So, the midterm election of 2018 is now over. The election drew one of the largest electorate turnouts ever in a midterm election. Elements of the media have spoken of the results, using the term “a blue wave”. Indeed at the national level, the House did have a very significant turnover of House seats from Republican to Democrat. In the Senate, the blue wave had not been expected to occur, and indeed, it did not.
At the Florida state level it was the Governor’s race and the U.S. Senate race which received most of the attention, with votes so close that recounts were necessary. But the voting situation for these two races reflected something quite important: that among the voting public, the electorate was split right down the middle. This would appear to imply that half of our state’s population is most pleased with the outcome of the election and half of the state’s population is most likely disappointed with the outcome. So what may the election outcome mean regarding healthcare policy at the federal, state, and local levels, and how will it impact patients, providers, and payers? Whereas it is questionable whether one can rely entirely on our crystal ball, there are certainly some strong indications as to where policy may lead.
Let’s start at the state level. With the state legislature maintaining its Republican majority, and with a new Republican governor who is closely aligned with President Trump’s political views, we may anticipate that there will be no Medicaid expansion in the state of Florida over the next two to four years. We may also expect that there will be no enhanced eligibility in the state. As such, there will be people who will continue to fall between the cracks in terms of insurance coverage.
People earning 133 percent of the Federal Poverty Level (FPL) or above will be eligible for the federal subsidies through the Federal Exchange under the Affordable Care Act. But parents who make more than 30% of the FPL, individuals without children and undocumented immigrants will be ineligible for Medicaid. Without any insurance coverage, these categories of individuals will be dependent upon Emergency Departments for their care, the highest cost, lowest quality of care given the discontinuity of care. Further those individuals without insurance coverage will be charged full list price. With an inability to pay, this patient population will continue to place a bad debt burden on health care providers.
Looking at the federal level, the Democratic majority in the House and the Republican majority in the Senate will tend to assure that there will be no major change in current health care policy except, perhaps as it pertains to pharmaceutical pricing and policies. The recurring theme of “repeal and replace” of Obamacare will now be a mute point as the various attempts to reverse the law in the past were initiated in the House. And whereas Florida will not be expanding Medicaid, we are and will continue to see additional states expanding their Medicaid programs. It is interesting to note that when Medicaid was initially passed in 1965, the number of states that signed on were approximately the same number as those that initially expanded their Medicaid programs with partial federal funding in 2011. Over time, the number of states that adopted Medicaid or Medicaid equivalent programs expanded to all 50 states and the District of Colombia, much like what we have seen with the number of states adopting Medicaid expansion continuing to increase. One of the unknowns will be the extent of rule changes by the Department of Health and Human Services, the Center for Medicare and Medicaid Services, and the President himself in terms of Executive order, as they affect Medicare and the Federal government’s role vis-a-vis Medicaid.
There are two areas of apparent consensus between the Republicans and Democrats that appear to be forthcoming: assurance of insurance coverage for those individuals with preexisting conditions and the monitoring and regulation of pharmaceutical companies.
One issue that has not been addressed by either party but is coming at us like a freight train is the fact that the Medicare system is expected to go broke in the year 2026, this as indicated by the Trustees of the Medicare Trust Fund, themselves.
Having said that, it may be anticipated that Medicare will not be allowed to go broke. Baby boomers have a loud voice in American politics, bolstered by the power of the American Association of Retired Persons (AARP) which represents Americans over the age of 50. Individuals in Congress every so often mention the concept of reevaluating entitlements … the code word for Social Security and Medicare. But this is the third rail in American politics and would tend to haunt the House or Senate members who bring up the concept in earnest.
Given that cutting benefits of retirees or raising the age of eligibility will tend not to happen and given the fact that Medicare will not be allowed to go broke, there are only two variables left … increase taxes on the employed and self-employed population and/or cutting reimbursements to providers. Indeed, the trend has already occurred. Hospitals are operating on an average operating margin of under 2.8% and we may anticipate further reductions in reimbursements to hospitals systems. Physicians have seen reductions in reimbursement for clinical services under Medicare. For example, the conversion factor for calculating clinical services reimbursement for a Medicare patient is actually lower today than it was 10 years ago and more cutbacks may be expected in the future. One of the other hidden aspects is that Medicare is the major funder of residency training programs, a policy that began in 1965. There will be increased questioning as to whether Medicare is the appropriate source of funds given the need for CMS to control costs. The result would be costs of residency programs, absorbed by teaching hospitals, fewer residency programs, and a result in increased shortage of physicians. It should be noted that in the not too distant past, there were 133 residency positions for every 100 medical school graduates. Today there are fewer residency program openings than there are graduates from medical school.
So one can anticipate that issues that have been on the forefront of the health care debate, issues dealing with access and efficiency, will continue to be the subject of continued conversation and debate. Certain aspects are relatively certain, and other aspects are unclear in terms of outcome. Indeed we will continue to realize that, as per President Trump, “health care is complicated.”
