health reform bracketology

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2012 Election Outcomes

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Step 3: Click “The Future of Health Reform”

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We believe that Republicans will seek to administratively disrupt and congressionally defund core provisions of

PPACA, as well as seek to increase flexibility for other provisions

Scenario: Law Upheld / R Gridlock

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• Republicans will continue to press for wholesale repeal, though some elements of the law that have already gone into effect will be preserved. Repeal will happen through reconciliation.

• Major provisions of PPACA will remain in force, but the Secretary will use his/her discretion to implement innovative changes in the Medicaid program that center on state flexibility (e.g., repealing the MOE, Duals initiatives, etc.).

• Republicans will try to reform Medicare, likely through a Medicare exchange and increasing the eligibility age, but will be met with opposition from Democrats. IPAB will remain a target for repeal.

• Delivery reform will continue at the current pace with some provisions being shelved due to budgetary constraints and HHS capacity.

• Exchanges will be implemented as prescribed with additional administrative flexibility granted to states unable to meet the statutory deadline. The Federally Facilitated Exchange will be scaled back.

• Minor modifications will be made to select insurance reform provisions while reforms like guaranteed issue and community rating will stay in effect.

• The premium subsidy will likely be reduced to 250%-300% of the FPL.

The Breakdown by

15%

70%

10%

0%

Work w/D's

AdminTactics toSlow Imp

ModifyCurrent

Regs

Nothing

In this scenario, what tactic will Republicans use to disrupt PPACA?

We believe that Democrats will view their election triumph as a validation of PPACA and will continue with a full

implementation of the law, albeit with some provisions delayed

Scenario: Law Upheld / D Gridlock

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• Full-scale implementation of PPACA will continue unabated.

• The Medicaid program will largely remain as envisioned by PPACA. States will continue to push for flexibility on the MOE; in response, the administration will grant 1115 Waivers, but with reform elements.

• Democrats will continue to introduce Medicare savings through payment adjustments and minimal benefit changes. The savings could be used to offset the SGR-fix; IPAB likely upheld.

• Delivery reform will continue at the current pace with some provisions being shelved due to budgetary constraints and HHS capacity.

• Many of the hesitant states will move to build exchanges while some will continue to refuse compliance. Many state exchanges will not be operational until 2015.

• All insurance reform provisions will remain in effect.

• The premium subsidy will move forward uninhibited, though it is possible the FPL level will be reduced to 300-350% for cost savings.

43%

39%

16%

More Rigid No Changein Flexibility

MoreFlexible

In this scenario, how will the administration change its stance on state flexibility?

The Breakdown by

We believe that Republicans will attempt but fail at repealing all of PPACA, but will then pursue a piecemeal repeal

approach on targeted, less politically controversial provisions

Scenario: Law Upheld / R Sweep

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• Republican repeal-and-replace efforts—a patchwork of various conservative proposals (e.g., Rep. Ryan’s plan)—will primarily target the individual mandate, guaranteed issue, and community rating.

• The Administration will focus on providing state flexibility and innovation through 1115 Waivers rather than full repeal. Budget pressures could reduce the FPL cutoff in the Medicaid expansion.

• Republicans will use Rep. Ryan's budget as a blueprint for Medicare reform and repeal IPAB. Cuts to hospital payments will stay intact and the SGR fix will likely be offset by defunding portions of PPACA.

• Delivery reform will continue at the current pace with more demonstrations/pilot programs being shelved due to budgetary constraints. Innovation Center funding will continue.

• Republicans will not completely repeal exchanges due to pressure from the insurance and medical lobby, instead opting to make legislative changes that provide states with additional flexibility and allow private-market distribution.

• Republicans will overhaul the insurance reform provisions with few replacements. Republicans will likely replace guaranteed issue.

• The premium subsidy will likely be repealed and replaced.

46%

26% 21%

3%

In this scenario, how will Republicans pursue a repeal of PPACA?

The Breakdown by

We believe that Republicans will administratively disrupt some PPACA provisions and find increased bi-partisan

support in Congress to repeal or modify other provisions

Scenario: Mandate Overturned / R Gridlock

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• Republicans and Democrats will be unable to agree on a viable replacement for the individual mandate.

• Major aspects of PPACA will remain intact, but the Secretary will use his/her discretion to implement innovative changes in the Medicaid program that center on state flexibility (e.g., repealing the MOE, Duals initiatives, etc.).

• Republicans will try to reform Medicare, likely through a Medicare exchange and increasing the eligibility age, but will be met with opposition from Democrats. Hospital payment cuts will stay intact and IPAB could be repealed.

• Delivery reform will be accelerated with an emphasis on cost-cutting programs.

• For exchanges, Republicans will seek congressional support for enhanced waiver authority and look to enable public/private partnership development.

• The Congress will ensure that guaranteed issue is repealed, but will not be able to find a bi-partisan replacement, leaving it to the administration. Republicans will administratively weaken other core insurance provisions.

• The premium subsidy will largely remain intact, but will face a modest decrease on the basis of deficit cutting.

In this scenario, how will Congress replace the Guaranteed Issue provision?

25%

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41%

High Risk Pool

Auto Enroll (Employers)

Mandatory Enrollment Period

No Replacement

The Breakdown by

We believe that Democrats will work to salvage the public image of the law, quickly implementing the remaining

provisions while negotiating alternatives as necessary

Scenario: Mandate Overturned / D Gridlock

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• Democrats will search for a mandate replacement, but will be unable to move anything through the Congress, limiting their response to administrative action.

• The Medicaid program will largely remain as envisioned by PPACA. States will continue to push for flexibility on the MOE; in response, the administration will grant 1115 Waivers, but with reform elements.

• Democrats will continue to introduce Medicare savings through additional payment adjustments and minimal benefit changes. Hospital payment cuts likely will stay intact, and IPAB likely upheld.

• Delivery reform will continue as outlined in PPACA and will be consistent with the current administration’s pace of implementation.

• Exchanges will be implemented as prescribed by PPACA, with few states establishing their own exchanges in the short term; additional states will come online after 2015. The Federally Facilitated Exchange will serve an important role.

• Both parties will ensure that guaranteed issue is overturned while all other insurance provisions will continue unimpeded. A congressional replacement for guaranteed issue is unlikely.

• The premium subsidy will be scaled back slightly from 400% of FPL on the basis of deficit concerns.

In this scenario, how will Congress replace the Guaranteed Issue provision?

The Breakdown by

21%

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High Risk Pool

Auto Enroll (Employers)

Mandatory Enrollment Period

No Replacement

We believe that Republicans will succeed in a partial repeal of the law, focusing on entitlement and insurance

reforms

Scenario: Mandate Overturned / R Sweep

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• Republicans will not pursue a replacement to the individual mandate.

• The Administration will focus on providing state flexibility and spurring innovation through 1115 Waivers rather than full repeal. Budget pressures could reduce the FPL cutoff in the Medicaid expansion.

• Republicans will use Rep. Ryan's budget as a blueprint for Medicare reform and repeal IPAB. Cuts to hospital payments will stay intact and an SGR fix will likely be offset by defunding portions of PPACA.

• There will be a new emphasis on delivery reform as HHS’ focus shifts away from insurance provisions.

• Republicans will immediately seek repeal of exchanges and allow private exchanges to distribute modified premium subsidies.

• Republicans will repeal most insurance market provisions without replacement while furthering the work done on high-risk pools to offset the loss of guaranteed issue.

• The current premium subsidy is likely to be repealed and replaced with a means-tested program.

36%

3%

54%

RepealEntire Law

Not PursueRepeal

TargetedProvisionsfor Repeal

In this scenario, how will Republicans pursue a repeal of PPACA?

The Breakdown by

We believe that Republicans and Democrats will not come together on a comprehensive replacement plan, but will

moderately reform entitlement programs

Scenario: Law Overturned / R Gridlock

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• A minimalist approach will be taken vis-à-vis Medicaid reform, although additional flexibility will be provided to states in eligibility determination. Block grants will not be a policy option.

• Republicans will try to reform Medicare through a Medicare exchange. A greater focus will be placed by the administration on Medicare Advantage programs. Minor adjustments will be made to FFS.

• The Administration and Congress will re-institute some of the payment reform provisions but cut funding to demonstrations without proven records.

• Republicans and Democrats will be unable to find a bi-partisan alternative to the premium subsidy, leaving the middle-class uninsured without redress.

• Private exchanges will emerge, expanding in popularity while focusing primarily on the group market.

• Given the popularity of guaranteed issue, Congress will look to guaranteed issue-like solutions to the coverage dilemma—e.g., high-risk pools.

• Republicans will pursue portability and med-mal reforms as health policy options.

• Republicans may be in favor of working with Democrats to re-institute some of the insurance provisions found in PPACA.

20%

25%

8%

15%

15%

10%

7%

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30%

47%

33%

Premium Support(Medicare)

Block Grants(Medicaid)

Medicaid Expansion

Substitute ForMandate

MLR Restrictions

Rate Banding

Employer Penalty

Modified PremiumSubsidies

Modified GuaranteedIssue

Consumer-FocusedInsurance Reforms

Public/PrivateExchange Funding

In this scenario, what health reforms would the Congress & White House be able to pass?

The Breakdown by

We believe that Democrats will try to salvage some elements of PPACA, but no major health reform legislation will

make it through Congress

Scenario: Law Overturned / D Gridlock

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• Improving state budgets and an illusion of flexibility in Medicaid will reduce the impetus for major reform. Congress may relax some state requirements, especially with respect to eligibility determination.

• No fundamental changes to the current FFS system are anticipated. The administration will continue to support the current path of Medicare Advantage, potentially through provisions similar to PPACA.

• Delivery reforms will continue with less funding for some programs.

• State-based exchanges will be implemented in some states with existing funds while slow group private exchange development will continue.

• Republicans and Democrats will be unable to find a bi-partisan alternative to the premium subsidy, leaving the middle-class uninsured without redress.

• Democrats will find an administrative replacement for guaranteed issue, possibly by developing high-risk pools.

• A handful of states will implement their own versions of PPACA-style reforms, including mandates, subsidies, and insurance reforms.

• The administration will attempt to salvage disparate portions of PPACA administratively.

14%

14%

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Premium Support(Medicare)

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Medicaid Expansion

Substitute ForMandate

MLR Restrictions

Rate Banding

Employer Penalty

Modified PremiumSubsidies

Modified GuaranteedIssue

Consumer-FocusedInsurance Reforms

Public/PrivateExchange Funding

In this scenario, what health reforms would the Congress & White House be able to pass?

The Breakdown by

We believe that Republicans now “own” health care reform and will be under pressure to find a solution, but will take a

minimalist approach with respect to federal government involvement

Scenario: Law Overturned / R Sweep

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• Increasing economic pressures will be an impetus for Medicaid reform, resulting in the Administration and Congress loosening constraints on states. Block grants will likely not be a policy option.

• Medicare Advantage will grow while premium support will be a viable policy option with an opt-out trigger. Republicans will use Rep. Ryan's budget as a blueprint for Medicare reform.

• We will see the re-institution of some delivery reform provisions while the general FFS transition progress will be slowed.

• Republicans will introduce an alternate premium subsidy program that will have a distribution channel through both public and private exchanges.

• State-based exchanges will be implemented in some states with existing grant funding while Republicans may actively look to fund private exchange development.

• High-risk pools will be the Republican solution to pre-existing conditions exclusions.

• Republicans will push for tort reform and insurance portability and re-instate the more popular insurance reform provisions.

23% 28%

39%

10%

In this scenario, how will Republicans pursue major health system reform?

The Breakdown by

FAQs

What is Health Reform Bracketology? Bracketology is a scenario-planning tool that examines the various Supreme Court and election outcomes and their impact on key health reform policies.

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What is FuturePanel? FuturePanel™ brings together former senior executives from the Centers for Medicare and Medicaid Services, national leaders in health information technology, veterans of state-level health care policy, clinical experts, great economists and legal minds to vet assertions and tease out the implications of the various scenarios. What is LP Health Watch? LP Health Watch is a survey tool used to gather the opinions of a distinguished group of industry executives and Washington DC insiders.

General Assumptions

Regardless of the Supreme Court decision and election outcomes, the next Congress will have to deal with sun-setting tax provisions that, if mishandled, invite economic destabilization and political brinkmanship. These fiscal “train wrecks” include:

• Expiration of the Bush Tax Cuts

• Expiration of the Payroll Tax

• Expiration of the Alternative Minimum Tax Patch

• The enactment of the Sequestration

• Required raising of the Debt Ceiling

• Cuts to Medicare due to the Sustainable Growth Rate

Six Fiscal Train Wrecks

We assume that the outcome of the Presidential (and to some extent Senate) elections will be largely influenced by the economy. Therefore, we make the following implicit assumptions in our scenarios:

• If Republicans win the White House, then it is likely that the economic recovery has stalled or the economy is slipping back into recession.

• If Democrats retain the White House, then it is likely that the pace of economic recovery has either maintained or quickened in the weeks and months prior to the election.

Economic Performance

We assume that the majority of state governors will be Republican. As of now, it is projected that 34 governors will be Republican, creating immense pressure from states on congressional delegations and the White House to cede further state flexibility.

Gubernatorial Pressures

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health reform bracketology

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mandate overturned

law overturned

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