’s medical loss ratio provisions is to lower premiums. The health care reform law requires individual and small group carriers to spend at least 80% of the premium dollars they take in on claims and improving the health of their members – and requires large group coverage to spend 85% of premium dollars on those expenses. The likelihood of this happening is, to put it politely, extremely low. Back in 2007 when California Governor Arnold Schwarzenegger proposed a similar provision, I pointed out some of the misconceptions surrounding MLR targets and cost.

But there is likely to be one revelation that will result from the PPACA’s medical loss ratio requirements. There will be greater transparency concerning how carriers spend their money – all carriers – than there has been in the past. While publicly traded insurers have been required to disclosed significant information, how it’s organized and presented is of more use to investors than policy analysts. And non-profit or private carriers have been subject to far fewer disclosure requirements. And those disclosures are subject to rules that vary from state-to-state. All of this makes comparisons across carriers and markets challenging.

All that is about to change thanks to the Patient Protection and Affordable Care Act and, specifically, the MLR provisions in the health care reform law. I realized this after reading Health Affairs excellent brief on the medical loss ratio provision published in HealthAffairs and brought to my attention by Chris Conover (publisher of the U.S. Health Policy Gateway blog. (Both HealthAffairs and the blog are featured on this site’s Health Care Reform Resources page.)

The HealthAffairs brief reminded me of a minor provision in the PPACA I’d forgotten about: although the medical loss ratio requirements only take effect on January 1, 2011, the law calls for a “dry run” to test out the system. Once the medical loss ratio regulations are final (the MLR rules were developed by the National Association of Insurance Commissioners, but must be certified by the Department of Health and Human Services) carriers will complete the various forms describing their 2010 spending. Assuming these reports are made public, they’ll enable the first true apples-to-apples comparisons among carriers. What are their current medical loss ratios? How much is being spent on quality improvement programs? What percentage of premium is passed on to brokers in the form of commissions? The list goes on.

Transparency and disclosure have been heralded as a “disinfectant” in politics. The results, as the $4 billion+ spent on the mid-term elections underscore, are questionable. Nonetheless, in most situations, most of the time, disclosure does tend to help keep people and corporations on, well, if not the straight-and-narrow, then the straighter-and-narrower.

I can’t predict what we’ll learn from the disclosure resulting from the implementation of the PPACA’s medical loss ratio requirements. But I’m willing to bet it will be interesting.

Trailblazed Book Goes Digital

Off topic, but … as is apparent from the book cover appearing on the right of this page, I’ve written a book. Titled Trailblazed: Proven Paths to Sales Success the book reports on the findings of a study my consulting firm, the Alan Katz Group, conducted to identify the practices, procedures and perspectives common to high-growth producers (those achieving 20% sales growth year-over-year), but not to their less successful colleagues.

The book has been doing well (thank you all) and has been available for purchase on Amazon and Barnes & Noble for some time. (And those of you who have read it and liked it, please feel free to leave a review on either of those sites. For those who read it and didn’t like it, please feel free to leave a nice review for a Tom Hopkins or Jeffrey Gitomer book).

As I give speeches about the Trailblazed Sales Project Study, I’ve been asked if the books were available in digital format. I can finally answer “yes.” Trailblazed is now available for Amazon’s Kindle, Barnes & Nobles Nook, and Apple’s iPod through the Kindle or Nook apps. The eBook version of the Trailblazed includes the exact same content as the real world book, but contains a lot more pixels.

We now return to the regular Alan Katz Health Care Reform blog already in progress.

Does Health Care Reform Include a Real Estate Tax?

Health care reform ain’t pretty and it ain’t cheap. (Of course, neither was America’s health care system before the passage of the Patient Protection and Affordable Care Act, but that’s not the point). Someone has to pay for the new law and there’s a host of fees, taxes and the like to foot the bill.

In a comment on my previous post, Jim Diani asked about a 3.8% tax on real estate sales the PPACA imposes starting in 2013. Since the answer concerns more than real estate transactions and hasn’t been discussed much here, I thought a post would be helpful.

There is no tax in the new health care reform aimed specifically at real estate transactions, yet there is a tax that will apply to many such sales. Specifically, the PPACA imposes an “Unearned Income Medicare Contribution tax of 3.8% imposed on the lesser of income over $200,000 for individuals (and $250,000 for joint filers) or on investment income.  This tax was contained in the reconciliation bill, HR 4872 (page 33 for those keeping track). Investment income , and more precisely, “net investment income,” is defined as the sum of “gross income from interest, dividends, annuities, royalties, and rents” not earned in the ordinary course of a trade or business and “net gain (to the extent taken into account in computing taxable income) attributable to the disposition of property,” but not property held in a trade or business.

(This seems like an appropriate point to mention that those seeking a formal interpretation of this provision of the PPACA should consult with your tax expert and that nothing in this post is intended to be or should be taken as tax or financial advice. While we’re at it: clean your room; don’t mix reds and whites in the laundry; if you’re a broker join NAHU;  and don’t text while driving. Now back to our regularly scheduled post.)

So how does this play out. For an individual earning a salary of $300,000 per year who sells her home for $800,000 which, after offsetting basis and various homeowner deductions nets her a profit of $250,000 on the sale, the tax would apply to the $100,000 in salary above the $200,000 threshold (for an additional tax of $3,800) and nothing on the $250,000 unearned income netted from the sale of the property. Change her salary to $500,000 and, since the tax applies to the lesser of wages above the threshold or unearned income, she’d pay an additional $9,500 of taxes on the sale of the house. (Note 11/11/10: This example has changed from the original posting thanks to an error pointed out by reader Don H . Thanks Don for this catch and to Janet Paiwelson for noting the typo on the Medicare Part A tax, below — which has also been correct. I apreciate the help from both of you).

Whether the tax applies to the sale of a home, then, depends on several factors. Clearly the tax is not applied on the total sales price (in the example above, the $800,000). Many taxpayers realize little income from home sales thanks to the tax-favored nature of this particular investment.  But to the extent there is some taxable income realized from the sale of a home under today’s tax code, the PPACA does apply a 3.8% on this investment income to help fund Medicare.

And to be clear, the tax isn’t targeted at home sales. It applies to a broad range of unearned income.

Ask supporters why they imposed this tax and the most common answer will be that it’s a matter of fiscal responsibility (President Barack Obama insisted that the new health care reform law be deficit neutral) and as a matter of tax equity. This latter point goes to the current situation in which only salaries and wages are subject to the Medicare tax. There’s a whole group of Americans who earn hundreds of thousands of dollars on investments, dividends and the like who avoid this tax yet benefit from Medicare. Imposing this tax on non-wage income is viewed as a way of making the tax system more fair.

Incidentally, this isn’t the only new Medicare tax. Individuals making at least $200,000 a year or married couples earning $250,000 will see their Medicare Part A taxes increased by 0.9%. Taken together, this increase and the Unearned Income Medicare Contribution are expected to generate $210 billion between 2013 and 2019.

The new Congress may try to eliminate or postpone these taxes, but my guess is they’ll have a tough time doing so. First, because politically it’ll be hard for Republicans to constantly be seeking tax relief for high wage earners and those living on investments. Second, the expected revenue from these taxes amounts to over 20% of the cost of health care reform. Reducing or eliminating this revenue would gut the PPACA and President Obama won’t agree to that.

Meanwhile, back at the original question: does the new health care reform impose a 3.8% tax on the sale of homes? Only to the extent any portion of the sales price would be considered taxable income today and that income (when combined with other investment income) exceeds the taxpayers wages above $200,000 for an individual and $250,000 for a couple.

Thanks for the question, Jim. Hope this helps.

The New Health Care Reform Resources Page

As promised, I’ve added a resources page to this blog. The page provides access to a broad range of information and tools with the goal of making it easier for brokers and their clients to find the information they need to make informed decisions.

Currently the resources page provides items ranging from copies of the two bills that make up the Patient Protection and Affordable Care Act to tools for determining if grandfathering your current medical plan makes sense to timelines to news sources.

My thanks to all of you who suggested sites and tools – many are included on this list. And many more will be added to the list over time. For the launch of the page I’ve focused on more “hard” resources (news sites, official FAQs, etc.). Moving forward I’ll add links to sites offering views and analysis of health care reform from across the political spectrum. So please continue to recommend additional resources.

Fixing Health Care Reform Harder with Pelosi as Democratic Leader

The message delivered by the 2010 mid-term election is clearly in the eye of the beholder. Some see it as a repudiation of President Barack Obama and/or Democrats in Congress. Others see it as a rejection of incumbents of all political parties. Most everyone agrees, however, that this was an election demanding change. There are other blogs that do a great job of noodling through these kinds of issues. This blog focuses on health care reform. And while I believe the Patient Protection and Affordable Care Act will be changing over the next several months, the process won’t be easy.

The difficulty is only in part because a divided Congress is a guarantee of frequent gridlock. Consider the Kabuki Theater we’ll see play out on repeal of the PPACA. My guess is Republicans in the House will push through a bill to repeal the new health care reform law. This legislation may contain language to preserve certain provisions of the PPACA, but it will be dubbed the “repeal bill.” Not that the GOP majority needs their votes, but a handful of Democrats will likely vote for this bill despite pressure by the Democratic leadership to present a unified front (Democrats aren’t nearly as disciplined as Republicans in this regard, so someone is likely to jump ship).

Democrats in the Senate will kill the bill – and will likely prevent it from coming to the floor. Either party can filibuster. Even with with a few Democratic defections (that would be Senators Joe Lieberman, Ben Nelson and Joe Manchin) the GOP will fail to garner the 60 votes necessary. So President Obama won’t even need to veto the bill as it will never get to his desk.

This script, or something much like it, has nothing to do with public policy and everything to do with politics. Each side will be playing to their base. You might even see liberal Senate Democrats put forward legislation to implement a public option or the like, safe in the knowledge that such a bill would die in the House. Again, it’s all about making partisans (and pundits) happy.

Eventually, however, members of both parties will need to focus on the substantive work of amending the PPACA. In my previous post I wrote about the need for Republicans to decide if they will seek to improve President Obama’s health care reform plan or use the PPACA as a campaign issue in 2012. In that post I also brought up the possibility that Speaker Nancy Pelosi might retire from Congress given the drubbing House Democrats received on election night. She won’t. At least not yet.

Speaker Pelosi has announced she’ll seek to become the Minority Leader in the new Congress. This no doubt delights many Republicans in the House and saddens some Democrats. As the Associated Press reports, in making the move to stay on as House Democratic leader, Speaker Pelosi “rejected pressure from moderate House Democrats – and even some liberal allies .…” Again, other blogs will dissect the broader political impact of this move. But what does it mean for health care reform?

Unfortunately, Speaker Pelosi’s decision to stay on as the Democratic leader in the House means improving the Patient Protection and Affordable Care Act will be much harder than would be the case with someone else leading the Democratic caucus. First, because Speaker Pelosi is a lightning rod for conservative anger. Speaker-to-be John Boehner will have a tough enough time getting his caucus to vote for anything short of repeal of health care reform. The GOP Caucus in the House will contain a significant number of true believers: ideologues who consider compromise a mortal sin as opposed to a natural part of the political process. And even those Republican lawmakers prone to compromise will spend the next two years looking over their right shoulder evaluating whether a vote for half-a-loaf on an issue will have career-ending consequences. Getting these compromise-shy politicians to accept a deal brokered with Minority Leader Nancy Pelosi may be asking too much.

The second reason her decision makes improving health care reform more challenging is that it means no change among the negotiators. The Big Five in Washington for the past two years have been President Obama, Senate Majority Leader Harry Reid, Senate Minority Leader Mitch McConnell, Speaker Pelosi, and Minority Leader Boehner. Assuming no challenge to the two Senators (and none seems to be emerging) and with the likelihood of the House leadership simply switching offices, the same Big Five will be negotiating health care reform for the next two years. Meaning no new perspectives, no change in tone, no difference at all (other than the relative power each holds). As anyone whose survived basic chemistry in high school can tell you, if you have combine the same ingredients in the same way expect the same results. For those of us looking for improvements to the PPACA, this is not a good thing.

Democrats in the House could choose someone else as their Leader, but Speaker Pelosi is an excellent vote counter. I doubt she’d have announced her intentions without be certain they’ll be achieved.

A lot of the Democrats defeated on November 2nd were moderates – the Blue Dog Coalition in the House will be roughly half the size in the new Congress as it was in the old one. This means the Democratic caucus is more liberal going forward than it has been in the past. And given the success of the Tea Party the Republican Caucus has grown even more conservative. The gulf between the two, consequently, is greater than ever and there a fewer bridge builders to help span it.

Changing the PPACA is important. Having the same faces among the Big 5 and more extreme caucuses in the House doesn’t mean revising health care reform will be impossible. But it does mean achieving that change will be harder.

Second Take on 2010 Election Results and Health Care Reform

The 2010 mid-term elections were one of those elections. One that changes everything … forever. We haven’t had one of these game changing elections since, well, 2008. Which apparently defines “forever” as meaning “two years.” So before the next tsunami/landslide/other metaphor for lots of changes election in 2012, what will be the 112th Congress’ impact on health care reform? What follows is my take on what can and/or should happen in the next two years along with some broader political observations. Like the predictions available 24×7 on Talk Radio and cable “news” shows, they may be wildly off-the-mark. I also may change them at any time (consistency not being a high priority among broadcast pundits). Hopefully, this perspective will provide some grist for your own thinking about the future. Please feel free to share your predictions and observations – just remember to keep your comments civil.

1. Who Will Lead? While we assume we know who the major players will be for the next two years, we don’t know for sure. Yes, President Barack Obama will remain president. And it is all but certain that today’s Minority Leader, John Boehner, will become Speaker John Boehner. While some talk of a challenge from conservatives against Senate Minority Leader Mitch McConnell, that’s possible, but unlikely. With his come from behind victory Tuesday night, Senate Majority Leader Harry Reid would be expected to remain in that post. Then again, he bears substantial responsibility for the heavy hit his caucus just took. A challenge to Senator Reid is not beyond the realm of the possible, it’s simply not likely. Then there’s current Speaker Nancy Pelosi. Dethroned Speakers have retired from Congress before (think Newt Gingrich and Dennis Hastert). Speaker Pelosi could seek to serve the Democratic Caucus as Minority Leader, but there’s no guarantee she’d be elected. We’ll know more in a few weeks, but there could be some new players in leadership roles. This could change the tenor and tone of negotiations. Then again, nothing might change at all.

2. Why Republicans May Let PPACA Stand. The Patient Protection and Affordable Care Act will be amended. Whether those changes are substantial or not is in the hands of newly empowered Congressional Republicans – and, as noted below, a few Democrats). The GOP, both from ideological disagreements with President Obama and political calculation gave no support to the Administration’s major legislative goals. Unified Republican caucuses in both Chambers of Congress worked to deny the President any support – at times even when the President was promoting or at least open to GOP positions. And they were rewarded with a political landslide of historical proportions. With 21 of the 33 Senate seats up for election held by Democrats and the Presidency on the line in 2012, why mess with success? (OK, besides a desire to solve problems). If the strategy is to deny the President accomplishments upon which he can campaign for reelection, then “fixing” his flawed health care reform plan is counterproductive. Better to let things remain as they are then hope to ride displeasure with the PPACA to majorities in Congress and a Republican President in the White House. Is this a cynical perspective? Perhaps. But given the promise of “no compromise” from Representative Boehner and Senator McConnell’s statement that Republican’s “single most important thing we want to achieve is for president Obama to be a one-term president” perhaps not.

3. Why Republicans May Improve the PPACA. Then again, the Republicans may decide to fix a lot of what’s broken in the Patient Protection and Affordable Care Act. And even add some needed additional reforms to the package. The “just say no” political strategy carries some heavy risk. Republicans already have a worse “favorability gap than Democrats. (Exit polls indicate that 43 percent of voters have a favorable view of Democrats while 53 percent view them unfavorably while 41 percent viewed Republicans favorably and 53 percent viewed them unfavorably). Other polls show the public wants Republicans and Democrats to work together to get things done. Now that they have power, the public may punish the GOP if they fail to deliver results. “Fixing” health care reform would demonstrate Republicans understand their responsibility to move beyond gridlock. Some changes will be easy; others much harder. But a vibrant debate – and some political compromises – could also enable Republicans to achieve long held goals like medical malpractice reform and improve the cost containment provisions of the new health care reform law. At least one can hope.

4. Vice President Biden May Determine the Fate of Health Care Reform. When the dust settles, the Senate Democratic Caucus will have 53 members (assuming Senator Pat Murray’s lead in Washington continues to grow) while there will be 47 Senate Republicans (which  recognizes that whoever Alaska elected to the Senate will caucus with Republicans). However, one member of the Democratic Caucus is Senator Joe Lieberman, a conservative Independent who frequently sides with Republicans. And with a tough reelection campaign facing him in 2012 he might switch over to Republicans with the right inducement. Then there’s the Senate’s most conservative Democrat, Senator Ben Nelson of Nebraska. He too often sides with Republicans. Concerned about his reelection in 2012 he too might support Republican efforts to amend the PPACA. Enter stage right Governor and future Senator from West Virginia Joe Manchin, who may prove to be even more conservative than Senator Nelson. Governor Manchin has said that he “favors repealing things that are bad in [the PPACA]” and describes President Obama’s health care reform as “overreaching.” If these three members of the Democratic caucus – and only these three – join a united Republican effort to change major aspects of the Patient Protection and Affordable Care Act the Senate would deadlock, leaving Vice President Biden to cast the decisive vote. Who says being Vice President is a boring job?

5. Be Careful What You Wish For. If gridlock is avoided, what might change in the PPACA? The low-hanging fruit involves lowering administrative burdens imposed by the Patient Protection and Affordable Care Act that have little value. Examples include provisions impacting W-2s and 1099s (In a press conference today President Obama talked about the need to reduce the burden of the PPACA’s 1099 requirements). Republicans might want to make it easier to achieve grandfather status and thus enable some employers and consumers to avoid certain requirements of the PPACA. They will push for medical malpractice reform and may offer some additional measures to control costs. And Republicans could (and should) make the premium subsidies created by the PPACA available for use outside of the government exchanges. This would create more competition and choice for consumers and employers, a cause the GOP could easily champion. Republicans are unlikely to do away with the medical loss ratio requirements included in the health care reform law, but they might redefine elements of it. For example, they could recognize the wisdom of excluding broker commissions from the MLR calculation altogether (OK, this may be wishful thinking). Republicans are unlikely to seek to eliminate exchanges – they have been a part of the GOP’s health care reform proposals for years. They will seek to do away with the individual mandate, even though doing so would result in skyrocketing premiums. In other words, some improvements pushed by Republicans could make health care reform worse.

6. Obama Has Already Won. Here’s an observations folks may not like, but if you think about it, when it comes to health care reform, President Obama has already won. No one that I’m aware of is calling for a return to the status quo. Even the Republican campaign mantra was to “repeal and replace” the Patient Protection and Affordable Care Act. Yes, his particular reforms may cost the President a second term and certainly cost some lawmakers their job, but these are short-term impacts. Long term President Obama accomplished what predecessors of both parties tried and failed to do – pass substantial health care reform. Even if Republicans could repeal the new law (and they can’t given their inability to muster veto-proof majorities) they would need to replace it with something. And that something will not be a return to America’s health care system circa 2008. You may not like the Administration’s reforms. Those reforms may need reforming. But it cannot be denied that President Obama delivered on his campaign promise to forever change America’s health care system.

6. Change Will Change. There has been a lot of discussion on this blog – some of it quite heated – concerning the impact of the PPACA in general and on brokers in particular. As I’ve noted frequently, the health care reform law itself is not the end reforming health care. The PPACA is only the start. Much of the law remains to be interpreted by federal and state regulators and then those regulations will in turn be interpreted by employers, carriers and others. Even if Congress gridlocks on major revisions, some change to the PPACA will emerge from Congress in the next two years. And Republicans in the House will certainly seek to impact implementation of the law through through Congress’ budget and oversight powers. The PPACA is health care reform that needs reforming. My hope is that we get those changes. But whether they’re the right changes or not, there will be change.

There’s one thing certain about the 2010 election results: they assure an interesting 2011.