Health Reform Bracketology

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Health Reform Bracketology

  1. 1. Health Reform Bracketology 2010 Congressional Election Madness Standings as of November 2, 2010 Overview As the 2010 election approaches, Leavitt Partners has engaged a collection of our policy experts and senior advisors to identify provisions within the recently passed health reform legislation that are subject to potential disruption. Health reform continues to be an important topic with voters, and our firm believes that certain scenarios regarding the future congressional makeup could have a material impact on the timing and nature of the implementation of PPACA and related health care reform efforts. HOUSE SENATE Democrat Republican Democrat Republican Democrat Republican Democrat Republican Democrat Republican Democrat Republican Democrat Republican Democrat Republican ? ? Current Public Polls Suggest* *Prediction based on analysis using data from www.RealClearPolitics.com, November 2 2010 Democrats Republicans Toss Up Democrats Republicans Toss Up 167 44 224 48 7 45 Republicans House Democrats Senate © Leavitt Partners 2010
  2. 2. Methodology and Focus Our analysis utilizes polling data from RealClearPolitics.com to project the likelihood of various election outcome scenarios in the House of Representatives and the Senate. Based upon these scenarios, publicly reported information, and other proprietary sources, Leavitt Partners has identified several PPACA provisions that could be targets for disruption. We have queried several health care experts for their opinion on a) the likelihood of disruption of these targets given certain election outcome scenarios, b) potential congressional tools/channels to facilitate the disruption, and c) potential outcomes. The data is aggregated and presented below. Health Reform Bracketology 2010 Congressional Election Madness Standings as of November 2, 2010 Republicans DemocratsRepublicansRepublicans Democrats Democrats Election 2010 Scenarios Target • Individual Mandate • Employer Penalty: • Premium Subsidies: • Medicaid Expansion: • Medical Loss Ratio: • Medicare Funding Cuts: Likelihood 80% 73% 58% 58% 70% 83% Likelihood 68% 45% 40% 43% 53% 68% Likelihood 28% 30% 25% 25% 23% 53% Target • Individual Mandate • Employer Penalty: • Premium Subsidies: • Medicaid Expansion: • Medical Loss Ratio: • Medicare Funding Cuts: Target • Individual Mandate • Employer Penalty: • Premium Subsidies: • Medicaid Expansion: • Medical Loss Ratio: • Medicare Funding Cuts: House Senate House Senate House Senate © Leavitt Partners 2010
  3. 3. Individual Mandate Standings as of November 2, 2010 Current Public Polls Suggest* LP Coaches Poll Prediction Democrats Republicans Republicans Democrats Republicans Democrats HOUSE SENATE 68% (-5% Change From Last Week) Chance of Disruption if Republicans take the House and Democrats retain the Senate. See below for type of disruption.Modify 55% Stall 38% Repeal 8% 80% Chance of Disruption Republicans House Senate Alternative Scenario Commentary: Our coaches slightly reduced the likelihood of disruption back to earlier levels as Democrat retention of the Senate appears more probable. Also, recent comments from the President have made it clear that even if Republicans were to sweep the Congress, it won’t necessarily translate to any type of compromise. There has been increased chatter that appropriations and reconciliation would be vehicles for disruption. Republicans Modify 78% Stall 20% Repeal 3% 28% Chance of Disruption Democrats House Senate Democrats *Prediction based on analysis using data from www.RealClearPolitics.com, November 2 2010 Modify Stall Repeal Modify, 50% Stall, 45% Repeal, 5% © Leavitt Partners 2010 Disruption Analysis Likely modifications include raising the income threshold of those exempt from the requirement, or denying funding to the IRS to hire new staff to enforce the provision. If repealed, one discussed substitute is an auto-enrollment process with an opt-out provision.
  4. 4. Employer Penalty Standings as of November 2, 2010 Current Public Polls Suggest* LP Coaches Poll Prediction Democrats Republicans Republicans Democrats Republicans Democrats HOUSE SENATE 45% (-5% Change From Last Week) Chance of Disruption if Republicans take the House and Democrats retain the Senate. See below for type of disruption.Modify 58% Stall 33% Repeal 10% 73% Chance of Disruption Republicans House Senate Alternative Scenario Commentary: Sen. Hatch, who will be the next ranking member of the Senate Finance Committee, has said he is looking for bipartisan support to introduce a bill to change this and the individual mandate. Republicans Modify 65% Stall 33% Repeal 3% 30% Chance of Disruption Democrats House Senate Democrats *Prediction based on analysis using data from www.RealClearPolitics.com, November 2 2010 Modify Stall Repeal Modify, 60% Stall, 38% Repeal, 20% © Leavitt Partners 2010 Disruption Analysis We believe that any potential modifications will be focused on additional exceptions for businesses or a reduction in the penalties.
  5. 5. Premium Subsidies Standings as of November 2, 2010 Current Public Polls Suggest* LP Coaches Poll Prediction Democrats Republicans Republicans Democrats Republicans Democrats HOUSE SENATE 40% (-3% Change From Last Week) Chance of Disruption if Republicans take the House and Democrats retain the Senate. See below for type of disruption.Modify 78% Stall 20% Repeal 3% 58% Chance of Disruption Republicans House Senate Alternative Scenario Commentary: Our coaches feel that the President will fight any disruption on this every step of the way. This provision is not likely to face immediate congressional intervention as it is not slated for implementation until 2014. Nevertheless, look for it to be a component of future fiscal dialogue, and possibly be addressed in the Debt Commission’s report to the President in December. Republicans Modify 78% Stall 20% Repeal 3% 25% Chance of Disruption Democrats House Senate Democrats *Prediction based on analysis using data from www.RealClearPolitics.com, November 2 2010 Modify Stall Repeal Modify, 75% Stall, 25% © Leavitt Partners 2010 Disruption Analysis Potential compromises could involve lowering the amount of subsidy to the target population (below 400% of the Federal Poverty Level), or changing the eligibility criteria to reduce the number of eligible individuals who qualify based upon household income.
  6. 6. Medicaid Expansion Standings as of November 2, 2010 Current Public Polls Suggest* LP Coaches Poll Prediction Democrats Republicans Republicans Democrats Republicans Democrats HOUSE SENATE 43% (+5% Change From Last Week) Chance of Disruption if Republicans take the House and Democrats retain the Senate. See below for type of disruption.Modify 60% Stall 33% Repeal 5% 58% Chance of Disruption Republicans House Senate Alternative Scenario Commentary: Our Coaches have increased the probability of disruption due to the likelihood of a higher mix of elected Republican governors and a Republican majority in the House. Also, recent court decisions will make it harder for states to generate non-eligibility savings. Governors, including some Democrats, may press the new Congress to deal with Medicaid sooner rather than later. This type of increasing pressure from governors is likely to result in modifications of these reforms, not a full repeal. Republicans Modify 60% Stall 15% Repeal 0% 25% Chance of Disruption Democrats House Senate Democrats *Prediction based on analysis using data from www.RealClearPolitics.com, November 2 2010 Modify Stall Repeal Modify, 55% Stall, 45% © Leavitt Partners 2010 Disruption Analysis Possible modifications could include offering Medicaid eligible populations the option of receiving a voucher for use in purchasing insurance through state exchanges.
  7. 7. Medical Loss Ratio Standings as of November 2, 2010 Current Public Polls Suggest* LP Coaches Poll Prediction Democrats Republicans Republicans Democrats Republicans Democrats HOUSE SENATE 53% (-10% Change From Last Week) Chance of Disruption if Republicans take the House and Democrats retain the Senate. See below for type of disruption.Modify 63% Stall 18% Repeal 218 % 70% Chance of Disruption Republicans House Senate Alternative Scenario Commentary: Our coaches feel that carriers will feel more free to express their deep dissatisfaction with how this issue is being handled if there is a Republican sweep. An increasing alignment of the administration and NAIC positions will make intervention in this policy less likely. Republicans Modify 75% Stall 25% Repeal 0% 23% Chance of Disruption Democrats House Senate Democrats *Prediction based on analysis using data from www.RealClearPolitics.com, November 2 2010 Modify Stall Repeal Modify, 75% Stall, 20% Repeal, 5% © Leavitt Partners 2010 Disruption Analysis Possible modifications could include the granting of waivers to carriers, businesses, or states that show evidence of market destabilization.
  8. 8. Medicare Funding Cuts Standings as of November 2, 2010 Current Public Polls Suggest* LP Coaches Poll Prediction Democrats Republicans Republicans Democrats Republicans Democrats HOUSE SENATE 68% (No Change From Last Week) Chance of Disruption if Republicans take the House and Democrats retain the Senate. See below for type of disruption.Modify 63% Stall 30% Repeal 7% 83% Chance of Disruption Republicans House Senate Alternative Scenario Commentary: This is the area of the bill that the Democrats will find most difficult to protect if there is a Republican sweep of Congress.. Even Democratic control does not guarantee that the Medicare cuts will survive. Republicans Modify 63% Stall 30% Repeal 3% 53% Chance of Disruption Democrats House Senate Democrats *Prediction based on analysis using data from www.RealClearPolitics.com, November 2 2010 Modify Stall Repeal Modify, 63% Stall, 30% Repeal, 7% © Leavitt Partners 2010 Disruption Analysis Early legislative action in the 112th congress could result in an executive branch invitation to a ‘Budget Summit’, a forum for negotiating a budget that both Congress and the President can tolerate. Such a summit would be high stakes political theater that could create “winners” or “losers” out of the new congress.
  9. 9. Republicans Take House, Democrats Retain Senate Historical Coaches Polling *Prediction based on analysis using data from www.RealClearPolitics.com, November 2 2010 © Leavitt Partners 2010 0% 10% 20% 30% 40% 50% 60% 70% 80% 10/4/2010 10/11/2010 10/18/2010 10/25/2010 11/1/2010 LikelihoodofDisruption Individual Mandate Medicare Funding Cuts Medical Loss Ratio Medicaid Expansion Premium Subsidies Employer Penalty
  10. 10. Salt Lake City Office 299 South Main Street Suite #2400 Salt Lake City, UT 84111 Washington DC Office 1776 I Street, NW 9th Floor Washington, DC 20006 Phone: 801.538.5082 LeavittPartners.com

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