What’s Next for Healthcare?

On the eve of this national midterm election polls are continuing to suggest a decided shift in congressional2014_elections_senate_map power. According to Real Clear Politics, current polling indicates 45 Democratic candidates are probable Senate winners, while 47 Republican candidates are positioned to be elected – leaving 8 races considered tossups. If voting plays out as polling suggests – and really, that’s a subject ripe and deep enough for a few hundred theses over the next decade I would think – Republicans only need to win half of those races to secure a 51-seat majority in the Senate.

The Affordable Care Act continues to be unpopular at around 38% of the country having a favorable opinion and 52% having an unfavorable opinion. With Republicans controlling both houses of Congress and their long-standing opposition one would think repealing the ACA would be priority one. But with President Obama’s unequivocal certainty to veto any attempt to repeal the ACA and 60 votes needed for cloture an outright repeal is unlikely. And candidly, a lot of Republicans are not anxious to take away parts of the Act that have proven popular.

So what is likely then. The Senate has never held a symbolical repeal vote, so it will be politically important to Republican Senators they have an opportunity to be on the record as voting for repeal. So we’ll have to endure that circus. Once past the political symbolism I think it is anyone’s guess what’s next. And that’s because it’s anyone’s guess who will ultimately control the soul of the Republican party.

There is the school of thought that a Republican majority in Congress would reflect a referendum on incumbency over frustration with that body’s inability to accomplish anything meaningful. To be sure, it would also be viewed as a referendum on the Administration. But another two years of meaningless symbolic gestures at the President’s expense might not play well for Republicans in 2016, which will be for even bigger stakes. While a more moderate tone from Republicans willing to find common ground with Democrats could lead to modifying and/or repealing the most unpopular aspects of the ACA.

On the other hand, strong-willed elements of the party’s conservative wing could once again seek to hold the Republican Party hostage in the name of being committed to their ideological base. Realizing their only chance of gaining popular support on a national level is to galvanize that ideology beyond current levels of support they don’t have much to lose by risking the ire of those who might view them as obstructionists.

If there were to be some revisions that somehow could be agreed upon by both parties, they would likely need to already have popular appeal – e.g., repeal of the employer mandate provision, repeal of the annual health insurance fee, repeal of the medical device tax – and possibly even repeal, or at least modification of, the individual mandate.

Why are these appealing? Because they lower costs to voters – whether directly or intuitively through the cost of doing business. What is far less attractive are things like repealing individual tax credits and cost-sharing subsidies for health insurance and funding of Medicaid expansion. That leaves a bit of problem for Republicans then, doesn’t it: cutting revenue without cutting expenses while seeking to be fiscally prudent as a primary positioning strategy ahead of the 2016 presidential election.

So how would this be political conundrum be reconciled? Hands, please.

My educated (as in reading the writing on the wall) guess is we will see even more pressure on providers to control costs and system utilization. More emphasis on provider risk sharing. Continued focus on value and tying outcomes to investment. Further support for capitation-based payment models via managed care. Oh, and increased pressure to embrace performance improvement and quality-based systemic approaches that have proven successful in achieving production efficiencies in other industries.

Whatever the outcomes of tomorrow – and however those outcomes manifest in the legislative and regulatory impact on the healthcare industry – all healthcare providers would do well to understand and accept that staying on top of state and federal activities is going to be crucially important to organizational survival.

  ~ Sparky

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