Health Care Faces Rocky Road in New Congress

Dec. 31, 2010— -- New provisions under the health care law will roll out starting Jan. 1, but the debate over health care reform is far from over as lawmakers in both chambers craft ways to tweak the controversial legislation.

In the Senate, an unusual alliance has formed between Sen. Ron Wyden, D-Ore., who voted for the health care legislation, and Sen. Scott Brown, R-Mass., whose election to the late Sen. Ted Kennedy's seat nearly derailed the law.

The two senators are crafting a plan that would allow states to opt out of the Affordable Care Act if their programs meet the standards of the federal health care law and do not add to the deficit.

It's designed to throw a bone to conservatives who want to repeal the law. But rather than give states all the power to make their decisions, states would still have to meet guidelines set by the federal government, even if they don't want to carry out the new law.

Wyden and Brown have hailed their work as a sign of bipartisanship. There's little so far to indicate whether others are on board, but the two senators' effort has kicked off a debate that has simmered underneath the surface in the Senate.

"I see the potential for all sorts of shifting alliances in the Senate. I think people have paid attention to the Brown-Wyden bill. I think that's less a policy issue and more an opening bid on the politics, if you will," said Ed Haislmaier, a senior research fellow in health policy studies at the conservative Heritage Foundation.

"From a policy perspective this is very very small," he said. "What it is is the first tentative step on both sides, but it becomes a nucleus that you can then widen the circle."

State governments across the country, from Arizona to Florida, argue that the law impinges on their sovereignty and adds a burden at a time when they're already struggling with budget deficits.

Supporters of the Wyden-Brown plan say giving states authority is crucial to improving the health care system.

"To impose Arizona's value system on Massachusetts will be traumatic," and vice versa, said former Human and Health Services Secretary Mike Leavitt.

Virginia faced the first victory in this battle when a federal judge ruled earlier this month that the health care law violates states rights. A similar 20-state law is pending in Florida.

As senators work out ways to tweak the health care law, incoming Republican freshman in the House of Representatives vow to take a vote to repeal the Cass, even if only for symbolic purposes, since it's unlikely to pass in the Senate and can ultimately be vetoed by President Obama.

"Repeal and replace continues to be what the Republicans have committed themselves to," Rep. Bill Cassidy, R-La., told ABC News. "We are not naive. We know the president will most likely veto the bill to repeal the whole piece. But on the other hand, there are some things that are so onerous that quite likely they can be repealed piece by piece."

Health Care Faces Rocky Road in New Congress

But Cassidy doesn't quite agree with Wyden and Brown's proposal that he said would only expand bureaucracy.

"I think the Massachusetts proposal, which is frankly the beta version of what Obamacare is, is not working," he said. "There has be to be a fundamental restructuring of how we think of the delivery of health care. Unless that's achieved it almost doesn't matter where the focus of authority is."

Health care is also likely to come up in deficit talks as the new Congress looks at new ways to manage the country's massive budget deficit.

House Republicans are already discussing ways to defund parts of the contentious law.

"The real political dynamite will be funding for implementing reform. The stopgap funding bill that keeps the government going until March has already cut funding for the roll-out," said Robert I. Field, professor of health management and policy at Drexel University school of public health. "Spending bills originate in House, which will be Republican-controlled. That will give them a perfect grandstand for showcasing their opposition to reform."

As senators and members of the House -- who are sure to take a vote on repealing the law -- work out new plans, the administration is rolling out the law as planned, including funnelling millions of dollars to states to modernize their systems.

Speaker Nancy Pelosi vowed in a statement Thursday that "Democrats will fight to preserve these gains for the American people in the months and years to come," signaling the start of what could be a tough battle for Democrats ahead.

The challenges they face ahead are numerous. Some states have refused to move forward with the law or, like Arizona, are refusing to accept federal grants for expanding Medicaid.

Lawmakers are threatening to repeal key parts of the law that could derail it altogether. The lawsuit pending in Florida currently specifically targets the constitutionality of the provision that requires all Americans to carry health insurance.

The individual mandate is the cornerstone of the new health care law, and overturning that, insurance companies say, would be drastic to their bottom lines since they need that assurance to comply with new restrictions that have been placed on them.

"Without the individual insurance mandate, most of the rest of the law -- no exclusion for pre-existing conditions, no lifetime ceiling, etc. -- cannot function and at that point will have to be repealed," said Daniel S. Blumenthal, associate dean for community health at Morehouse School of Medicine.

ABC News' Kim Carollo contributed to this report.