Law360, New York (November 05, 2014, 12:50 AM ET) — The U.S. Senate’s flip to GOP hands will add new turmoil to health care policymaking as Republicans launch fresh assaults on the Affordable Care Act, but it also sets the stage for important compromises as the party eyes 2016, experts say.
The Republican Party won control of the U.S. Senate in Tuesday’s midterm elections, taking seats held by Democratic incumbents in several key battleground states to secure the majority after holding onto the U.S. House of Representatives earlier in the evening.
The GOP had needed to reel in six seats to retake the Senate following eight years of Democratic control, and by late Tuesday had done just that in Arkansas, Colorado, Iowa, Montana, South Dakota and West Virginia to push them to victory.
The overarching challenge for Republicans now will be balancing conservative priorities with a recognition that White House veto power looms large, making concessions essential if the GOP hopes to enact meaningful legislation and prove its governing chops.
That tension is especially stark because the party has only a narrow window of opportunity to make its mark during the Obama administration’s twilight years. By summer 2016, election season will be in full swing, and as early as summer 2015, several Senate Republicans could start spending most of their time on the presidential campaign trail.
“They expect they’ll have a six-month window to legislate” with the full powers of their new majority, Julius W. Hobson Jr., a health care lobbyist at Polsinelli PC, told Law360.
Here are six health policy issues to watch in the months ahead.
New ACA Debates Loom
Republicans will probably be eager to cast anti-ACA votes, in part because outgoing Senate Majority Leader Harry Reid, D-Nev., has not permitted votes on legislation passed by the conservative U.S. House Of Representatives. However, experts say President Barack Obama will undoubtedly veto any serious threats to the law, making those actions largely symbolic.
“I don’t think you’re going to see any significant damage done to the ACA,” Manatt Health Solutions managing director Joel S. Ario said.
The wildcard is whether, after five years of ACA hostilities, Republicans and Democrats can call a limited truce and find ways to improve the law. The ACA’s medical device tax and employer mandate are seen as promising targets — provisions that could be scrapped or dialed back in ways that both parties could tout as pro-business achievements.
“We are going to have to have a conversation at some time as a country about how to improve the Affordable Care Act,” Ario said.
Committees to Step Up Scrutiny
Just as GOP senators had to watch passively as House Republicans voted repeatedly to fully or partly repeal the ACA, so too have they been unable to stage oversight hearings scrutinizing the law. That will change as Republicans start running the Senate Finance Committee and the Senate Committee on Health, Education, Labor & Pensions.
But experts don’t think the panels will devolve into political sideshows, because their respective incoming leaders — Orrin Hatch of Utah and Lamar Alexander of Tennessee — are widely regarded as pragmatic legislators, not flame-throwing partisans.
“Both of them have reputations of trying to get things done,” Hobson said. “It’s more a question of whether they can move things through the entire Senate.”
2016 Will Hang Over GOP’s Head
On that question, it remains to be seen whether GOP senators will make common cause with Democrats on significant health policy reforms. But experts predict the Republican Senate at the very least will avoid deeply conservative legislation — especially legislation related to Medicare spending — mainly because lots of vulnerable members will face re-election in two years.
Specifically, the GOP must defend 24 Senate seats in 2016, compared with just 10 for Democrats. Many of the GOP seats are in blue states or swing states, including Florida, Illinois, Iowa, Missouri, New Hampshire, North Carolina, Ohio, Pennsylvania and Wisconsin.
“You’re not going to see Republicans up for re-election in two years doing anything crazy with respect to the budget,” Husch Blackwell LLP partner Harvey M. Tettlebaum said.
Court Vacancies Thrown Into Limbo
GOP senators won’t hesitate to flex their majority muscle when it comes to Obama’s judicial nominations, which could prove pivotal in deciding an array of health policy suits. The president already has had enormous success tilting the political balance on circuit courts, and attorneys say Republicans will be dead-set on preventing many more left-leaning judges from being confirmed to higher courts.
“My theory is almost no judges get confirmed in the next two years,” Hobson said. “[Republicans] just won’t do it.”
Among the 13 circuits, only seven seats are vacant, and so a lack of new appointments in the next two years may not be terribly consequential. However, because so many high-stakes cases are pending involving the ACA and other health care issues, any unexpected openings on the circuits — and in particular the U.S. Supreme Court — could be momentous.
“Certainly, whatever vacancies are created during that time, it’s going to have an effect,” Tettlebaum said.
Doctor Pay Poses Immediate Challenge
An immediate test for the new GOP-led Congress will be Medicare’s physician-payment formula, known as the sustainable growth rate. Money is earmarked through March 31, by which time action will be needed to avert severe reimbursement cuts.
There’s broad support among lawmakers and doctors to scrap the SGR, and eliminating the formula would be an early feather in the GOP’s cap. However, paying for it won’t be easy — the Congressional Budget Office earlier this year priced repeal at roughly $125 billion.
The cost of ending the SGR has been volatile, however, and so a new CBO estimate likely will emerge in early 2015. That dollar amount may determine whether the SGR is finally axed or if yet another short-term “doc fix” occurs instead.
“A lot of it will depend on CBO’s new baseline,” Hobson said.
All Eyes Will Focus on ‘Grand Bargain’
More prominently, there will soon be chatter about a possible “grand bargain” to shrink the federal budget deficit — perhaps by closing tax loopholes and cutting Medicare spending by hiking the eligibility age.
If that’s something Congress and the White House pursue, Obama will have to persuade Democrats to play ball, and Senate Republicans will have to convince their more conservative House counterparts to moderate their demands.
Obama “has said he would be open to reasonable things. … The question is whether the Hill can deliver something that is not an overreach,” said Keith J. Fontenot, managing director of public policy at Hooper Lundy & Bookman PC.
“There could be a bargain,” Fontenot said, “but how it sizes up in the end is anybody’s guess at this point.”
–Editing by Richard McVay and Jeremy Barker.