Health Reform Bracketology Oct 25

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Health Reform Bracketology Oct 25

  1. 1. Health Reform Bracketology 2010 Congressional Election Madness Standings as of October 25, 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, October 25 2010 Democrats Republicans Toss Up Democrats Republicans Toss Up 179 33 223 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 October 25, 2010 Republicans DemocratsRepublicansRepublicans Democrats Democrats Election 2010 Scenarios Target • Individual Mandate • Employer Penalty: • Premium Subsidies: • Medicaid Expansion: • Medical Loss Ratio: • Medicare Funding Cuts: Likelihood 85% 78% 63% 53% 78% 85% Likelihood 73% 50% 43% 38% 63% 68% Likelihood 28% 30% 33% 20% 33% 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 October 25, 2010 Current Public Polls Suggest* LP Coaches Poll Prediction Democrats Republicans Republicans Democrats Republicans Democrats HOUSE SENATE 73% (+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 35% Repeal 8% 85% Chance of Disruption Republicans House Senate Alternative Scenario Commentary: The Individual Mandate has become the leading symbol for conservatives and moderates in opposition of health reform. As the election draws near look for heightened rhetoric around this provision as it is arguably on the top of the list for congressional disruption. The Judicial path can also still affect this provision with Attorneys General from 20 states challenging the constitutionality of this mandate. The slow court progression continues to make headlines and is staying top of mind for voters. 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, October 25 2010 Modify Stall Repeal Modify, 53%Stall, 43% 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 October 25, 2010 Current Public Polls Suggest* LP Coaches Poll Prediction Democrats Republicans Republicans Democrats Republicans Democrats HOUSE SENATE 50% (+2% 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 33% Repeal 15% 78% Chance of Disruption Republicans House Senate Alternative Scenario Commentary: Our coaches have increased the chance of disruption slightly due to the appearance of a stronger than previously expected Republican presence in the Senate. This issue will need to fit into an overall plan for getting the economy moving and restoring trust among employers. However, the penalty will be linked to other issues to maintain employer coverage. Our coaches also believe that Democrats are more likely to work with Republicans on modifications for the Employer Penalty than they would be on other PPACA issues. Republicans Modify 68% Stall 30% Repeal 3% 30% Chance of Disruption Democrats House Senate Democrats *Prediction based on analysis using data from www.RealClearPolitics.com, October 25 2010 Modify Stall Repeal Modify, 63% Stall, 35% Repeal, 3% , 0% © 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 October 25, 2010 Current Public Polls Suggest* LP Coaches Poll Prediction Democrats Republicans Republicans Democrats Republicans Democrats HOUSE SENATE 43% (No Change Change From Last Week) Chance of Disruption if Republicans take the House and Democrats retain the Senate. See below for type of disruption.Modify 80% Stall 18% Repeal 3% 63% Chance of Disruption Republicans House Senate Alternative Scenario Commentary: No significant market developments have transpired in the last week causing our coaches to change their predictions. Republicans Modify 85% Stall 13% Repeal 3% 33% Chance of Disruption Democrats House Senate Democrats *Prediction based on analysis using data from www.RealClearPolitics.com, October 25 2010 Modify Stall Repeal Modify, 78% Stall, 23% , 0% © 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 October 25, 2010 Current Public Polls Suggest* LP Coaches Poll Prediction Democrats Republicans Republicans Democrats Republicans Democrats HOUSE SENATE 38% (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 53% Stall 40% Repeal 8% 53% Chance of Disruption Republicans House Senate Alternative Scenario Commentary: No significant market developments have transpired in the last week causing our coaches to change their predictions. Republicans Modify 65% Stall 10% Repeal 0% 20% Chance of Disruption Democrats House Senate Democrats *Prediction based on analysis using data from www.RealClearPolitics.com, October 25 2010 Modify Stall Repeal Modify, 50% Stall, 48% © 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 October 25, 2010 Current Public Polls Suggest* LP Coaches Poll Prediction Democrats Republicans Republicans Democrats Republicans Democrats HOUSE SENATE 63% (+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 63% Stall 18% Repeal 20% 78% Chance of Disruption Republicans House Senate Alternative Scenario Commentary: Our coaches increased this provision’s likelihood of disruption as tighter margins in managed care plans may warrant additional compromise. As states and companies have come forward citing the need for waivers politicians are becoming increasingly sensitive that the MLR could reduce the quantity of health plans. Republicans Modify 78% Stall 23% Repeal 0% 33% Chance of Disruption Democrats House Senate Democrats *Prediction based on analysis using data from www.RealClearPolitics.com, October 25 2010 Modify Stall Repeal Modify, 78% Stall, 18% Repeal, 5% , 0% © 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 October 25, 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 28% Repeal 10% 85% Chance of Disruption Republicans House Senate Alternative Scenario Commentary: No significant market developments have transpired in the last week causing our coaches to change their predictions. Republicans Modify 70% Stall 28% Repeal 10% 53% Chance of Disruption Democrats House Senate Democrats *Prediction based on analysis using data from www.RealClearPolitics.com, October 25 2010 Modify Stall Repeal Modify, 63% Stall, 28% Repeal, 10% © 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, October 25 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 LikelihoodofDisruption 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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