Compromise on healthcare policies could be the ultimate winner in next week’s midterm elections.

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The Democrats’ predicted blue wave looks poised to hit the Republicans’ red seawall, which means a big swath of the country could crash purple this midterm election cycle. For the healthcare industry, where stakes are higher at the state level over the next two years, that could mean the states will carry out the kind of bipartisan work that stymies Washington.

“Keep in mind how Washington under the Democrats and Republicans has been increasingly unable to get things done in a whole lot of areas,” Charlie Cook, editor of Cook Political Report, told the Medicaid Health Plans of America conference in Washington last week. “That has left a power vacuum that has devolved power out to state governments.”

As congressional Republicans and Democrats remain gridlocked over changes to the Affordable Care Act, the Trump administration is giving states more leeway to reshape their individual markets. The CMS is also encouraging state-level overhauls of Medicaid with an eye toward shrinking costs.

This comes as Democratic gubernatorial candidates in red and purple states run on Medicaid expansion. These opposing factors set the stage for significant policy changes that could mingle Republican and Democratic ideas.

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Currently the governor and legislature in 26 states are Republican, with 13 states of those rated at various degrees of vulnerability. The same is true in eight states for Democrats, with five also considered vulnerable. But now more than 6,000 state legislative seats are up for grabs. Nearly a third of the races for the 36 open governorships are toss-ups—including Florida, Iowa and Wisconsin.

Here’s a look at how 
Nov. 6 could change things:

Medicaid

Top of mind for the hospital industry and insurers, Medicaid expansion is on the ballot in four states. Idaho, Nebraska and Utah could expand for the first time, and Montana could extend its program that is due to expire.

Brian Whitlock, CEO of the Idaho Hospital Association, called the ballot proposition a “top priority,” as he emphasized the financial impact of the state’s significant coverage gap: 62,000 people who don’t qualify either for Medicaid or for subsidies on the exchanges.

But gubernatorial races could also spur another slew of expansions across widely variant regions.

Healthcare on the ballot
Voters across the country will have their say on a number of healthcare issues this election season. Here’s a sampling of ballot initiatives.

California


Proposition 8: Would require outpatient dialysis clinics to refund patients or their insurance providers any revenue above 115% of the cost of direct patient care.

Maine


Question 1: Would authorize new taxes to pay for universal home care for people age 65 and older who have physical or mental disabilities.

Massachusetts

Question 1: Would set nurse-patient ratios.

States with Medicaid expansion proposals

Idaho

Nebraska

Montana*

Utah

*Would extend existing expansion which is set to expire

Sources: National Conference of State Legislatures and Modern Healthcare reporting

Democratic candidates Andrew Gillum in Florida, Stacey Abrams in Georgia and Tony Evers in Wisconsin are campaigning on Medicaid expansion in states where GOP-controlled executive and legislative branches have so far strongly opposed it. All three are polling in a dead heat with their opponents.

Expansion in just two of those states could mean a surge for managed-care insurers. “If the governors flip in both Florida and Georgia, Medicaid stands to add about 1 million lives—662,000 in Florida and 388,000 in Georgia—through expansion,” said Alex Shekhdar, head of federal affairs and state policy for Medicaid Health Plans of America.

Neither Florida nor Georgia has applied for a work requirement waiver to the CMS, but Shekhdar believes both could end up going the Virginia route of a “compromise expansion” where eligibility could be paired with a mandate to work, volunteer or enroll in school.

Democrat Drew Edmondson is running on expansion in Oklahoma’s open governor’s race, although public support has not appeared strong enough to drive a voter ballot campaign there. This race is also a toss-up.

Maine voters approved expansion but this year’s governor race is still significant because of dynamics that have so far blocked the rollout. Term-limited Republican Gov. Paul LePage lost an appeal to a lawsuit over his refusal to implement the expansion as he argued that the Legislature needs to first come up with a way to pay for the state’s share.

In the toss-up race to succeed him, Democratic Attorney General Janet Mills supports expansion and backed the lawsuit against LePage. The GOP contender, businessman Shawn Moody, echoes LePage’s position. As reported by the Portland Press-Herald, Moody has said expansion is the law and he would implement it, but with the caveat of “sustainable and responsible funding from the Legislature.” Moody also supports LePage’s application for a 1115 waiver to add work or volunteer requirements for some in the program.

In Iowa, Republican Gov. Kim Reynolds is fighting claims that she’s moved too quickly to push Medicaid managed care. The state’s rapid transition to private insurers roiled providers and patients as health plans lost hundreds of millions of dollars. The state last year asked the CMS for $225 million in risk corridor payments to mitigate the losses.

Individual market

States are also the battleground for competing visions of the ACA. But where individual states land may look more nuanced.

Maura Calsyn, managing director of health policy for the liberal Center for American Progress, is tracking measures that combat what ACA supporters deem “sabotage” by the Trump administration: state-by-state restoration of the individual mandate (as the District of Columbia, New Jersey and Vermont have done), reinsurance and state curbs on short-term plans. “Other pieces are the cuts to navigators and outreach programs, and the shortened open-enrollment periods,” she said.

On the conservative side, a lot of hopes hinge on the administration’s 1332 state innovation waivers as a driver for creativity. “To make the markets work, you have to pursue different strategies,” said Doug Badger of the conservative Heritage Foundation. “Why not give states maximum flexibility to try different things?”

Congressional shift?

Democrats could easily assume the mantle of power in the House. (It’s much more unlikely in the Senate.)

That means oversight. Key Democrats are clear they will pummel the Trump administration with subpoenas to scrutinize everything from Medicaid work requirements, cuts to marketing funding for the ACA’s open enrollment and navigator programs, and HHS’ role in the migrant children’s detention crisis.

A Democratic majority could also mean a seismic shift in the recent GOP House-driven momentum to reform the 340B drug discount program, which has pitted hospitals against drug companies in one of the most bitter lobbying wars on Capitol Hill. Democrats are largely on the side of hospitals as Republicans have pushed for stronger reporting measures and limits to how many patients qualify for significant prescription drug discounts collected by the providers.

House Democrats are also signaling willingness to work with the White House on lowering drug costs, which is making manufacturers nervous. However, as analysts from Height Capital Markets note, the Senate’s 60-vote threshold could block significant legislative measures.

For industry lobbyists who want to find a vehicle for their bills, next year’s expiration of disproportionate-share hospital payment cut delays as well as funding for the U.S. territories likely mean that a healthcare package will be on the agenda for 2019.

Looking to 2020

“Medicare for all,” or some notion of a single-payer system, continues to creep into the political discourse. It was talked up by progressives in some Democratic primaries and, conversely, is being used by Republicans as a rallying cry to the base as “a government takeover of healthcare.”

But an analysis from the Washington firm Forbes-Tate Partners shows Democratic leaders have kept their ranks moderate, despite the emergence of a Medicare for All Caucus this summer: 60% of House Democratic candidates in competitive races have never expressed support for “Medicare for all,” along with 92% of Senate Democratic candidates. Seventy-eight percent of campaign websites for House Democratic candidates in competitive races don’t mention it at all.

The analysis posits that this means Democrats as a bloc will steer clear of the single-payer debate ahead of 2020. Analysts acknowledge this could change depending on who the party nominates for president.

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