This ain’t New
Hampshire—and it ain’t like living with Mama.
Welcome to gridlock.
Dispatch from Colorado Springs, Day 5 and finalat The
Council's 97th Insurance Leadership Forum:President George W.
Bush has just spoken, and even the most hardened of Democrats
in the audience (not that many) were impressed and
entertained.You can disagree with his presidency, but you
can’t argue he’s not smart.
In this dispatch, we are a month out from the midterm
elections, and I’ve taken a $100 bet with Hyatt Brown (of
Brown & Brown, of course) that Republicans will capture a
minimum of 50 new seats in the House of Representatives, more
than enough to seize control of that chamber. I’m pretty
sure Hyatt thinks I’ve got cocky wishful thinking going
on—and he may well be right.
The difference between Republicans hitting or missing the
magic 218 members, obviously is critical in answering the
“where do we go from here” questions.By the time
you read this, you’ll certainly know how far the
GOP’s gains will be in the House and Senate.(I might as
well go ahead and embarrass myself here and predict a net gain
of seven seats for Republicans in the Senate.)But no matter
where on the spectrum it goes—from modest gains to wipe
out—there are some predictions that I think will hold
upregarding the agent/broker agenda in Washington.
The first is that gridlock will reappear, and that’s
not always a bad thing.One of the big reasons that Bill Clinton
left the federal government with surpluses was that the GOP
Congress wouldn’t give him the appropriations he wanted
on the domestic front, and he wouldn’t give Republicans
what they wanted on the defense front.
Whatever you think about the Obama Administration and the
Democratic Congress, they’ve gotten big things
done.Almost any scenario in the midterm elections means that
there will be fewer moderate Democrats, and that means more
polarization, what I call the “Sacramento-ization”
Health reform cannot be repealed as long as Barack Obama is
President.Period.The degree to which it can be reined in will
depend not only on election results, but on sustained and
growing public antipathy toward it.Republicans will have to be
extremely smart about defunding the implementation of the
health reform law by the Department of Health and Human
Services.To a certain extent, the toothpaste can’t be put
back in the tube.The market reforms (e.g., the pre-existing
conditions restrictions, the “slacker” provision
for kids up to 26, etc.) are unlikely to be targeted.But
considering the reality that the exchanges and most of the
subsidies won’t kick in until 2014, there are plenty of
targets for Republicans, including low-hanging fruit such as
the 1099 reporting provision.
The day in October was telling when The Wall Street Journal reported that
McDonalds might discontinue its mini-med plan for 30,000
workers.HHS immediately expressed its willingness to bargain on
the minimum loss ratio rules and exceptions for limited benefit
plans, even though they surely were holding their noses.This
demonstrated a chink in the armor that Republicans might be
able to exploit and expand.
How they’ll do that is anybody’s guess.At every
event I’ve attended with Republican members of Congress
in the last three months—and I’ve been to a lot of
them—I’ve asked how they see the end
game.They’ll take their repeal vote, lose, and then start
defunding, raising the specter of the government shutdown of
1995, which Republicans completely fumbled.The end game is
impossible to assess.
On the property-casualty side, our issues are far less
partisan and unlikely to be influenced in a dramatic way by
changes in Congress.If your firm is bank-owned, you have much
at stake at the parent level, as the GOP would aggressively
move to repeal portions of the Dodd-Frank regulatory bill,
including the new consumer credit regulatory function at the
Federal Reserve. No doubt there will be a greater federal
involvement in insurance matters at the 30,000-ft. level, with
some firms such as AIG considered systemically relevant
(perhaps Berkshire Hathaway?) and large financial holding
companies will receive more scrutiny.But nothing will change
the surplus lines provisions (praise the Lord), or the creation
of a Federal Insurance Office at the Treasury, which is more of
a bully pulpit than a regulator.
I am skeptical that the Optional Federal Charter debate will
advance very far in the next session of Congress.The Dodd-Frank
bill was the biggest legislative overhaul of financial
regulations since the Great Depression.If you couldn’t
make it in the context of that bill—the OFCnever got out
of the starting gate—it will be nearly impossible to get
there as a stand-alone measure in a Congress controlled either
by Democrats or Republicans.
At the ILF meeting at the Broadmoor, I got marching orders
from our Advocacy Committee to take the next steps to build
consensus on agent/broker licensing reform (the so-called
“NARAB II” approach).If I squint my eyes, I can
imagine that we might be able to build that consensus with a
lot of industry partnership.We also want to use every amount of
leverage we can to roll back all of the threats to the
employer-provided group health insurance marketplace.And we
want to have a role in getting Congress to finally stop kicking
the can down the road of the National Flood Insurance Program
reauthorization.It needs reform, and the wind-water debate
needs to be resolved, too.
No matter the election results, we have our work cut out for
us.The late, great Rep. Charlie Wilson of Texas was asked about
the confirmation of Justice David Souter to the Supreme
Court.“David Souter better fasten his seat belt because
this ain’t New Hampshire—and it ain’t like
living with Mama,” he whooped.Sounds like the right
analogy for the next couple of years.
Wood is The Council’s senior vice president of