Barack Obama was re-elected president of the United States in a close election that portends that current policies will be maintained.
This includes healthcare reform and implementation of the Dodd-Frank financial services reform law.
“This was a status quo election,” says Eli Lehrer, president of the Washington-based R Street Institute.
“The Senate will stay Democratic and the House Republican. President Obama will stay in the White House,” Lehrer notes. “Although the Democrats far-better-than-expected performance in the Senate may indicate a small national move to the left, this isn't a real sea change.”
In one race, perhaps showing the insurance industry's clout, Sen. Jon Tester, D-Mont, was re-elected in a strongly red state, Tester got strong industry support in winning re-election. As a member of the Senate Banking Committee, Tester was an aggressive supporter of the industry on key issues, such as a long-term extension of the National Flood Insurance Program.
Meanwhile, Rep. Judy Biggert, R-Ill., was defeated for re-election, a victim of redistricting. She headed the Subcommittee on Insurance, Housing and Community Opportunity of the House Financial Services Committee, and was expected to be a big player on insurance issues. She shepherded the NFIP bill through its tortuous, five-year path to a long-term extension. The bill was finally enacted in July. It is unclear who will succeed her as chair of the insurance subcommittee. Biggert was also expected to be a key player on regulatory issues as well as in gaining passage of A Terrorism Risk Insurance Act extension.
Joel Wood, senior vice president of congressional affairs of the Council of Insurance Agents and Brokers, called Biggert's defeat, “extremely disappointing to the insurance industry.”
Lehrer says efforts to create a national catastrophe fund or anything of the sort are not going anywhere in this Congress. “Given that National Flood Insurance Program reform was one of the few major issues where we saw bipartisan cooperation in the last Congress, I believe that will continue.”
Regarding healthcare reform, Ethan Rome, executive director of Health Care for America Now, says, “After two years of raging debate about health care and the most expensive and polarizing presidential election campaign in our nation’s history, Obamacare won tonight – and it's here to stay. The re-election of President Obama seals the deal.”
However, a key question remains, whether, as rumored, the administration moves to delay implementation of the exchange system from Jan. 1, 2014 to perhaps Jan. 2015.
Beth Mantz-Steindecker, a health regulatory analyst at Washington Analysis, is suggesting that implementation of the exchanges may be pushed back because so few states are prepared to implement the program.
Washington Analysis analyst Ira Loss also confirms that it is unlikely that insurance agents will be able to win an exemption from the Medical Loss Ratio, given the election results.
Such legislation has passed a House panel, but whether the full House will decide to proceed with floor action in the face of the Senate Democrats likely blocking such a bill is a very big question.
At the same time, the likelihood is that release of the report on proposals to modernize regulation of the insurance system is likely imminent. The report, mandated by the DFA and supposed to have been released in January, has been kept in cold storage by the Treasury Department out of concern it would generate partisan attacks.
The election also ensures that the Financial Stability Oversight Council will likely follow through on designating certain non-banks such as insurers as systemically significant, perhaps as early as early next month.
The likely insurance company candidates are American International Group, MetLife and Prudential Insurance.
It also means that consolidated regulation of insurance companies which operate thrift holding companies will proceed. Implementation will likely be delayed beyond Jan. 1, and revisions in the proposed rules, which insurance companies universally oppose, are likely. The Fed might even postpone implementation until 2015; however, there ultimately will be consolidated regulation of insurance companies by the Federal Reserve Board, with or without congressional debate.
The election could have implications for the Terrorism Risk Insurance Act as well, which expires Dec. 31, 2014. Lehrer says, “Any sort of TRIA reauthorization faces a real struggle and I would doubt that the program will survive in its current form. That said, the very nature of the terrorist threat means that something, somewhere will probably continue to exist.”
There will also be key changes on House committees, with Rep. Jeb Hensarling, R-Texas, a strong supporter of the insurance industry, likely taking over as chairman of the House Financial Services Committee. The outgoing chairman is Rep. Spencer Bachus, R-Ala. And, with the decision of Rep. Barney Frank, D-Mass., not to run for re-election, he will likely be replaced as ranking member by Rep. Maxine Waters, D-Calif.
In acknowledging his victory, President Obama strongly signaled a renewed attempt to work across the congressional aisle with Republicans. And, in his concession speech, Republican Mitt Romney also dropped the stridency of the presidential campaign, and implied he would not attempt to hinder the president in carrying out government policies.
This could have implications for the “fiscal cliff” negotiations. A key Republican senator was quoted before the election as saying that if President Obama is re-elected, Republicans would have to bend to give him some tax increases in order to fend off a huge cut in defense spending.
"We might as well cut a deal," Sen. James DeMint, R-S.C., said of what would happen if Obama wins. "If Republicans want to maintain the defense, we're going to have to give tax increases to Obama."
“When Jim DeMint is suddenly open to revenues, you know the tide is turning," a grinning Sen. Charles Schumer, D-N.Y., responded.