Election “First Take” Analysis

November 10, 2016

The following is our quick analysis of the election for your reading pleasure. NARHC will also be creating a more RHC-centric analysis and sending that out sometime next week via List Serve.

Two days ago, Republican candidate Donald Trump was elected as the 45th President of the United States. Trump defeated his Democratic opponent, Hillary Clinton, despite an overwhelming sense by almost everyone going into Election Day that Clinton would win.

Trump’s 276 electoral votes, which is only six more than are required to win the election, does not speak for the decisiveness of his victory. Those who paid close attention to polling data and projections on reputable websites, such as 538 and Real Clear Politics, expected a very close race with Clinton edging out a win. Not only did Trump outperform projections in most of the up for grab “swing” states such as Pennsylvania, North Carolina and Florida, he was also able to win several states that historically vote Democrat that he was not expected to have a chance of winning. The most notable of these states include Wisconsin and Michigan.

Most pundits and pollsters dismissed the possibility of a “Trump effect” in which Trump outperformed polls due to the people being surveyed not wanting to go on record that they were supporting Trump. The Trump effect played a significant role in the primary elections. Trump had also narrowed a lead that Clinton held over the past two weeks. In fact, Trump was polling within the margin of error in many of the states he won.

This was, by any measure, a transformational election. It was an “insiders” vs. “outsiders” election more than a “liberals” v. “conservative” election at the Presidential level. It was also an economic election. Places like Pennsylvania, Ohio, Wisconsin and Michigan voted red. While the national economic numbers are improving, general confidence in the economy has yet to make a full recovery after the great recession. Many Americans felt that they have been passed over. This was middle class America’s “I will not be ignored” moment.

Looking down the ticket, the House of Representatives will remain in Republican control. This was always expected. The Senate will also remain in Republican control despite a much less certain outlook going into Election Day. However, Republicans will not have a “super majority” of 60 seats needed to override a Senate filibuster. The results of the House and Senate elections will be covered in greater detail later in this document.

But now the work begins.

It is worth noting that this will be the first time the GOP has controlled the House, Senate and White House since 1928 so this is something none of us have ever experienced. The Republicans will also now be able to nominate a ninth Supreme Court Justice, which could swing the political balance of the court towards conservative ideology.

The GOP victories down ticket (House and Senate) suggest that there are opportunities to get things done in the legislative arena that may not have been possible under divided government. We still have the filibuster in the Senate but it is possible that we will see, particularly in the first 100 days, legislation enacted that makes some significant changes in policy. The GOP had the odds against them relative to the number of seats they were defending relative to the Democrats. But those tables are turned in 2018 when more than 20 Democratic Senate seats will be up and only a handful of GOP seats. Trump is a negotiator, not an ideologue, so he will likely be open to deals that wouldn’t be possible under a more ideologically driven politician. Democrats up for re-election in 2018 may be inclined to “work with” the new President, particularly if they are in a “red” state.

With regards to health policy, this may result in some down-the-road changes to MACRA but the core will remain. MACRA enjoyed strong bi-partisan support and will likely continue to enjoy bi-partisan support. However, changes could be made that might have been unrealistic just a few weeks ago.

Additionally, key provisions of the Affordable Care Act (ACA) are in jeopardy (individual mandate, employer mandate). It may also accelerate Health Plan departure from the ACA Exchanges because they want more in the way of protections from risk and those are not likely to occur under a GOP Congress. Lack of a filibuster-proof Senate means a full repeal of the ACA is unlikely but dramatic changes will likely occur.

Trump and the GOP Congress can, despite the filibuster, use Budget Reconciliation – the same legislative process President Obama used to pass some of the key provisions of the ACA – to repeal and or replace key provisions of the ACA with only a simple majority. Some provisions of the ACA, such as protections for patients with preexisting conditions and allowing consumers to remain on their parent’s insurance plan until they are 26, remain popular and could exist in some form under a Republican alternative.

Reconciliation could also be the likely process for enacting a tax reform package and possibly other policies. Under reconciliation Congress can pass any legislation dealing with the raising or spending of money via the tax code or entitlement with a simple majority; a reconciliation bill cannot be filibustered. Expect to hear more about “reconciliation” as the principle vehicle for change.

In general, all of the policies that President Obama enacted via Executive Order because he could not pass those policies with legislative success, will likely be rescinded by President Trump. Also, the precedent that President Obama set in using Executive Orders may be employed by President Trump. The use of Executive Orders by President Obama was always a double-edged sword because it sets a precedent for his successors to do the same thing.

The Trump Administration is also expected to put a “hold” on any regulatory actions currently pending, either in development or in the proposed rule phase. Regulations that have been finalized cannot be unilaterally rescinded but the Trump Administration could (again following President Obama’s lead) announce that they will not enforce some of the policies adopted in recently finalized rules with which they may disagree.

This likely means to the end of several other Obama health care initiatives such as the Health Care Payment Learning and Action Network. This was a creation of the Obama Administration and, if for that reason alone, will likely be disbanded by the Trump Administration. Republicans have grown increasing critical of the alternative payment models (APM) that have come out of another ACA creation, the Centers for Medicare and Medicaid Innovation (CMMI) within CMS. The Trump Administration could significantly scale back CMMI or perhaps eliminate it altogether. Had Clinton been elected, many of Obama’s initiatives would have likely been continued. Further, it would not have been surprising if Clinton retained many of the Obama appointees at CMS/HHS. With Trump’s victory, it will be a whole new cast of characters in HHS and every other Agency.

Finally, the transition from Obama to Trump begins today. President Obama and Trump are scheduled to meet in the coming days to discuss the transition process. Engaging with the Trump transition team will be incredibly important. The transition team will be meeting with the current political and career people in every agency, including HHS and CMS. They will be getting briefing books on every policy in development and we will want to get in their ear to make them aware of our concerns on various topics. The transition team will also help decide who Trump appoints to take over these Agencies. His appointees will be a likely indication of the policies that the Trump Administration Agencies will act on.

 

House and Senate Analysis:

Going into last night’s election, Republicans held a four-seat majority in the Senate and a 54-seat majority in the House of Representatives. Final polls before the election showed Senate control likely to be a very close race. Many believed the result would be a 50-50 split in the Senate or a one vote majority either way. Republicans won 20 of the 33 Senate elections, ending the night with at least a 51-seat majority going into 2017.

Some of the Senate races still have not been decided. Louisiana’s Senate race, with a field of 24 candidates, ended with no candidate earning the 50 percent threshold needed to win. A runoff election will be held December 10 to decide that election. New Hampshire’s race, which ended with Maggie Hassan and Kelly Ayotte only 700 votes apart, will require a recount.

Polling leading up to the election indicated that Democrats were expected to make significant gains in the House of Representatives. Two of Louisiana’s congressional races will result in a runoff election, however, Republicans will control at least 240 of the 247 seats that they held in the 114th Congress. Polling did not forecast Democrats to reclaim the majority at any point in this election cycle, but this result is far short of predictions.

Congress will still have a major role to play in the policy making process. Rep. Paul Ryan of Wisconsin has announced he will seek a new term as Speaker of the House of Representatives. It is unclear if he will be challenged for the Speakership by another member of the Republican Conference. Senator Mitch McConnell of Kentucky is likely to remain the Senate Majority Leader. Earlier this year, Speaker Ryan outlined his platform on a number of foreign and domestic policy areas called “A Better Way.” A Better Way is available online. This website offers a glimpse into the policy agenda the Republican-controlled Congress might pursue.

A list of the Senate results can be viewed online as well as the results of the House of Representatives elections.

Bill Finerfrock, Matt Reiter, and Nathan Baugh
(202) 544-1880

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