So, What Happens Now?

Last Tuesday, Republicans scored a historic victory by increasing their majority in the House of Representatives; retaking the majority in the Senate; and, expanding the number of Governor’s mansions and state Houses under GOP control.  So, what happens now?

Lame Duck
Because Congress did not complete work on a variety of issues prior to adjourning in September, a “lame duck” session has been scheduled.  Because of the GOP victories on Tuesday, it is highly unlikely that the lame duck session will accomplish anything other than a continuation or extension of appropriations bills or certain expiring tax provisions.

Between now and December 11th, the current Congress will have to decide what to do with the appropriations bills.  The most likely scenario is that the Congress adopts another CR (or omnibus) appropriations bill that avoids making substantive decisions on spending for the 2015 Fiscal Year.

Although many Members of Congress have been urging the Congressional Leadership to put a permanent SGR fix on the agenda for consideration during the lame duck, we think it is highly unlikely this will occur.

The consensus for enactment of a permanent SGR fix remains largely intact but it is important to remember that the consensus was ONLY for what should replace the SGR, NOT for how to pay for the SGR fix.  The “pay for” remains as elusive today as it was 9 months ago when Congress adopted the current patch.

Because the temporary SGR fix does not expire until the end of March, there is time during the early months of the new Congress to deal with this issue.  We see no evidence that the new Congress will be any more willing to cut physician fee schedule payments by 21% than the current Congress has been.

Once the new Congress gets settled in and the leadership/committee chairmanship races have been decided, we expect the 114th Congress will work in earnest to find a permanent fix.

Healthcare Reform
Despite the loud and persistent calls from GOP candidates for repealing the Affordable Care Act (ACA), we see little evidence that legislative efforts to repeal the ACA will be any more successful in 2015 than they were in 2014 or 2013.

It is entirely possible (even likely) that the GOP controlled Congress will pass legislation repealing most or all of the ACA in the early part of 2015.  But the President has threatened that he will veto any legislation repealing the ACA.  And despite their gains, the GOP does not have a veto-proof majority.

It is possible that the GOP could force some changes to the ACA.  There are various legislative tools and ways to package legislation that would make it difficult for the President to veto certain bills.  Also, many Democrats have expressed concerns about certain provisions of the ACA so it is conceivable that the GOP could get some Democratic support for votes overriding a Presidential veto.

Repealing the Medical device tax, modification of the employer mandates and language expanding insurance options and patient provider options are all proposals that have generated some bi-partisan support.  It is conceivable that legislative reforms encompassing these types of changes could obtain support with sufficient numbers to override a possible Presidential veto.

Break Away from the Static

House of Representatives
The GOP will control no fewer than 245 seats, up from the 230 they had going into the election.  If that number holds (most of the unresolved seats are seats currently held by Democrats), then the GOP will enjoy their largest House majority since Harry Truman was President.

Technically, nothing will change in the House in terms of the GOPs ability to control the House agenda.  Despite the increase in their majority, House Republicans will not have enough votes to overcome Presidential vetoes should the President choose to use his Veto pen during the last two years of his term in office.

House Speaker John Boehner (R-OH) is expected to seek another term as Speaker of the House of Representatives and despite rumblings from some of the party’s most conservative members, he should be re-elected without problem.

Earlier this year, then House Majority Leader Eric Cantor (R-VA) was defeated in the GOP primary and he subsequently resigned his seat in Congress.  This led to the election of Kevin McCarthy (R-CA) as the GOP Majority Leader.  McCarthy will surely run again and he, too, is expected to be elected easily to the Majority Leader position.

Not surprisingly, the Senate and the Senate Committees are where we will see the most visible signs of the impact of the GOP wins.  Based upon known outcomes, the GOP will control at least 52 seats during the 114th Congress, up from 45 during the current Congress.

Senator Mitch McConnell (R-KY) is poised to become the next Majority Leader in the United States Senate. Like most of his predecessors, his initial comments have been sprinkled with compliments for his opponents and suggestions that he will be different in his leadership style, offering a more open and inclusive environment in the Unites States Senate.

McConnell has stated publicly that he wants to lead more in the style of legendary Senator Majority Leader Mike Mansfield (D-MT) and less like what has been the norm under Senator Reid.  Whether he delivers on that promise remains to be seen.

Two seats currently held by Democratic Senators remain unresolved at the time of this writing:

Alaska – Although 100% of precincts have reported, and the GOP Candidate, Dan Sullivan is leading incumbent Mark Begich (D-AK) by approximately 8,000 votes, some outlying villages have not sent in their results and there are apparently a large number of absentee ballots yet to be counted.

Louisiana – Louisiana has a unique electoral system where all candidates, regardless of party, can run in the general election.  However, in order for a candidate to be declared the winner, he/she must garner at least 50% + 1 of the votes.  If no candidate achieves that threshold, then there is a run-off between the top two vote getters in a second election, again, regardless of party.

When looked at by party voting, the GOP candidates received 55% of the vote and the Democratic candidate received 42% of the vote.  The expectation is that when the second vote occurs in early December, the GOP vote will coalesce around Cassidy making him the favorite to win round two.

ADVOCATE will continue to provide updates as information becomes available.

Best Regards,
Kirk Reinitz, CPA