Barack Obama was re-elected president of the United States Tuesday night in a close election that portends that current policies will be maintained.
This includes healthcare reform and implementation of the Dodd-Frank financial services reform law.
There will be key changes on House committees, with Rep. Jeb Hensarling, R-Texas, a strong supporter of the insurance industry, likely taking over as chairman of the House Financial Services Committee. The outgoing chairman is Rep. Spencer Bachus, R-Ala. And, with the decision of Rep. Barney Frank, D-Mass., not to run for re-election, he will likely be replaced as ranking member by Rep. Maxine Waters, D-Calif.
At the same time, Rep. Judy Biggert, R-Ill., was defeated for re-election, a victim of redistricting. She headed the Subcommittee on Insurance, Housing and Community Opportunity of the House Financial Services Committee, and was expected to be a big player on insurance issues. She shepherded the NFIP bill through its tortuous, five-year path to a long-term extension, finally enacted in July. It is unclear whom will be named to succeed her as chairman of the insurance subcommittee.
And, she was expected to be a key player on regulatory issues as well as guiding passage through the Congress of extension of the Terrorism Risk Insurance Act, which expires in December 2014. Joel Wood, senior vice president of congressional affairs of the Council of Insurance Agents and Brokers, called her defeat, “extremely disappointing to the insurance industry.” Regulatory issues she dealt with in her role as head of the Insurance Subcommittee include designation of insurance companies as systemically significant and consolidated regulation of insurance companies with thrifts. Wood called her a” thoughtful, moderate ally of the industry.”
Regarding Hensarling and Waters, Wood called Waters a “liberal firebrand.” He also said that Hensarling and Waters “will be quite the odd couple.”
However, it is almost certain that the “fiscal cliff” will be averted. Speculation by pundits early this morning was that Congress will move the Dec. 1 deadline for implementation of the cuts and phaseout of the Bush-era tax cuts will be extended, but only for several months.
Practically, however, that won’t work.
One of the key issues is estate tax policies. Given that estate and trust tax planning is expensive, as is the need for the Internal Revenue Service to issue guidance on mid-year course corrections, as well as complex, it appears that a common sense solution is to extend everything for one year while comprehensive tax form is debated in the next Congress.
A bipartisan group is working on comprehensive tax reform in the Senate, and Rep. Dave Camp, current chairman of the House Ways and Means Committee, has held joint hearings with the Senate Finance Committee on the issue.
Key issues include inside buildup, Corporate-Owned-Life-Insurance and Bank-Owned-Life-Insurance, the estate tax, general federal tax rates, non-qualified deferred compensation plans and the dividend-received deductions on variable annuity contracts.
Based on the Obama administration’s proposed 2013 budget, other provisions on the table include generation-skipping transfer taxes and grantor retained annuity trusts.
“This was a status quo election,” said Eli Lehrer, president of the R Street Institute, a think tank.
“The Senate will stay Democratic and the House Republican. President Obama will stay in the White House,” Lehrer said.
At the same time, in acknowledging his victory, President Obama strongly signaled a renewed attempt to work across the congressional aisle with Republicans. And, in his concession speech, Republican Mitt Romney also dropped the stridency of the presidential campaign, and implied he would not attempt to hinder the president in carrying out government policies.
The first implication is that implementation of the Patient Protection and Affordable Care Act (PPACA) will continue.
“After two years of raging debate about health care and the most expensive and polarizing presidential election campaign in our nation’s history, Obamacare won tonight – and it’s here to stay,” said Ethan Rome, executive director of Health Care for America Now. “The re-election of President Obama seals the deal.”
Karen Ignagni, president and CEO of America’s Health Insurance Plans said in a statement this morning that, “We congratulate President Barack Obama and members of Congress in both parties for winning their elections.”
She said health plans are committed to working with policymakers to make coverage more affordable, promote choice and competition, and maintain a strong safety net for our nation’s most vulnerable populations.
“As the health care reform law is implemented, policymakers must prioritize affordability for consumers and employers,” Ignagni said. “Several provisions in the law, such as the new premium tax, minimum coverage requirements, and age rating restrictions, need to be addressed to keep coverage as affordable as possible and ensure broad participation in the system.”
However, a key question remains, whether, as rumored, the administration moves to delay implementation of the exchange system from Jan. 1, 2014 to perhaps Jan. 2015.
Beth Mantz-Steindecker, a health regulatory analyst at Washington Analysis, is suggesting that implementation of the exchanges may be pushed back because so few states are prepared to implement the program.
Washington Analysis analyst Ira Loss also confirms that it is unlikely that insurance agents will be able to win an exemption from the Medical Loss Ratio (MLR), their No. 1 legislative priority, given the election results.
Such legislation has passed a House panel, but whether the full House will decide to proceed with floor action in the face of the likelihood that Senate Democrats have the votes to block its passage is a very big question.