Dispatch from Colorado Springs, Day 5 and final at 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 up regarding 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” of Washington.
Health reform cannot be repealed as long as Barack Obama is President.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 OFC never 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.