Midterm Elections and Healthcare Reform

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One thing's for sure: the midterm election will mark the beginning of a new and different political period. Just how new and different we'll know in the days and weeks that follow.

RealClearPolitics, a polling data aggregator, shows Republicans securing a majority in the House and among governors, and possibly even the Senate.

After the economy and jobs, voters cite health care reform and dissatisfaction with government as the most important issues to their vote, according to the Kaiser Family Foundation.

Three factors will shape what happens after November 2nd:

  1. the degree to which Republicans 'win', including not just the total number of seats but also the individual seats themselves, in particular those now held by high-profile Democrats;
  2. the cohesiveness of the Republican AND Democratic agendas, including the administration's response to the new Congress;
  3. the speed of economic recovery and restoration of job growth.

[For a great overview of seats won and lost in midterm elections, we recommend visiting USMidtermElections. This site allows you to view and sort midterm results back to the very first one in 1790, for both chambers.]

Should, for example, the Republicans win control of both Houses, a majority of governorships, and deliver a consistent and coherent post-victory agenda, while the economy continues to teeter, expect party leaders to attempt dramatic legislative action.

Should the Democrats maintain Senate control and quickly refashion their image, expect softer Republican action, even if economic recovery stagnates.

At this point, odds favor a dramatic momentum shift in favor of Republicans. As of October 18th, RealClearPolitics shows the Republicans securing 212 seats and the Democrats 180 seats, with 43 undecided. The Senate divides between 46 Republicans and 48 Democrats, with six seats too close to call.

The biggest battlefield

Perhaps the biggest political battlefield—and display of these three factors at work—will be health care, and the fight to dismantle the Patient Protection and Affordable Care Act, President Obama's defining legislation.

Republicans have three strategies from which to choose:

  1. a swing-for-the-fences outright repeal;
  2. a house-of-cards killing of key provisions;
  3. a foot-dragging delay of its implementation.

Repeal, while a low probability, is not improbable. If the three dynamics identified above strongly favor Republicans, then Congress's ability to override a certain presidential veto would depend on how many Democrats choose to vote against the administration. Let's not forget: the Democratic party will feature folks not tethered to the 111th Congress and the 2008 election.

Foot-dragging, on the other hand, would likely happen if our three factors and their dynamics underwhelm. Rather than surprises at the polls, it would be Republicans badly flubbing their message that most likely spawns this reactive strategy—a situation where Republican momentum stalls.

The most likely strategy will be an attempt to kill key provisions, with the goal of forcing the bill to collapse like a house of cards. According to a recent article in the Financial Times, Republicans may seek to defund the scores of agencies that the bill requires the Department of Health and Human Services to set up for implementation. (Depending on the number of seats won, the Republicans could also use reconciliation as a legislative tool to advance this plan of attack, as the Democrats did to force through their agenda.)

Such a house-of-cards strategy, the FT notes, would still require substantial reputational risk just as the next election cycle commences.

To be sure, opposition to health reform won't take place on Capital Hill alone. The constitutional fight over the individual mandate is already making its way to the US Supreme Court. With many of the bill's key provisions—including the individual mandate—taking effect in 2014, the plaintiffs are seeking to accelerate the suit's journey, while the defendants are aiming to slow it down.

Moreover, states and their newly elected governors and local leaders will need to address massive health care obligations right away. Earlier this month, the New York Times reported a first-time disclosure of $200 billion in unfunded liabilities among the cities, counties and authorities of New York.

Many state officials are likely to consider the design and use of insurance exchanges. Until 2014, these officials will enjoy considerable free rein, and could build systems that effectively reduce government commitments by emphasizing market-based solutions. In fact, some conservative thought-leaders argue that state action on the exchanges could do more to curtail the bill than Congress itself. A viewpoint, for example, Scott Gottlieb and Tom Miller recently expressed in the Wall Street Journal.

The stakes are high for both parties, and for the administration and its legacy. Watch for a fierce—and potentially complex—fight to erupt immediately after the 112th Congress takes its seat.

Disclosure: No positions