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Obama or Romney: How 2012 Elections Will Impact Exchanges

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   November 05, 2012

Elections are just a day away, and the results will have a huge impact on the future of U.S. healthcare. But whether President Barack Obama remains or former Massachusetts Governor Mitt Romney is elevated to our nation's highest office isn't the only race that healthcare CFOs need to watch. The Senate races will also influence the policies adopted and enforced in the coming years.

The fate of health insurance exchanges (HIX) is particularly dependent on which party controls the Senate. I spoke with a health and public policy expert to find out how the Presidential and Senate elections could impact HIX.

"Exchanges are like a Travelocity for health insurance, and aren't political except that it is a feature of 'Obamacare.' The exchanges concept wasn't a politically partisan one, though. It's found in Romney's Massachusetts plan too," says Dick Cowart, chair of the health and public policy department at the Baker Donelson law firm.

Healthcare executives are more supportive than suspicious of HIX, according to our HealthLeaders Media annual industry survey. Just under half of the 823 leaders in the survey say they view HIX as an opportunity, while 19% see exchanges as a threat.

Last week, communications firm ReviveHealth and Catalyst Healthcare Research released results from another survey of healthcare executives. Among the findings:

  • A third of respondents say HIX will move forward regardless of who wins, while 46% say that if Romney wins they still expect exchanges to proceed, but only if administered by the states, not the federal government. Nine percent of respondents say a Romney win will mean a halt to HIX. Some respondents speculated about a year's delay of the exchanges or a rollout of private exchanges with states contracting with them for certain target populations.
  • Hospital executives also expect all the national health insurance carriers to participate in state HIX, as well as strong participation from managed Medicaid plans.

Cowart notes if Romney is elected, the "artwork" will be in separating out HIX from the Patient Protection and Affordable Care Act without necessarily eliminating them. "I believe that exchanges will continue," he says. But, Cowart notes, the Senate elections can influence that outcome as well.

"If Romney is elected, but the Democrats still control the Senate, in that case the repeal and replacement of the Affordable Care Act becomes much more problematic," he says. "Republicans have to run the table to have a clean repeal and replace, so it's not just the presidential race that matters. And the Senate races are close, too."

If Obama is re-elected, Cowart says, HIX will continue as a policy, regardless of who controls the Senate. But if Republicans control the Congress and try to repeal or replace PPACA, then the president would very likely veto the attempt.

If HIX go forward, then most healthcare executives will need much more education on the details, Cowart says. Selecting a rate for the exchanges is a complicated process. First the governor of each state must determine what the essential health plan benefits will be. Then the payers have to organize their networks around those benefits, and then both the commissioner of insurance in each state and the HIX have to oversee the adequacy of that network and the premium pricing to buy that plan.

"What's not in [the law] is oversight on what a plan pays a provider. So it's certainly plausible, in regulations that aren't written yet, for there to be some oversight as to what [rate] is 'reasonable,'" he says."And many governors won't make a decision on how to proceed with exchanges until after the election."

If rates prevail at Medicaid levels or below, then 57% of healthcare executives in the ReviveHealth/Catalyst survey feel the impact on the bottom line would lead them to make substantial cuts to operating costs or do something drastic such as "merge, cut service lines, or close units." Nearly a quarter of respondents say they would decline to participate, while other responses included assertions that they "would go out of business" or "go bankrupt."

That's a grim possibility for some hospitals and health systems Regardless of the election outcome, Cowart says, "On November 7, we're all going to have to have a very adult conversation about exchanges and Medicaid expansion."

Karen Minich-Pourshadi is a Senior Editor with HealthLeaders Media.

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