Three New Themes Coursing Through Our National Health Policy Debate

August 29, 2024

In our last dispatch, we discussed items remaining on Congress’ plate between now and the end of the year. This period will include a short stint in September when Members will be back in Washington but, after that, they won’t then return until after the November elections. In fact, while Congress is scheduled to be in session every week of September, it’s quite possible their time in town is cut short so campaigning can resume.

For health policy stakeholders, now continues to be the time to plan and strategize for what may be in front of you, not only in the, “lame duck,” session, but also throughout 2025 during a newly configured Washington. Additionally, due to the reversal of the Chevron deference, we can now add legal uncertainty to the list of unknowns.

In sum, healthcare organizations should remain hyper-attuned to Washington during this time of heightened regulatory and legislative risk.

As for today, the below explores broad themes coursing through our national health policy conversation. In my 20 years watching this space up close, these expansive themes often act as indicators of what may come down the pike, and we quite often end up hearing about them in the future.

Theme 1: A New – And Reconstituted – Debate About The Affordable Care Act

For those of us who lived through the “ACA Wars” of the early 2010s, the relative Pax Romana experienced since 2017’s Repeal and Replace effort has been welcome. Wherever you may fall in regards to the ACA as a piece of public policy, it appears Republican health policy thinkers are developing new ways of framing the law which stakeholders need to know. In addition, Republicans in Congress are forecasting their intention to use the coming expiration of the Trump tax cuts as leverage to open debate about the expanded – and also expiring – subsidies for ACA plans that were included in both the American Rescue Plan and Inflation Reduction Act.

Broadly, we have begun to see Republican messaging characterizing the Affordable Care Act as both too expensive and that Medicaid expansion payments are flowing improperly.

Three quick resources to better understand these dynamics are below:

The Paragon Health Institute: The Affordable Care Act’s Medicaid Expansion Caused Improper Payments to Soar
Obamacare Premium Benefits Targeted as GOP Pushes for Tax Cuts
Congressional Budget Office: Answers to Questions for the Record Following a Hearing on An Update to the Budget and Economic Outlook: 2024 to 2034 (See Question about halfway down that begins, “CBO projects in the most recent baseline that Obamacare subsidies…”)

Further muddying the political waters in this space is the increase in ACA plan enrollment, particularly in Republican controlled states. Across America, 21.4 million people are now enrolled in ACA subsidized health plans. However, a political dynamic to watch is that enrollment is surging in Republican controlled states including YoY increases in West Virginia of 80.2%, Louisiana of 75.9%, Ohio of 62.2%, Indiana of 59.6% and Tennessee of 59.5%. These dynamics are already leading to fascinating alliances in and out of Washington with an unusual coalition comprised of both insurers and patient advocacy groups forming called Americans to Keep Healthcare Accessible. Add in that just ten states remain which have not adopted the ACA’s Medicaid expansion – and the positive impact Republican governors and their rural hospitals accrue to their budgets because of it – there are sure to be shifting political alliances. With that in mind, even if you’re a healthcare stakeholder not directly touched by the ACA, I recommend paying attention because you could either get caught up in these crosscurrents, or those dynamics should inform your DC navigation writ large.

Theme 2: Medicare Advantage vs Hospitals & Hospitals vs Medicare Advantage

Readers of these updates will know we have been analyzing the uncertain Medicare Advantage landscape since the start of the year (see previous dispatches linked at the end of this document). The v28 risk adjustment changes have put incredible policy, operational and payment pressure on insurers which is now trickling down to plan offerings, supplemental benefit options and, of course, stock prices. CMS is even trying to determine how to better compare spending in Traditional Medicare vs Medicare Advantage in order to inform policy down the line.

A dynamic that has not yet been explored as much is the proxy battle between Medicare Advantage insurers and hospitals. In my view, three forces are informing this space:

MA approaching 55% of Medicare enrollment
CMS’ 2030 goal for accountable/value-based care; and
v28 reducing money in the MA ecosystem

Due to all three of these, there are indirect ramifications worth examining that do not involve the plan premiums or quarterly earnings reports we see in the news.

With the rise of MA enrollment, hospitals are seeing new influxes of seniors in private plans. This reduces a hospital’s negotiating position because seniors want to be in-network for their local hospital and, when

they’re not, Members of Congress hear about it. On the other side, hospitals also have a hand to play because insurers could do without the negative PR generated during these very public confrontations, even when they eventually resolve. Further, as CMS moves towards value-based care, the resulting reduction in emergency room visits will begin to limit that line of lucrative hospital revenue, potentially further heightening angst for all sides.

Watch this space, but in the meantime, below are three resources outlining these dynamics:

Theme 3: The New, Fascinating, And Bipartisan Confluence of Anti-Corporate Sentiment

The final theme we’re exploring today is perhaps the one that is most uncertain. Since the election of Ronald Reagan in 1980, the Republican party developed as core to their policy a focus on low taxes, limited government and foreign policy/military strength. Along with those pillars was a steadfast belief in free-markets and close alignment with large corporations. As Donald Trump’s influence on the Party solidifies, there is a new GOP policy strain emerging of anti-corporate and pro-worker sentiment. While this sentiment has not yet permeated the entire Party in Congress, it is growing and has been further elevated with the pick of Senator JD Vance (R-OH) as the Republican Vice Presidential nominee.

I first noticed this new theme when Sen. Josh Hawley (R-MO) teamed up with Sen. Elizabeth Warren (D-MA) to introduce a bill to clawback the compensation of bank executives if their institution failed. Seven months later, Hawley partnered with Sen. Bernie Sanders (I-VT) and a slew of other Democrats on a resolution expressing solidarity with striking United Auto Workers. Both Hawley and JD Vance have also recently stood with workers on union picket lines. It has been a long time since Republican elected officials were pro-union, but as the national coalitions of both parties continue to re-align, we may see more of these dynamics emerge.

Now, you may be asking, “what does this mean in practicality?” While is has had a limited impact in the immediate term, this dynamic could become more powerful over time. Right now, for healthcare stakeholders, particularly in the MA orbit, a leading GOP health policy think tank has called for ending the quality bonus system, home risk assessments and chart review. This is converging on the left with a call for a “healthcare industrial policy,” to combat vertical consolidation and create, “resilient healthcare infrastructure,” by essentially declaring healthcare a public good. More immediately, we see it with bipartisan efforts at PBM reform and interest in the effects of hospital/insurer consolidation. While much of these sentiments have long been part of Democratic Party thinking, they are new – and as of yet not at critical mass – inside the GOP, but they are indeed there, and stakeholders should be watching them.

Below are additional resources illuminating these crosscurrents: