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Center for Children and FamiliesOctober 19, 2011October 19, 2011

Chris Jennings, PresidentChris Jennings, President

Jennings Policy Strategies, Inc.Jennings Policy Strategies, Inc.

Political and Policy Political and Policy Environment Framing Environment Framing

Children’s Health Care: Children’s Health Care: Diagnosis and PrognosisDiagnosis and Prognosis

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($1,500)

($1,000)

($500)

$0

2001 2011

Today’s Health Reform Debate isPrimarily Driven by Deficit/Debt...

Deficit, Dollars in Billions, FY 2001 vs. 2011

$127 B

Source: Congressional Budget Office, September 2011

($1.3 trillion)

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Here’s Why: Program Priorities/Costs Exceed Available Revenues

(CBO’s Most Realistic Long Term Budget Scenario)

Source: Congressional Budget Office

Percentage of GDP

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Debt Limit Deal 2.0 Will Require Another FEDERAL Health Care

Contribution Bipartisan debt agreement requires $1.2

trillion in cuts Automatic sequester cuts for defense and

Medicare are intended to be incentive for a broader bipartisan budget deal

Medicare is slated for approximately $130 billion dollars in cuts unless Congress finds alternative ways to achieve the $1.2 trillion target without it

BUT, in reality, the defense sequester represents an unacceptable ceiling for the “Super Committee” and the 2 percent Medicare health sequester represents an unacceptable floor

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Most* Health Stakeholders Do Better with Automatic Cut than

Broader Deal By a factor of 2 or 3, any Super Committee

deal will likely produce more cuts than the automatic sequester

Consumer groupsConsumer groups (and most Dems) fear painful cuts to low income, and “bad” Obama trade providing cover from Ryan Medicare Rx, limited revenue and ineffective jobs policy

Businesses and states fear cost-shifting/bad policy

Hospitals and home health care providers fear higher aggregate cuts and new Medicaid cuts

PhRMA fears Medicaid rebates being expanded

* Exceptions: Docs and some plans/discretionary interests

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Debt Deal 2.0 Scenarios in One Slide

1) Super Committee fails/sequester is assumed (although there will be time to fix most painful 2013 cuts next year) – 25-30%

2) Super Committee hybrid scenario – 60% Achieves less than $1.2 trillion in savings, but reduces across

the board sequester cut through increased health care savings deal

Medicaid is major new target along with low-hanging Medicare fruit

Defense cuts are moderated Health care constituencies targeted complain about being

singled out Could include bucking important decisions on revenue and other

“hard” issues to 2012 process

3) Super Committee produces major debt/deficit deal, including tax reform – 5-10%

Response to gloomy economy, stock market, disgust with Congress and public pressure to act

Looks increasingly like Bowles-Simpson, including larger health care savings and tax reforms that produce deficit reduction revenue

Elite media embrace, but unclear whether voters will 6

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And If That’s Not Enough, the Supremes Likely Weigh in on ACA

Constitutionality This Fall, Supreme Court decides whether

to grant cert to competing parties challenging Florida v. HHS 11th Circuit case

Assuming cert granted, Supreme Court will hear case by late Spring 2012

Final ruling should emerge by end of June

Current status of likelihood of the court hearing the case is over 90 percent – (only takes four to grant certiorari) – and both opposing parties have requested it

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Supreme Court Split Decision Ruling Scenarios (Assuming

Justices Grant Cert)

Outlook: While many predict, no one has a clue.

Most believe it will be either scenario 1 or 2.8

Scenario 1

Sustain law as is -- with a great deal of negative commentary about the law emerging from most conservative justices

Scenario 2

Overturn individual requirement (mandate) to purchase insurance, but leave most everything else in place

Scenario 3

Overturn individual mandate and many other provisions of the law

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But Most Are Missing Simple Truths

There will be vehement reaction to any ruling by respective bases, but independent voters are key

If Court ruling effectively upholds constitutionality of “mandate,” independents will likely view it as affirmation of the law -- urging politicians to move on to public’s priorities

If Court rules “mandate” as unconstitutional, what to do next becomes a major election issue, perhaps even challenging Medicare/Medicaid/entitlement reform as #1 health issue

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So Where Does That Leave Advocates of Children?

Viewed as better positioned than most stakeholders

Popular provisions and perceptions in place: Popular parents policy buy-in up to age 26 MoE protections from cuts CHIP is still expanding coverage for children Polling looking strong for kids and kids’

interests States or Feds are not comfortable with

policies that openly screw kids

Advocates of Children’s Health (continued)

Don’t get cocky; plenty of problems, including: Momentum declining for simplified enrollment

and openness to expanding kids coverage; (as well as overall state based budget/policy threats)

Affordability test for tax credit eligibility Exchange development Benefit design Overall implementation challenges Supreme Court and “mandate” – impact on

insurance protections – no one knows this issue better than you

And, of course, Medicaid cut threats are quite real

Big Message

Your future – for good or bad – tied to overall big wave threats that are not directly under your

control. To extent your popularity can help undermine,

go for it…