Health reform bracketology oct 7 [recovered]

Health Reform Bracketology2010 Congressional Election Madness

Standings as of October 4, 2010

OverviewAs 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 4 2010

Democrats Republicans

Toss Up

Democrats Republicans

Toss Up

190 38 207 48 5 47

RepublicansHouse

DemocratsSenate

© Leavitt Partners 2010

http://www.realclearpolitics.com/

Methodology and FocusOur 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 Bracketology2010 Congressional Election Madness

Standings as of October 4, 2010

Republicans DemocratsRepublicansRepublicans Democrats Democrats

Election 2010 Scenarios

Target• Individual Mandate• Employer Penalty:• Premium Subsidies:• Medicaid Expansion: • Medical Loss Ratio: • Medicare Funding Cuts:

Likelihood80%80%63%50%80%87%

Likelihood51%40%37%27%60%70%

Likelihood17%23%23%

7%30%63%



House Senate House Senate House Senate


Individual MandateStandings as of October 4, 2010


LP Coach’s Poll Prediction

Democrats

Republicans

Republicans

Democrats

Republicans Democrats

HOUSE SENATE

51%Chance of Disruption if Republicans take the House and

Democrats retain the Senate. See below for type of disruption.

Modify 53%

Stall 33%

Repeal 13%

80%Chance of Disruption

RepublicansHouse Senate

Alternative Scenario

Commentary: Leavitt Partners believes that both Democrats and Republicans are unhappy with the Individual Mandate as currently constituted, making it a likely target. Although unpopular, the need to address adverse selection in insurance pools is acknowledged. If repealed, one discussed substitute is an auto-enrollment process with an opt-out provision. 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. Like some other controversial provisions of PPACA, the individual mandate does not take effect until 2014, allowing reasonable time for disruption.

Republicans

Modify 67%

Stall 33%

Repeal 0%


DemocratsHouse Senate


Democrats


Modify; 53%

Stall; 43%

Repeal; 30%



Employer PenaltyStandings as of October 4, 2010



Democrats

Republicans

Republicans

Democrats


HOUSE SENATE



Modify 47%

Stall 37%

Repeal 17%




Commentary: With the campaign season in full sway, look for Republican candidates to speak out against penalties and fines levied against employers not offering sufficient insurance, citing the detrimental impact on employment. Possible modification scenarios could include exempting more businesses through hardship waivers, defunding enforcement capabilities, or lowering the penalties.

Republicans

Modify 63%

Stall 37%

Repeal 0%




Democrats


ModifyStall

Repeal

Modify; 53%Stall; 40%

Repeal; 7%


Premium SubsidiesStandings as of October 4, 2010



Democrats

Republicans

Republicans

Democrats


HOUSE SENATE



Modify 73%

Stall 20%

Repeal 7%




Commentary: Lower health insurance premiums are especially appealing to both parties in the current economic and political environment. However, premium subsidies to large numbers of Americans remains a highly contentious issue. 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. With subsidies not scheduled to begin until 2014, plenty of time remains to modify this provision.

Republicans

Modify 73%

Stall 23%

Repeal 3%




Democrats


ModifyStall

Repeal

Modify; 67%

Stall; 30%

Repeal; 3%


Medicaid ExpansionStandings as of October 4, 2010



Democrats

Republicans

Republicans

Democrats


HOUSE SENATE



Modify 58%

Stall 39%

Repeal 3%




Commentary: Leavitt Partners believes that the Medicaid expansion will be a difficult provision to disrupt. This expansion was really the plan “B” for the so called “public option” that Democrats originally championed, and is politically challenging to roll back. Consequently, none of our experts believe that the provision will be repealed. However, possible modifications could include offering Medicaid eligible populations the option of receiving a voucher for use in purchasing insurance through state exchanges.

Republicans

Modify 85%

Stall 15

Repeal 0%




Democrats


ModifyStall

Repeal

Modify; 60%

Stall; 40%


Medical Loss RatioStandings as of October 4, 2010



Democrats

Republicans

Republicans

Democrats


HOUSE SENATE



Disruption Type

Modify 63%

Stall 27%

Repeal 10%




Commentary: The new Medical Loss Ratio requirements could have a negative impact on the attractiveness of the Individual Insurance market to traditional insurance providers. Several states, including Maine, Iowa and possibly Florida have asked HHS for leniency in allowing a “phase-in” of this provision. Also, 30 state-insurance commissioners recently met with the White House and “urged the Obama administration to consider phasing in the 80% requirement over several years to avoid disruption of insurance markets.” www.nytimes.com/2010/09/23/business/23states.html, September 22, 2010

Republicans

Modify 77%

Stall 23%

Repeal 0%




Democrats


ModifyStall

Repeal

Modify; 73%

Stall; 23%

Repeal; 3%


Medicare Funding CutsStandings as of October 4, 2010



Democrats

Republicans

Republicans

Democrats


HOUSE SENATE



Modify 70%

Stall 17%

Repeal 13%




Commentary: Medicare funding , including the IPAB (Independent Payment Advisory Board), Medicare Advantage program, and market basket updates, represent an extremely large portion of funding and contentious area of debate. 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.

Republicans

Modify 70%

Stall 27%

Repeal 3%




Democrats


ModifyStall

Repeal

Modify; 70%

Stall; 20%

Repeal; 10%


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Health reform bracketology oct 7 [recovered]

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