In an ideal version of the U.S. government, consequential federal legislation becomes law with support from liberal and moderate Republicans, as well as conservative and moderate Democrats. However, since the two major parties have long lacked cooperation and Congressional moderates are essentially extinct, often the only time consequential legislation can pass is if one party controls the White House, Senate and House of Representatives, says James A. Klein, president of the American Benefits Council.
The recent midterm elections put the House in the hands of Republicans and left the Senate in Democratic control—though the Georgia runoff next week will determine just how much power Democrats have. Either way, the split means that Congressional stalemates will remain common, leaving employers looking for policy movement in the lurch.
“The 2022 elections have once again delivered to the country a ‘divided government’ with each party controlling one house of Congress,” Klein says. “So, more gridlock is likely to ensue.”
Klein says this scenario is truly unfortunate because there are a number of employer issues, particularly around benefits, that enjoy bipartisan support: retirement policy measures currently included in the so-called SECURE 2.0 legislation, initiatives to address the mental health crisis, efforts to advance access to telehealth and a desire for greater transparency in cost and quality of health services.
“Bipartisan interest in certain policy objectives is largely stymied by the inability to find agreement on broader legislative vehicles—tax or government funding measures, for example—to which substantive employee benefits proposals can be attached,” Klein explains.
Klein adds that Congressional gridlock results in several byproducts that will have an impact on employee benefits issues:
- Greater activity by regulatory agencies: With a lack of Congressional action, entities such as the departments of Labor, Treasury, Health and Human Services, the Pension Benefits Guaranty Corporation and others are paths to achieve objectives. That’s because it is through the regulatory process that the executive branch is able to put its stamp on public policy. “So, we should expect to see more regulatory agency action regarding mental health parity, missing retirement plan participants, fiduciary standards and regulatory implementation of Medicare drug price legislation that was included as part of the Inflation Reduction Act,” Klein explains.
- Greater activity by state and local governments: Klein says state and municipal lawmakers will continue to respond to issues they feel federal policymakers are not addressing. This will manifest itself in a variety of ways, including more state/local laws mandating employer provision of certain health benefits, continued expansion of state-sponsored retirement programs for the workers of private sector employers and myriad state and local paid leave laws.
- Increasing litigation: Finally, Klein says, expect to see more lawsuits that would erode ERISA’s federal preemption framework—which gives the federal government the authority to place a higher priority on ERISA that state or conflicting laws—will also seek to expand fiduciary liability for any number of things, including failure of certain retirement plan investments to provide desired returns.
Nonetheless, he notes there is reason for a bit of optimism, as he believes that the recent midterm elections message does not necessarily reflect an “all is lost” outlook. He cites election night polling by a highly regarded national firm, Public Opinion Strategies.
By wide margins, the survey found that voters reported that employers remain their most trusted source of affordable, high-quality healthcare coverage, retirement financial security and valued paid leave. Along the same lines, he says, voters surveyed made clear their preference for building upon the successful employer-sponsored benefits system—rather than large-scale changes that rely either on a greater role for the government or individuals.
To learn more about policy impacts on employers, join HRE at the annual Health and Benefits Leadership Conference, including keynoter Ilyse Schuman, senior vice president, Health Policy, American Benefits Council, who will present “Employee Benefits Update: Politics, Process & Public Policy.” Find out more and register here.
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