More Related Content Similar to Health Reform Bracketology Oct 18 Similar to Health Reform Bracketology Oct 18 (20) More from Leavitt Partners More from Leavitt Partners (18) Health Reform Bracketology Oct 181. Health Reform Bracketology
2010 Congressional Election Madness
Standings as of October 18, 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
Republican Republican
Democrat ? ? Democrat
Republican Republican
Democrat Current Public Polls Suggest* Democrat
Republican Democrats Republicans Democrats Republicans Republican
Democrat 179 43 213 48 6 46 Democrat
Republican Toss Up Toss Up Republican
House Senate
Democrat Republicans Democrats Democrat
*Prediction based on analysis using data from www.RealClearPolitics.com, October 18 2010 © Leavitt Partners 2010
2. Health Reform Bracketology
2010 Congressional Election Madness
Standings as of October 18, 2010
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.
Election 2010 Scenarios
House Senate House Senate House Senate
Republicans Republicans Republicans Democrats Democrats Democrats
Target Likelihood Target Likelihood Target Likelihood
• Individual Mandate 85% • Individual Mandate 68% • Individual Mandate 28%
• Employer Penalty: 78% • Employer Penalty: 48% • Employer Penalty: 28%
• Premium Subsidies: 63% • Premium Subsidies: 43% • Premium Subsidies: 33%
• Medicaid Expansion: 53% • Medicaid Expansion: 38% • Medicaid Expansion: 20%
• Medical Loss Ratio: 75% • Medical Loss Ratio: 58% • Medical Loss Ratio: 30%
• Medicare Funding Cuts: 85% • Medicare Funding Cuts: 68% • Medicare Funding Cuts: 53%
© Leavitt Partners 2010
3. Individual Mandate
Standings as of October 18, 2010
Current Public Polls Suggest*
Republicans HOUSE SENATE Democrats
Republicans Democrats
Democrats Republicans
LP Coaches Poll Prediction
Alternative Scenario
House Senate
68% Disruption Analysis
(+8% Change From Last Week)
Republicans Republicans
Chance of Disruption if Republicans take the House and Likely modifications include
Modify 55% Democrats retain the Senate. See below for type of disruption. raising the income threshold of
85% Stall 38% those exempt from the
Chance of Repeal,
Disruption Repeal requirement, or denying funding
Repeal 8% 5%
to the IRS to hire new staff to
House Senate enforce the provision. If
Democrats Democrats Modify, repealed, one discussed
Stall, 43% Modify
53% substitute is an auto-enrollment
Modify 78%
28% Stall process with an opt-out
Stall 20% provision.
Chance of
Disruption Repeal 3%
Commentary: Our coaches have increased their projection of the likelihood of disruption for the Individual Mandate for the second
week in a row. The Individual Mandate is making its way through the court system and recent developments this week in Virginia indicate that
judges are sensitive to the potential unconstitutionality of the provision (WSJ Article). Also, it is starting to appear that Tea Party candidates
could make up a formidable voting bloc in the House and Senate. These candidates have been among the most outspoken critics of this
provision in challenging its constitutionality and openly threatening disruption.
*Prediction based on analysis using data from www.RealClearPolitics.com, October 18 2010 © Leavitt Partners 2010
4. Employer Penalty
Standings as of October 18, 2010
Current Public Polls Suggest*
Republicans HOUSE SENATE Democrats
Republicans Democrats
Democrats Republicans
LP Coaches Poll Prediction
Alternative Scenario
House Senate
48% Disruption Analysis
(+8% Change From Last Week)
Republicans Republicans
Chance of Disruption if Republicans take the House and We believe that any potential
Modify 53% , 0%
Democrats retain the Senate. See below for type of disruption. modifications will be focused on
78% Stall 33% additional exceptions for
Chance of Repeal,
Repeal
Disruption 15%
businesses or a reduction in the
Repeal 3%
penalties.
House Senate
Democrats Democrats Stall, 40% Modify,
58%
Modify
Modify 60%
28% Stall
Stall 38%
Chance of
Disruption Repeal 3%
Commentary: Our coaches determined that an increase in this provision was warranted. Employers are beginning to push back on the
overall health reform bill citing cost concerns. HHS has demonstrated a willingness to adhere to business concerns by granting waivers and other
concessions for other provisions. If trend follows suit, Republicans will look to defend businesses by focusing their efforts on mitigating or
eliminating the potential penalties on employers. This type of rhetoric has been heightened as we come closer to the election and businesses
continue to struggle in the anemic economy.
*Prediction based on analysis using data from www.RealClearPolitics.com, October 18 2010 © Leavitt Partners 2010
5. Premium Subsidies
Standings as of October 18, 2010
Current Public Polls Suggest*
Republicans HOUSE SENATE Democrats
Republicans Democrats
Democrats Republicans
LP Coaches Poll Prediction
Alternative Scenario
House Senate
43% Disruption Analysis
(+3% Change From Last Week)
Republicans Republicans
Chance of Disruption if Republicans take the House and Potential compromises could
Modify 80% , 0%
Democrats retain the Senate. See below for type of disruption. involve lowering the amount of
63% Stall 18% subsidy to the target population
Chance of
Disruption 3%
Repeal (below 400% of the Federal
Repeal
Stall, 23% Poverty Level), or changing the
House Senate eligibility criteria to reduce the
Democrats Democrats number of eligible individuals
88%
Modify who qualify based upon
Modify
33% Stall Modify, household income.
Chance of
Stall 10% 78%
Disruption Repeal 2%
Commentary: The probability of disruption has been slightly increased for this provision. Our coaches believe that the debt
commission will provide political cover for Democrats or Republicans if they advocate for a decrease in entitlement spending. The debt
commission will finalize their report to the President by the end of December and is expected to include a myriad of entitlement reform
suggestions.
*Prediction based on analysis using data from www.RealClearPolitics.com, October 18 2010 © Leavitt Partners 2010
6. Medicaid Expansion
Standings as of October 18, 2010
Current Public Polls Suggest*
Republicans HOUSE SENATE Democrats
Republicans Democrats
Democrats Republicans
LP Coaches Poll Prediction
Alternative Scenario
House Senate
38% Disruption Analysis
(+10% Change From Last Week)
Republicans Republicans
Chance of Disruption if Republicans take the House and Possible modifications could
Modify 53% Democrats retain the Senate. See below for type of disruption. include offering Medicaid
53% Stall 40% eligible populations the option
Chance of
Disruption 8%
Repeal of receiving a voucher for use in
Repeal
purchasing insurance through
House Senate state exchanges.
Modify,
Democrats Democrats Stall, 48%
50%
65%
Modify
Modify
20% Stall
Stall 10%
Chance of
Disruption Repeal 0%
Commentary: State budgets continue to be impacted by the slow economic recovery. Republicans in Congress have requested that
states send them information on the fiscal impact of PPACA’s mandatory Medicaid expansion. State budget solvency and the ensuing state
lobbying could have an impact on expanding Medicaid. In addition to State fears regarding the expansion, providers are slowly conceding that
the increase in patient volume may strain resources and capacity. One example of this was covered by the Washington Post last week.
*Prediction based on analysis using data from www.RealClearPolitics.com, October 18 2010 © Leavitt Partners 2010
7. Medical Loss Ratio
Standings as of October 18, 2010
Current Public Polls Suggest*
Republicans HOUSE SENATE Democrats
Republicans Democrats
Democrats Republicans
LP Coaches Poll Prediction
Alternative Scenario
House Senate
58% Disruption Analysis
(-2% Change From Last Week)
Republicans Republicans
Chance of Disruption if Republicans take the House and Possible modifications could
Modify 63% , 0%
Democrats retain the Senate. See below for type of disruption. include the granting of waivers
75% Stall 18% to carriers, businesses, or states
Chance of Repeal,
Disruption Repeal that show evidence of market
Repeal 20% 5%
destabilization.
House Senate Stall, 23%
Democrats Democrats
75%
Modify
Modify
30% Stall Modify,
Stall 25%
Chance of 73%
Disruption Repeal 0%
Commentary: The Medical Loss Ratio continues to be front and center as we come closer to its effective date of January 1, 2011. Last
week the NAIC sent a letter to Secretary Sebelius suggesting a phase-in of the MLR limits to prevent market destabilization. Maine, Iowa, and
South Carolina have requested waivers, and it is expected that larger businesses, expatriate plans, and additional states will seek some redress
from the forthcoming requirements.
*Prediction based on analysis using data from www.RealClearPolitics.com, October 18 2010 © Leavitt Partners 2010
8. Medicare Funding Cuts
Standings as of October 18, 2010
Current Public Polls Suggest*
Republicans HOUSE SENATE Democrats
Republicans Democrats
Democrats Republicans
LP Coaches Poll Prediction
Alternative Scenario
House Senate
68% Disruption Analysis
(No Change From Last Week)
Republicans Republicans
Chance of Disruption if Republicans take the House and Early legislative action in the
Modify 63% Democrats retain the Senate. See below for type of disruption. 112th congress could result in an
85% Stall 28% executive branch invitation to a
Chance of
Disruption 10%
Repeal
Repeal, ‘Budget Summit’, a forum for
Repeal
10% negotiating a budget that both
House Senate Congress and the President can
Democrats Democrats tolerate. Such a summit would
Stall, 28%
70%
Modify be high stakes political theater
Modify Modify,
53% Stall that could create “winners” or
Chance of
Stall 28% 63% “losers” out of the new
Disruption Repeal 10% congress.
Commentary: No significant market developments have transpired in the last week causing our coaches to change their predictions.
*Prediction based on analysis using data from www.RealClearPolitics.com, October 18 2010 © Leavitt Partners 2010
9. Medicare Funding Cuts
Standings as of October 18, 2010
80%
70% Medicare Funding Cuts
Medical Loss Ratio
Likelihood of Disruption
60%
50%
Employer Penalty
40%
Premium Subsidies
30%
Medicaid Expansion
20%
10%
0%
10/4/2010 10/11/2010 10/18/2010
*Prediction based on analysis using data from www.RealClearPolitics.com, October 18 2010 © Leavitt Partners 2010
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