Featured Health Business Daily Story, Oct. 19, 2012
Reprinted from HEALTH PLAN WEEK, the most reliable source of objective business, financial and regulatory news of the health insurance industry.
Are health plans ready for a Romney presidency or a second Obama term? What happens if one party sweeps both houses of Congress or the chambers remain split? Will HHS issue long-awaited rules implementing key provisions of the health reform law, or will it remain mum until after Nov. 6?
These questions permeated a series of talks and discussions at the Oct. 4-5 AIS Health Business Roundtables conference in Washington, D.C., where nearly every projection of what lies ahead mentioned the big “what if” that is the November election.
Possibly the most precise description of what could happen with a change in administration came from an Oct. 4 luncheon address by Republican Tom Scully, administrator of CMS from 2001-2004 under President George W. Bush, and now senior counsel at Alston & Bird, LLP.
He told conference participants that if former Mass. Gov. Mitt Romney (R) wins, the new president will certainly live up to his campaign mantra to try to repeal and replace the Affordable Care Act (ACA). He also would likely seek changes to Medicare, notably by raising the eligibility age to 67, ending the Medicaid expansion and turning over more of the Medicaid program to state control in the form of block grants.
Parsing no words, Scully said the ACA is not a good electoral issue for Obama and the Democrats, noting the program’s poll numbers “stink.” Many people around the country wonder how such a large reform effort could ever be considered given the fiscal mess the economy is in, he said, adding “how can you in your right mind do this without getting your financial house in order?”
But if a President Romney is unable to dump the whole reform law because of pushback from Congress, he will likely seek to slow new spending for the law’s provisions, which could cause at least a five- or six-year delay in implementing key provisions and lead to more of a gradual phase-in, Scully said. Romney probably also would seek to limit government spending on health care below the 20% of the U.S. Gross Domestic Product (GDP) it is supposed to hit by 2021, according to a June 2012 CMS report. In 2011, health care accounted for 17.9% of GDP.
A Romney administration likely would lead to a friendlier CMS in terms of policies that impact Medicare Advantage plans, Part D prescription drug plans and what Scully termed other “risk ventures.”
Scully dug further into his forecasting by naming possible HHS secretaries under a possible Romney administration, led by Louisiana Gov. Bobby Jindal (R), who served as HHS’s assistant secretary for planning and evaluation from 2001 to 2003. Candidates to lead CMS, according to Scully, could include former Harvard Pilgrim Health Care CEO and former Massachusetts Health and Human Services Sec. Charlie Baker, Jr. and former CMS General Counsel Thomas Barker, he said.
Like many at the conference, Scully sees the House remaining under Republican control, but the more interesting action may be in the Senate, where pre-election polls show tight races across the country leaving open a chance for a 50-50 split in that chamber. Scully, however, expects Democrats to end up with the slightest 51-49 majority there.
If Obama wins, Scully predicted a big budget deal similar to the 1997 compromise. In the budget talks, Republicans will seek a delay in health reform law enactment in exchange for agreeing to revenue raisers, i.e., taxes.
“The only two moving pieces for Obama in his next term are raising taxes, or delaying the implementation of Obamacare. The money just isn’t there to [implement major provisions of the reform law in 2014]…and if you’re going to do a budget deal [with Congress] next year, that’s what’s going to have to happen. It might take until June to get there, but that’s what’s going to happen. I’d bet my life on it,” Scully said.
In a separate roundtable discussion at the conference on Oct. 5, Henry Aaron, Ph.D., a senior fellow in economic studies at the Brookings Institution, said that if Romney wins and Republicans take over both houses of Congress, the ACA will be effectively killed off through the budget reconciliation process. He said under that election result scenario, Medicare would become a voucher program and Medicaid dollars block-granted to states. There are profound, fundamental differences between Romney and Obama, with the choice on health care coming down to rolling back what the president wants to accomplish and the uncertainty of what Romney will want to do.“This election is the most important for domestic policy in the last 80 years,” Aaron said.
Tom Miller, a resident fellow at the conservative American Enterprise Institute, did not agree often with Aaron, but did on the subject of what Romney plans to do if there is a Republican takeover of Congress and the White House. “[They] can debone and fillet the [Affordable Care Act] and leave some [extra] around for soup,” he said.
However, even if Republicans win a majority in the Senate, that is no guarantee that Romney would have the votes to repeal the reform law, according to Bob Laszewski, a former insurance executive and president of consulting firm Health Policy and Strategy Associates. He said that several moderate Republicans, such as Maine Sen. Olympia Snowe, have said that they want to fix the law, not replace it. Laszewski added that Republicans would need to muster 60 votes in order to delay implementation of the law. “Collins wants to fix, not repeal,” he said.
In an earlier keynote address on Oct. 4, former Senate Majority Leader Tom Daschle (D-S.D.) declared that the transformation under way in the U.S. health care system is comparable to the creation of the nation’s monetary system in 1913, the start of Social Security in the 1930s and the advent of Medicare and Medicaid in the 1960s.
Despite the trench warfare-type of battle taking place over health reform now, Daschle sees plenty of common ground to address the three major plagues in the system now: access to health care, the cost of care and the quality of care.
On access alone, he noted there are some 50 million Americans without health insurance, which results in 26,000 people dying every year because they don’t have coverage, citing recent data from Families USA. With respect to costs, Daschle said the U.S. will spend $35 trillion on health care over the next 10 years, taking up a larger share of GDP as each year goes by. On quality, he said the U.S. move from 11th to 42nd in the world in life expectancy shows “we’ve got a quality issue that is only getting worse.”
To transform health care, Daschle said there are many substantial changes necessary, including making all aspects of the system transparent, continuing a move away from fee-for-service care delivery and installing a modern, paperless information technology business model. For the near term, he cited a number of challenges to the ACA’s implementation. One that people aren’t talking a lot about, he said, are ongoing court cases, like those filed questioning the legality of health insurance exchange subsidies and contraception mandates.
© 2012 by Atlantic Information Services, Inc. All Rights Reserved.
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