• LAST CALL! HEDGEYE’S CYBER MONDAY SPECIAL EVENT

    OUR BEST DEAL ALL YEAR JUST GOT BETTER

    SAVE AN ADDITIONAL $100 OFF OUR ELITE PASS

Takeaway: Biden win not likely to result in soul searching necessary for embrace of Medicare for All and other progressive priorities

Editor's Note: This is a complimentary research note published by Healthcare Policy analyst Emily Evans. CLICK HERE to get COVID-19 analysis and alerts from our research team and access our related webcasts.

The Fractal Math of Politics | House Races Spell Trouble for Progressivism  - 11 9 2020 10 41 34 AM

Politics

It appears that while many Americans could do without Donald Trump as their president, they weren’t ready to abandon many of his policies and those of the Republican Party.

The failure to detect that in advance of the election is a good reminder that data is important but not worth much without a little common sense and observation of the world around us.

Nowhere is that clearer than the outcomes of races for the U.S. House of Representatives and in 50 state legislatures. Despite polling that told a very different story, Republicans thus far have not lost a single incumbent in the House and managed to pick off seven Democrats. State legislative races tell a similar story. Republicans maintained control of 28 and added a 29th in New Hampshire, despite well-funded efforts by former New York Mayor Mike Bloomberg to flip Texas and Florida in advance of redistricting.

If you could apply fractal math to politics, electoral outcomes in the lower house and in state legislatures would be as Hedgeye, CEO Keith McCullough likes to say, “the particular of the particular.” Put another way, those races measure public sentiment in a way statewide and national races cannot. That sentiment seems to be pointed away from certain Democratic priorities, at least as currently envisioned.

We have already noted that health care as an issue was losing its steam. Its primary proponents, the boomer generation, are being edged out of the center of political influence by younger, healthier cohort more interested in economic and social issues. Within that younger demographic reside key constituencies like Hispanics in South Texas and Cubans in Florida who shifted dramatically toward Republicans in last week’s election.

For everyone else, it is little wonder that after spending a few trillion dollars on the COVID response, the public was wary of more big game legislation like extension of the ACA tax credits or creating a public option. Or perhaps, COVID fatigue had them ready to just change the subject altogether.

Policy

Despite the election’s outcome, the policy landscape for health care changes very little. As we pointed out last week, the sweeping aspirations of the House’s left flank would be met with a cold shoulder in the Senate, regardless of which party prevails there.

What is new is that a Biden/Harris administration, having tossed the Biden-Sanders Unity Task Force recommendations into their personal dustbin of history, stopped feigning an interest in big ticket health policy initiatives. The transition website unveiled last week does not list health care as a priority and manages to bury Biden’s usual language on a public option at the end of his COVID-19 response plans, promising to get to it once the pandemic was over.

We are back to where we have been all along. The two areas of focus, outside of COVID which is a health policy category all its own, are likely to remain a benefit redesign for Medicare Advantage and some complementary effort to reform drug price policy. If the Trump administration manages to complete rulemaking on Most Favored Nation Executive Order, the Biden administration may have some additional leverage for a compromise that could include PBM reforms.

It remains to be seen how much political capital a Biden/Harris administration wishes to risk on reversing Trump-era regulations. Things like price transparency and site neutral payments have all been controversial within the industry but generally have bipartisan appeal. Medicaid reforms have been adopted through waivers after negotiations with states and are not likely to be unwound as quickly as critics would like. Deregulation of telehealth and site of service also have broad appeal.

The wild card is the ACA. If the court strikes the entire law down or sends it back to the trial court to sever parts from the individual mandate, the White House will want to rescue guaranteed issue for which there is bipartisan support.

Things get interesting if all the exchange subsidies are nullified in which case Republicans, emboldened by the election, have an opportunity to reassert their brand and demand the budgetary pound of flesh.

The Fractal Math of Politics | House Races Spell Trouble for Progressivism  - Medicare Advantage

Power

The election outcome leaves Speaker Nancy Pelosi in an interesting spot. She has done a remarkable job keeping her caucus under control the last two years. She now faces a thinner majority and a lot of finger pointing.

Over the weekend Rep. Alexandria Ocasio-Cortez was openly critical of the Democratic Party’s strategy and execution. She also appeared to be putting the Biden administration on notice to embrace progressive policies and not forget the grassroots efforts that got him to the White House.

As the transition website, the transition team and the cabinet names being bandied about suggest, Ocasio-Cortez and the left flank of the Democratic party are going to be bitterly disappointed. Their disappointment will put them at a crossroads where nearly every Avant Garde politician has found themselves: work quietly and successfully for incremental change or continue with outspoken opposition and risk irrelevance.

It is probably going to be the latter. Biden’s victory appears to have forestalled any of the soul searching necessary to embrace radical changes to the status quo like Medicare for All. That being the case and with an eye on 2022, Pelosi is unlikely to humor Ocasio-Cortez and other members of the left flank with hearings on progressive priorities forcing them into open criticism of the Speaker and the party leadership.

That setup should leave even the modest ambitions of Joe Biden’s health care agenda in the balance.