Rachel Woods: From Advisory Board, we are bringing you a Radio Advisory. My name is Rachel Woods. You can call me Rae. As of January 6th, the election season is finally, finally over and the Democrats pulled it off, unseating a Republican senator from Georgia for the first time since 1986. To talk about what a unified government means for healthcare, I've brought back VP of Executive Insights, Christopher Kerns. Welcome back to Radio Advisory, Christopher. What a wild and frankly weird kickoff to 2021? Christopher Kerns: Oh, just normal standard first week of the year, nothing unusual, nothing newsworthy, just standard first week of January. Rachel Woods: I think I've given up the idea that January is going to be a slow anything in the world- Christopher Kerns: It never really is, is it? Rachel Woods: Never. Not in the world of policy, not in the world of healthcare, so we might as well just go in headfirst. Christopher Kerns: I can definitely say I never would have expected what happened yesterday, and by yesterday, I mean January 6th. I never thought I would see that in my lifetime, honestly. Rachel Woods: January 6th was a weird day because it started off with first some actual confirmation, right? The votes finally being all in for what the state of the election was going to be and what that could mean for policy going forward. Obviously, it ended in complete disarray. But for now let's focus on what we need to know going forward. Obviously, Jon Ossoff and Raphael Warnock have secured the U.S. Senate for the Democrats. VP-elect Kamala Harris is going to act as the tie-breaking vote, which gives the Democrats more freedom to enact President-elect Biden's agenda. But, Christopher, how much freedom are we actually talking about here? Christopher Kerns: I think it's important to keep in mind which things Democrats can do unilaterally with a simple majority and what things that they can do that require a 60-vote filibuster threshold, and we can walk through some of those a little bit later. But what it means in practice is that Democrats will need 100% of their Senate caucus to vote in lockstep for any sort of legislation to pass, otherwise, it's going to be subject to defeat in the Senate. Rachel Woods: That's right. There is a majority, but it is extremely, extremely slim. And that brings us to questions about what is actually possible in a Biden-led administration. You came on the podcast right after Biden was declared victorious in November, and you made a series of predictions for how he could approach healthcare. Things like more focus on participation instead of performance in value-based care, more industry consolidation, states as being kind of the laboratories of experimentation, more healthcare spending controls and some areas of compromise. Do you stand by all those predictions? Christopher Kerns: I do. And the reason why is we were tempering our advice back then based on the fact that we really didn't know what the Senate outcomes were going to be, I still think that those things are true. Now, however, Democrats have a lot more avenues open to them to pass some legislation and frankly pass some regulation without risk of it being turned back via the Congressional Review Act. Rachel Woods: So let's actually talk about some of those things. In my mind, maybe the most obvious and perhaps immediate impact is what this means for Biden's nominees? Christopher Kerns: Well, they're definitely going to have a lot easier time getting through confirmation. So there had been some objections from some senators to Xavier Becerra in the Senate, but I don't think that we're going to see any significant objection to him getting through the Senate now. And I think in general all of Biden's nominees are likely to face a relatively easy confirmation process barring any significant information that requires Democrats to vote against that person. Rachel Woods: And that's a big deal, right? Outspoken defender of the ACA, outspoken defender of abortion rights getting through successful nomination to lead HHS is going to make things a lot easier for actually getting across Biden's agenda? Christopher Kerns: Yeah, and I think it also means that protecting the ACA is first and foremost among Biden's priorities when it comes to healthcare, which is one of the reasons why he chose Becerra, who is known first and foremost as a rapid defender of the Affordable Care Act. Rachel Woods: You just brought up the ACA, so let's go there next. You and I have talked on this podcast before about the likelihood of a Supreme Court invalidation of the Affordable Care Act. Congress, of course, doesn't have control over the Supreme Court decision here, but they will be able to decide what happens next, whatever the outcome might be. What's now on the table for the Democrats? Christopher Kerns: First of all, I don't like to make predictions, but in this case I feel pretty comfortable saying that I don't think the ACA is going to be invalidated in part or in whole, I think that's actually a remote possibility, it's always possible, but I think it's relatively remote at this point. But for the sake of argument, let's assume that the ACA is invalidated in part or in full. With 51 votes in the Senate, the options available to Democrats are relatively straightforward. They could repass the ACA with a nominal tax, for example, that restores the individual mandate and effectively restores the ACA. Christopher Kerns: But more interestingly, they could also view it as they do over. With 10 years of lessons learned, could they actually repass a different version of the Affordable Care Act? Now they may not want to revisit a lot of that legislation given what happened to them the last time they passed such significant legislation, they might just want to focus on the popular parts of the existing law. But the reality is that with a unified Congress, the ability for Congress to pass a replacement for the ACA that looks a whole lot like the ACA is relatively straight forward. Rachel Woods: That's right. Something that we'll be watching, but I agree with you, I don't think that the ACA is going away entirely, that's an area of disagreement across both political parties. Let's talk about an area that's always a bit of a bi-partisan priority and that's shoring up Medicare solvency. The obvious political disagreement here is not in if we should do this, but how Congress actually chooses to stabilize Medicare's finances? What are you expecting from a democratic Congress? Christopher Kerns: I think you've hit the nail on the head that no matter what happens this Congress and this administration are going to have to deal with the Medicare trust fund shortfall, which is slated to go into deficit before 2024. What that means- Rachel Woods: Which you pointed out to us last time, is also an election year? Christopher Kerns: Exactly. And frankly, the options available to Congress are generally unpalatable. So in general, they like to have bipartisan agreement on this from what we've seen in the past. However, with unified control of Congress, it means that the levers available to Democrats are a little bit more flexible as long as they can do this within the next two years, of course, because it's really an open question as to whether or not Democrats will be able to hold onto Congress in 2022 just given the precarious nature of their control. Rachel Woods: How much legislative running room actually exists for the Democrats under a simple majority? Christopher Kerns: Well, there's a process in Congress that many of your listeners probably already are familiar with called Budget Reconciliation, which in practice means that bills that allocate money or raise revenue for existing government functions can pass Congress with a simple majority. In the short term, of course, this means that Democrats can spend a lot more revenue combating the pandemic, but it also means that they have more levers available to them when it comes to shoring up the Medicare trust funds. So they have a few different levers available to them via premium hikes or tax increases or cuts to reimbursement. And in general, I believe that with a simple majority, they can choose the mix that they want of those three different options. Rachel Woods: Let's talk about what's on the table in a world where the Democrats have 51 votes, what can we expect? Christopher Kerns: All right, well, in addition to what they can do with cabinet nominees and what they can do with ACA and its individual tax, there are a few other things they can do. They can lower ACA premiums, for example. They could provide some incentives to expand Medicaid for individual states. They could protect the Medicare trust fund through drug price negotiation and payroll tax increases, and they could pass additional relief for states and providers. So the ability to pass legislation allocating a lot more money to individual states to combat the pandemic becomes a whole lot easier. So there are a lot of things they can do with a simple majority simply because they're spending related. Rachel Woods: You mentioned the filibuster earlier, which is I think one of the most interesting developments to watch here because it opens up the opportunity for change beyond the things you just referenced that only require a simple majority. How does getting rid of the filibuster impact health policy going forward? Christopher Kerns: Well, because a lot of legislation that was proposed in the Biden campaign was not necessarily related to raising revenue, a filibuster proof majority is generally needed. And there are two platforms in particular that I think are really important to keep in mind. One is instituting a public health insurance option, and the second is lowering the Medicare eligibility age to 60. Both of those would likely require a greater than 51-vote majority. Christopher Kerns: Now, if the Democrats abolished the filibuster, they would be able to do that in theory, assuming they can hold their caucus together for those two votes depending on what they look like. It's even possible if they could pass some version of Medicare for all, although again, we have a number of different legislators that have come out against that. And also remember it's not just the Senate where the majority is raised within the house majority also is very, very narrow and speaker Pelosi can afford very few defections there too. Rachel Woods: I hear you sort of, kind of tempering your reaction a little bit, I think appropriately, because while it is interesting to think about what getting rid of the filibuster would mean, it would also require a completely unanimous vote from their caucuses, which is at this point unlikely, Christopher Kerns: I think that's right, but there's also the potential that abolishing the filibuster is not going to be used just to pass healthcare legislation. It could be used to, for example, admit new states into the union, which would increase the number of senators, presumably Democratic. If that were the case, the ability for Democrats to pass Boulder legislation would be a lot easier, but again, it requires taking the step to abolish that filibuster and from the various people on the hill that we've talked to most seem to think that that's unlikely simply because eventually Republicans will be in the majority and they will use that filibuster abolition to their grounds as well. Rachel Woods: Leading up to the special election in Georgia, I think a lot of folks in healthcare were wondering how much change could come to our industry depending on the outcome. We've talked about a couple of different scenarios both through budget reconciliation, a 51-vote, what might happen if the filibuster goes away, but I just want to ask you directly how much change do you see coming to healthcare in a Biden-led and now unified democratic government? Christopher Kerns: I think the change is largely going to be evolutionary rather than revolutionary personally, simply because when we look at the ways in which CMS operated in the Trump administration relative to the Obama administration, it really built upon the lessons of the Obama administration rather than completely changing out a lot of the different regulations, right? So we actually see in terms of value-based care, in terms of a lot of the innovations that have come on payment reform more of an iterative approach in the last administration, I think we can expect that in this one too. So that's what I would expect more than anything else. Christopher Kerns: But all eyes are on whether or not the Democrats really want to be bold in their first two years and doing so is generally going to require abolishing that filibuster, and right now it just doesn't seem likely. So I think we can see much more of an iterative evolutionary approach to healthcare policy in the next two years, at least rather than seeing something major in revolutionary, but it's always possible. Rachel Woods: And that brings me to my next question. Even in a world where there is more iterative change, how quickly are you expecting Congress to act on any of the priorities that we have talked about thus far? Christopher Kerns: Well, I think they're going to act as quickly as they can given that most presidents with a unified Congress especially have real power for about two years to pass significant legislation. Rachel Woods: And we should acknowledge that this hasn't happened, right? A unified democratic government hasn't happened since 2009? Christopher Kerns: Right. But they also had huge super majorities in 2009 and they lost them pretty significantly in 2011. So I think this time around the ambition is probably going to be a little bit more tempered given the precarious nature of the majority, but as much as they can pass with 51 votes, I imagine they probably will. Rachel Woods: And that's not to mention all of the change, as you said, that can happen through HHS and CMS? Christopher Kerns: Exactly. Rachel Woods: We haven't talked about one area that will most certainly be an area of focus, and that is of course, COVID-19. I will admit that I am doing that a little bit on purpose because I know you're going to be coming back on Radio Advisory next week to talk about the Biden administration's plan to combat the pandemic, but I don't want to leave our audience with nothing. What new things can we expect from a unified government when it comes to battling COVID-19? Christopher Kerns: Two philosophies in particular are likely to guide the administration's response to COVID, one is a lot more money. So we're likely to see more money going into the pandemic simply because that has been the Democrat's stated goal. They have wanted to spend a whole lot more than Republicans have wanted to spend on combating the pandemic, especially when it comes to support for state and local governments Rachel Woods: And the economic effects of the pandemic as well? Christopher Kerns: Absolutely. And the second philosophy is that centralization. So federalism in this country has been used in many ways that have been benefited the country in terms of using states as laboratories for experimentation, for example. But in the case of a national health emergency, federalism has gummed up the works to be quite honest, there have been a number of different uneven responses to vaccine distribution. And I think the Biden administration is likely to want to centralize control over vaccine distribution to the extent that it is possible. Rachel Woods: And if I can give a second teaser, we're going to be bringing our colleague Brandy Greenberg back to talk about what's happened on the distribution side of the vaccine and what we can expect in, I think you're right, a world where there's a lot more federal control over what happens with vaccine allocation and distribution. Well, Christopher, this brings me to my final question. What do you want our Radio Advisory listeners to focus on this week? Christopher Kerns: It is to prepare for change because the reality is we are entering a period of uncertainty where we don't know exactly what the shape of legislation, what the shape of regulation is going to look like. We didn't get a ton of detail during the presidential campaign, the congressional campaigns. We have a pretty solid idea of what the platforms are for President-elect Biden and the Democratic Congress, but the shape that the legislation and regulation takes could be very, very different from what we had anticipated. Christopher Kerns: And the reality is that we're going to be entering a period of significant uncertainty, and we need to be able to roll with those punches. I wish I could be more reassuring on that, but the simple truth is that a lot of things that are going to be coming down the pipe could likely benefit some parts of health care and not benefit other parts of health healthcare. And we're going to be reporting in allies as they come to fruition. Rachel Woods: And I can't think of an organization that helps folks navigate uncertainty better than Advisory Board. So stay tuned for more from us and from Radio Advisory. Christopher Kerns: And nobody has as much fun with uncertainty as Advisory Board researchers. Rachel Woods: Thanks for coming back on the podcast, Christopher. Christopher Kerns: Anytime Rachel Woods: If last year taught us anything, it's that there's never really a slow news cycle in healthcare. So as change happens, you'll hear about it here on Radio Advisory. We'll continue to talk about what the Biden administration means for healthcare and how we'll continue to combat COVID-19 and get the vaccine in the arms of every day Americans. We'll continue to talk about hot topics as they come up, like remember Haven? It's gone now. And we'll continue speaking with leaders in healthcare like you about the challenges you are facing every day. Because remember, we are here to help.