The 2014 midterm election is over, but the changes that could result from the overwhelmingly strong Republican showing really have yet to begin. Healthcare appears to be one area where the changes could be dramatic. We asked three of our top healthcare contributors to weigh in on what they think the election results could ultimately mean for this industry. Here's what they had to say.
Cheryl Swanson: After sweeping midterm election wins for Republicans, what's going to happen to American healthcare? Is the Affordable Care Act toast?
That scenario isn't probable. Benefits are much easier to add than take away, and President Barack Obama has already vowed to veto any outright repeal. Republicans in Congress know they don't have the votes to stand up to a presidential veto and kill the healthcare law outright.
But the battle lines have been drawn. The Republican Congress will doubtless go after a slew of unpopular stipulations, and a likely provision to fall first is the 30-hour rule.
Congressional Democrats could well get behind a bill such as the Save American Workers Act (H.R. 2575), which passed the House last year. The act would restore the traditional definition of full-time workers (who must be offered health coverage) to employees who work 40 hours a week or more. Major private-sector advocates argue the 30-hour standard is unreasonable and has encouraged businesses to slash worker hours. The result is decreased productivity and more workers seeking subsidized coverage, increasing the cost of the health reform law.
Leo Sun: A Republican Congress could try to change the $35 billion meaningful use program, which awards subsidies to healthcare providers that "effectively" use electronic health records, or EHRs. Six Republican senators have offered a "reboot" for the meaningful use funds.
One of the six, Lamar Alexander of Tennessee, is expected to become chairman of the Senate's Health, Education, Labor, and Pensions Committee, which could give him the clout to reform the program. The "reboot" lawmakers claim the use of health information-technology systems might have "accelerated the ordering of unnecessary care" and that more measures should be introduced to "prevent fraud and abuse."
Altering the rules of meaningful use could slow the adoption of electronic health records, causing revenue growth at EHR companies such as Epic and Cerner (NASDAQ:CERN) to stall. Yet certain aspects of the plan -- such as forcing top EHR companies to share their patient data with competitors -- could be beneficial to other players like athenahealth (NASDAQ:ATHN) and Allscripts (NASDAQ:MDRX). Epic, for example, reportedly received over half of the $24 billion spent on meaningful use so far, thanks to its dominant market share. Therefore, EHR investors should pay close attention to how the reboot saga plays out.
Keith Speights: While the change in control of the U.S. Senate received the most attention, the election results for state legislatures and governors could make the greater difference for healthcare. Republicans now control 68 of the 98 state legislative chambers in the U.S. That's the highest number for the GOP ever. Republicans also now also hold the governor's office in 31 states -- the most since the 1920s.
What does this mean for healthcare? Perhaps the biggest impact is on Medicaid expansion.
Twenty-one states to date have opted against expanding Medicaid under the Affordable Care Act's provisions. The GOP, which has been largely opposed to the Obamacare Medicaid changes, holds the governor's office and the state legislature in 16 of those states. In how many of the 21 states do Democrats control both the executive and legislative branches? Zero. The prospects for any significant expansion of Medicaid in the near term appears to be small.
This reality could limit the prospects for health insurers with Medicaid operations in these states. For example, WellPoint (NYSE:ANTM) has enjoyed success from Medicaid expansion in 11 of the 21 states where the company competes in the Medicaid markets. However, the GOP solidly controls all 10 of the other states.
Cheryl Swanson owns shares of WellPoint. Keith Speights has no position in any stocks mentioned. Leo Sun has no position in any stocks mentioned. The Motley Fool has no position in any stocks mentioned, but the Fool recommends Athenahealth and WellPoint. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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