Implications of the 2018 Midterm Elections

Health care was a central issue in this year’s midterm elections. In the days after the election, many have speculated on what the results mean for U.S. health care policy. Since the Republicans maintained control of the Senate, while the Democrats took control of the House, some see the next two years as a time of political gridlock and stalemate. But even in today’s hyper partisan climate, a time of divided power brings opportunities for bipartisanship, particularly when moments of crisis meet moments of mutual political benefit. Additionally, given the centrality of health care to the election and the ongoing challenges to the system, we will in fact see substantial activity in the health care space, both legislatively and through executive branch action.

In a Leavitt Partners Health Intelligence webinar, Governor Mike Leavitt, Vince Ventimiglia, and Cristal Gary analyzed the midterm elections and discussed the implications for health policy. We’ve summarized the five biggest ones here:

  1. The Affordable Care Act remains the statutory construct for health care in America. Even the most ardent opponent of the ACA likely recognizes that for the foreseeable future it remains the health care law of the land. The ACA’s protections for patients with pre-existing conditions in particular became a winning platform for the Democrats and a third-rail for any Republican with sights on rolling back those protections. Furthermore, LP consumer survey results show that Americans place slightly more trust in Democrats to improve quality and reduce outcomes, which may strengthen their hand in protecting some ACA components. Although the attempt to repeal and replace the statutory components of the ACA failed, repeal and replace efforts for the ideology that underlies the implementation of the ACA remain at play.
  2. The executive branch will become even more active on health care policy. Since much of the ACA was done through administrative rulemaking, the Trump administration will redefine the details and the ideology of the ACA through its own rulemaking and guidance. In the absence of large-scale congressional action, which is less likely in a divided government, we expect the Administration to use regulations, rulemaking, pilots, and waivers to advance its health care agenda. Vince Ventimiglia, chairman of the Leavitt Partners board of managers and head of the Leavitt Partners Federal Advocacy and Insight practice, explains that “in divided government, executive branch activity is the fastest, most effective path forward to advance their goals.” We anticipate continued efforts on the four pillars of health care policy previously outlined by Health and Human Services Secretary Alex Azar: address drug pricing concerns, stabilize the individual market, promote value-based payment reforms, and increase action on the opioid epidemic.
  3. There is strong potential for bipartisan action on drug pricing. President Trump and lawmakers from both sides of the aisle have expressed a commitment to tackling high drug prices. In fact, If President Trump cannot find agreement among his own party, he may try to dislodge a deal on drug prices from Democrats. “There is confidence on a bipartisan basis for legislative and regulatory activity on drug prices. This is one area where the administration and House Democrats can come into sync and probably drive some agreement from Republicans,” explains Ventimiglia.
  4. There is also strong bipartisan support for value-based care. Another area of mutual interest for both Democrats and Republicans is value-based care, since both sides agree that fee-for-service medicine is a serious problem and coordinated care is better than uncoordinated care. HHS Secretary Alex Azar and CMMI Director Adam Boehler plan to use the levers they have, such as mandatory value-based payment models. Given the bipartisan support for the MACRA legislation and value-based care generally, it’s unlikely Congress would push back on these efforts.
  5. The states will continue to be important laboratories of policy change, particularly with Medicaid. Although most of the attention on election night and the days after has focused on the national scene, the political changes in the states may be more consequential. Seven states flipped to Democratic governors and six state legislatures flipped to Democratic control, with other states seeing larger numbers of Democrats even in the minority. Voters in three conservative states—Utah, Idaho, and Nebraska—approved ballot measures for Medicaid expansion. Cristal Gary, a Principal at Leavitt Partners who oversees the company’s State Insight practice, predicts that “it is likely we will see more Medicaid expansion moving forward in some of the states where Democrats won.” Changes around work requirements are likely too. According to Gary, “work requirements were one of those hot button issues in Medicaid in the past year and are one of those policy trends that really have a potential to reshape Medicaid in a significant way.” Several states with pending waivers for Medicaid work requirements are now controlled by Democratic governors, who may walk back those waivers.

Ultimately, we have an economic mandate to reform health care to avoid a crisis. Bipartisan efforts are possible when mutual benefit meets mutual crisis, and it is hard to know when the black swan of crisis will swim up to the shore.

Through its Federal Insight and Advocacy, State Insight, and Health Intelligence practices, Leavitt Partners gathers, analyzes, and translates market intelligence to inform clients and the general public on key health care trends. For additional information on ways that Leavitt Partners is tracking and providing policy and market health intelligence to support the transition to value, please contact Jennifer Colamonico.