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NAAOP November Government Relations Update

Mid-Term Election Impact and Brief Analysis

Democrats scored major victories in the election, becoming the majority party in the U.S. House of Representatives, achieving a majority of state governorships, and taking control of the U.S. Senate by a one vote margin. The results were largely consistent with most polling and political prognostications prior to the election, but the margins that Democrats achieved were generally larger than anticipated. Most analysts attributed the extensive Republican losses to the Iraq war, the unpopularity of President Bush, the economy, and a series of scandals that plagued the majority party. Following the election results, Defense Secretary Donald Rumsfeld resigned.

Impact on Policy: This sets that stage for a major shift in federal policy that could have a dramatic effect on health and human services, education, disability policy and policies that impact orthotics and prosthetics. Of particular interest to health care providers awaiting action on Medicare issues and funding levels for FY 2007, the change in leadership probably means that Congress’ lame duck session scheduled to begin November 13th will not be particularly fruitful. For the field of O&P, this means the likelihood of receiving a 4.3% Medicare fee schedule update on January 1st is very high.

House: In the House, at the time of this writing, the Democrats hold 230 seats and the Republicans hold 196, with 9 races throughout the country being too close to call. The margin to control the House is 218 seats. There is a real chance that Republicans may be shut out from taking any seats taken from Democrats, which would be the first time in history that this has occurred. But even if the Republican candidate in all 9 of these undecided races wins, the Democrats will still control the House. This means that a new Speaker of the House will be elected and all of the committees will change leadership. This also means that the agenda and the rules for debate in the House will no longer be run by Republicans, the party of President Bush.

Big winners in the House include Congresswoman Nancy Pelosi (D-CA), who is in line to become the first female Speaker of the House and highest elected female official in U.S. history. A long list of relatively unknown Democrats who toppled often well known Republicans follow, many of whom are either moderate or even conservative in their political outlook. Major figures who lost their reelection bids include Nancy Johnson (R-CN), Chairman of the House Ways and Means Health Subcommittee, Clay Shaw (R-FL), senior member of the Ways and Means full Committee and potentially the next chairman if House Republicans maintained their majority, and Speaker Hastert, who won reelection but announced that he will not seek the House Republican leadership post.

Senate: The Senate was less likely than the House to turn from Republican to Democratic control. In the Senate, Democrats have picked up six seats and now hold a 51 to 49 majority. The Democrats not only picked up six Republican seats but also held on to all of the Democratic seats including Maryland and New Jersey. With Democrats having taken the majority, they will be rewarded with controlling the agenda, chairing all committees and electing a new Majority Leader. Senator Harry Reid of Nevada, the present Senate Minority Leader, is expected to be elected Senate Majority Leader.

Political Analysis: In political terms, this election is a major shift in power in Washington and is being interpreted as a strong rebuke of President Bush and his leadership. Especially if the Democrats take the Senate, this election will have a major impact on the lame duck session of the 109th Congress, the last two years of the Bush Presidency, and perhaps the political dynamic in Washington.

Lame Duck Session: The lame duck session is likely to be shortened dramatically from what might have occurred if Republicans kept both Houses of Congress. If Republicans had won Congress, they would have returned on November 13th and continued to negotiate spending levels for fiscal year 2007, Medicare fixes such as physician payments and an extension of the therapy caps, and perhaps other legislation that is largely completed but has not received final approval before being sent to the President for signature. The likelihood now, in light of the Democratic gains, is a short lame duck session, pushing everything that can be postponed into next year for Democrats to address. Spending levels for federal programs will likely be addressed by passing a continuing resolution through some point next year (e.g., March 2007) at FY 2006 spending levels. This would be a major disappointment for anyone with provisions pending in this Congress as action on these provisions may not occur until well into next year. It is important to note, however, that this is informed speculation, and the incoming leadership may choose a different path in the coming days and weeks.

The 110th Congress: Because of the change in leadership, the 110th Congress will start with new leadership elections, selection of committee assignments and other organizing activities. The Democratic agenda is expected to focus on raising the minimum wage, increasing spending for homeland security and education, and promoting alternative fuels with less reliance on foreign oil. In addition, the House is widely expected to exercise greater oversight authority by probing Iraq reconstruction spending and other issues. Another key goal will be to authorize the federal government to negotiate pricing with prescription drug companies, thereby reducing the costs of the Medicare Part D program and perhaps allowing those savings to reduce the size of the gap in coverage under the existing program. A key challenge will be entitlement spending (i.e., Medicare, Medicaid and Social Security), as 2007 offers a window of opportunity in which to potentially accomplish an entitlement reform bill prior to the Presidential election year, when such a bill would be unlikely to pass.

Bipartisanship: Although too early to tell, the election results may trigger a new sense of bipartisanship in Washington, as the White House and the Democrats in Congress will have to work more cooperatively in order to accomplish any major legislation. Although Democrats have a fairly comfortable lead in the House and a razor thin margin in the Senate, they will need moderate Republican votes to move most legislation and President Bush still holds the veto pen, which will not be easily overridden in Congress as the House and Senate margins currently stand.

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