Skip to main content
The Keckley Report

What a Blue Wave Means for Healthcare

By October 19, 2020March 1st, 2023No Comments

As the week ended, the GOP-majority Senate Judiciary Committee scheduled its vote this Thursday to advance the Supreme Court nomination of Judge Amy Coney Barrett to the full Senate for confirmation.

Treasury Secretary Mnuchin and House Speaker Pelosi were negotiating a $1.8 to $2.2 trillion relief package for low-income households, small businesses, and hard-hit industries like airlines. And the coronavirus’ “third surge” dominated news coverage as deaths approach 220,000 and cases 8.2 million.

That’s the backdrop for Campaign 2020 which is arguably the most consequential election for healthcare since Lyndon Baines Johnson 1964 landslide win over Arizona Senator Barry Goldwater. Johnson garnered 61% of the popular vote, the highest margin since 1820, on the strength of his domestic policy agenda to end poverty and racial injustice and implement Medicare and Medicaid to protect seniors and the poor.

Campaign 2020 for the White House is the most expensive Presidential election in history: $3.2 billion has been spent through September 1 compared to $2.4 billion spent in 2016. There are also 35 Senate races, 435 House seats and 11 Governors’ races. It’s being call a “change election” by pundits drawing unparalleled attention of voters.

Since 2000, Pew Research has asked Americans “As far as making progress on the important issues facing the country is concerned, does it really matter who wins the presidential election, or will things be pretty much the same regardless of who is elected president?” The results are striking: In 2000, 50% said it mattered in Bush v Gore; in 2004, 67% said it mattered in Bush v Kerry; in 2008, 63% said it mattered in Obama v McCain; in 2012, 63% said it mattered in Obama v Romney; in 2016, 74% in Trump v. Clinton and this year, 83% in Trump v. Biden. In each of these elections, the issues that mattered most to voters were domestic policy—healthcare and the economy.

The same is even more true this year. The pandemic has heightened attention to public health and its economic impact on everyday households, especially those hardest hit. Voter passion has been building: in the 2018 mid-term pre-Covid elections, turnout was the highest since 1914. This year, turnout might exceed 60%, or 145 million voters. The President’s approval rating sits at 43% vs. 54% who disapprove, Congress approval is at 17%, down from its all-time high of 82% in 2001 and the public’s divided and anxious.

In its October 17, 2020 Confidence Interval assessment, FiveThirtyEight put the possibility of a Democratic sweep at 70%. It estimates the likelihood of a Biden win at 87%, continued control the House of Representatives by Democrats at 96% and a shift of Senate control to Dems at 73%. It’s being described as a change election. Pundits are speculating it could be a Blue Wave.

What might a Blue Wave mean for healthcare? And more strategically, what might change for those of us who are part of this industry?

A Blue Wave is possible but it’s too early to bet the ranch on it.

In 2016, polling showed Hillary Clinton with a formidable 3% lead. She won the population vote by 2 million, but lost the electoral college vote and the White House due to losses in Pennsylvania, Wisconsin, and Michigan where she fell 78,000 votes short. A lot can happen in the next 15 days.
Regardless of who wins the White House, the Senate vote will be the most consequential to healthcare.

The House originates budgets and spending but approval by the Senate is always a buffer. The Senate is currently in control of Republicans who occupy 53 seats vs. 45 held by Democrats and 2 Independents who caucus with them. According to the Cook Political Report, 12 of the 23 GOP Senate incumbents are in tight races; at least 6 appear vulnerable. By contrast, only 1 of the 12 races involving an incumbent Democrat appears in jeopardy. A net increase of 4 by Dem’s would cede control, but the assumption it would advance in radical changes health policy is unlikely. Why?

It was the Max Baucus (D-MT) led Senate Finance Committee in 2009 that passed its version of the Affordable Care Act 13-9. It was less progressive than many House Democrats preferred because it did not include tort reform, a public option, and tighter controls on the industry. Ultimately, the House accepted the Senate version recognizing something was better than nothing. The centrist-leaning Patient Protection and Affordable Care Act (ACA) became law in March 2010 with partisans on both sides acknowledging its flaws.

The ACA is more popular today than when it passed especially its protections against insurers who are prohibited from denying coverage due to pre-existing conditions. Notably, the 8 million who have tested positive for the coronavirus would join the ranks of the unprotected if the ACA was thrown out. So, regardless of the Supreme Court’s decision in California v Texas, the ACA or its look-alike replacement will be central to the Blue Wave policy agenda. And the Senate will have the final say on any major changes in its direction.
Economists believe a Blue Wave election will stimulate economic recovery and directly benefit the healthcare industry.

In what many consider counter-intuitive, a sweep by Democrats is not a major concern to bankers and investors. They accept that taxes might increase but think they’re offset by job growth and increased consumer spending. Central to their thinking is the presumption that funding for healthcare will increase and private investment encouraged as up to 20 million uninsured gain coverage and the pandemic is brought under control next year.
Given the salience of healthcare to the electorate in Campaign 2020 and the potential of a Blue Wave result, it’s logical to assume major changes in national healthcare policies are unlikely.

Unit prices for drugs, hospital stays, and specialty care will face continued pressure. Justification for hospital consolidation will be tightened and validation of promised community-benefits and cost savings required. The business practices of private equity-owned healthcare organization will face scrutiny akin to the spotlight on drug manufacturers currently.  And, as funding shortfalls for Medicare and Medicaid perplex Congress, the expansion of value-based purchasing programs and simplification of alternative payment models for providers are certain.

Since 2006 when I left Vanderbilt for DC, I’ve fought my natural distaste for the political process. My disdain peaks in political campaign seasons when disinformation and fearmongering on healthcare issues makes me puke. This year is no exception. The rhetoric about healthcare and the pandemic has not contributed to an informed electorate; it has done the opposite.

If a Blue Wave results from this election cycle, it’s not Armageddon for healthcare. But that doesn’t mean it’s license to continue business as usual.


P.S. The second and final debate between President Trump and Vice President Biden will be this Thursday. The 90-minute commercial free telecast will be moderated by NBC’s Kristen Welker and cover 6 topics. The coronavirus and healthcare will be prominent. Be safe and VOTE.
“Voter Turnout”; FiveThirtyEight

“Congress and the Public”; Gallup

“KFF Health Tracking Poll – October 2020: The Future of the ACA and Biden’s Advantage On Health Care”; October 16th, 2020;  Kaiser Family Foundation

“U.S. House Attrition During a President’s First Term, 1963 – 2020”; Ballotpedia

Kaiser: Biden Leading on Health Issues, Majority Support Keeping ACA

This KFF Health Tracking Poll was conducted October 7- 12among a nationally representative random digit dial telephone sample of 1,207 adults ages 18 and older. Highlights:

  • The majority of Democrats (91%), independents (81%), and Republicans (66%), say they do not want to see the Supreme Court overturn the ACA’s pre-existing condition protections—a double digit increase from one year ago for each group.

  • 60% do not want to see the Supreme Court overturn the entire ACA, up 10% points from one year ago. This includes majorities of both Democrats (89%) and independents (66%), but three-fourths of Republicans want the entire law overturned.

  • Overall views of the Affordable Care Act are slightly more positive this month, with 55% of the public saying they view the law favorably. This ties its highest favorability measured in ten years of KFF polling (tied with February 2020).

“KFF Health Tracking Poll – October 2020: The Future of the ACA and Biden’s Advantage On Health Care”; October 16, 2020; Kaiser Family Foundation



K Recovery Update: Poverty Rate, Investment Bank Profits up in K

According to researchers at the University of Chicago and Notre Dame, the number of Americans living in poverty has risen by about six million, increasing the poverty rate from 9.3%in June, to 11.1%, in September. Biggest increases have been among Blacks people (from 18.2%to to 22.8%) and those without a college education (from 17% to 21.5 %).

On Thursday, Morgan Stanley announced that, in the three months from July to September, it reaped $2.7 billion in profits up 25% compared to a year ago. Goldman Sachs announced quarterly profits of $3.62 billion, double its earnings in the same quarter in 2019.

John Cassidy  ”The Great Coronavirus Divide: Wall Street Profits Surge as Poverty Rises” October 16, 2020; The New Yorker

World Health Organization: Remdesivir didn’t Shorten Hospital stays, Improve Mortality

A randomized trial conducted by the World Health Organization found that remdesivir, an antiviral drug authorized to treat COVID-19, was not found to shorten hospital stays nor improve mortality.

The WHO studied the impacts of four drugs, including remdesivir, in a study on more than 11,000 people in 30 countries. Remdesivir has been widely used and become part of the standard of care for COVID-19 patients in the United States.


Pfizer: Mid-November Earliest it can Seek Virus Vaccine OK

Friday, Pfizer announced it cannot request emergency authorization of its COVID-19 vaccine before the third week of November. To qualify for an “emergency use authorization,” any COVID-19 vaccine must track at least half the participants in large-scale studies for two months after their second dose, the time period in which side effects are likely to appear. CEO Albert Bourla estimated Pfizer’s 44,000-person study will reach that milestone in the third week of November.

“An Open Letter from Pfizer Chairman & CEO Albert Bourla” Pfizer

Pandemic Cost Exceeds $16 Trillion

Noted Harvard economists David Cutler and Lawrence Summers calculate the total 10-year cost of the coronavirus is $16 trillion: lost GDP $7.6 trillion and impaired health $8.6 trillion. “The SARS-CoV-2 (severe acute respiratory syndrome coronavirus 2) pandemic is the greatest threat to prosperity and well-being the US has encountered since the Great Depression.”

David M. Cutler, Lawrence H. Summers “The COVID-19 Pandemic and the $16 Trillion Virus”; October 12, 2020; JAMA Network

KFF poll: Majority of Blacks Distrust Health System

A new poll released last week by The Undefeated and the Kaiser Family Foundation showed that 55% of Blacks distrust the American health care system. Highlights:

  • 70% believe individuals are treated unfairly when seeking medical care because of their race and ethnicity.

  • 40% Blacks know someone who has died of COVID-19 –double that of White adults.

  • 50% say they would not take the vaccine.

“New Nationwide Poll by the Kaiser Family Foundation and The Undefeated Reveals Distrust of the Health Care System Among Black Americans” October 13, 2020; KFF

Pitchbook: Mental Health Deals Strong in 2020

Last week, Pitchbook reported that funding of US mental health startups through 3Q20 ($1.37 billion) has surpassed the total capital invested in the space in 2019 ($1.06 billion). Multiple companies such as mental health apps Mindstrong, Lyra Health, and Calm who have each raised mega rounds of over $100 million this year. Companies with a focus on supporting mental health have seen skyrocketing interest and in turn their valuations rise. Calm for example was valued at $1 billion last year and will jump to a $2.2 billion value if their most recent round of $150 million is completed.

“Driven by pandemic demand, mental health startups surpass 2019 funding” Pitchbook October 14, 2020; Pitchbook

JP Morgan Analysis: Relief Funds Buoyed Spending Until Suspended in July

Including the $600 weekly CARES Act relief which equaled 145% of their pre-job loss wages, unemployment benefits amounted to 7.0% of total personal income in June of 2020—a record far exceeding the 1.3% peak during the Great Recession. When the weekly supplement expired at the end of July, the total value of unemployment benefits paid out to fell by 52% between July and August.4 Highlights:

  • Spending of the unemployed increased by 22% upon receipt of unemployment benefits, exceeding their pre-job loss baseline, while spending of the employed had dropped relative to baseline. Unemployed individuals’ spending fell by 14% in August impacting 26 million Americans.

  • With the expiration of the $600 benefit supplement, spending of the unemployed declined by 14 % in August roughly back to pre-pandemic baseline.

  • The unemployed roughly doubled their liquid savings during the four-month period between March and July 2020 but then spent two-thirds of the accumulated savings in August alone.

“The unemployment benefit boost: Initial trends in spending and saving when the $600 supplement ended” JP Morgan Chase October 2020; JPMorgan Chase


FY20 Deficit $6.1 Trillion; Federal Debt Near $27 Trillion

Friday, the Treasury Department announced that the U.S. budget deficit tripled to a record $3.1 trillion in the fiscal year that ended Sept. 30. Highlights:

  • The 16.1% budget gap in fiscal year 2020 is the largest since 1945.

  • Federal debt totaled 102% of gross domestic product, the first time it has exceeded the size of the economy for the full fiscal year in more than 70 years, according to estimates from the Committee for a Responsible Federal Budget

  • FY20 federal revenue totaled $3.4 trillion, down 1% from FY19; spending increased 47% to record $6.5 trillion as the government distributed $2.2 trillion relief funding for small businesses and households.

“U.S. Budget Gap Tripled to Record $3.1 Trillion in Fiscal 2020, Treasury Says”  Wall Street Journal October 16, 2020; Wall Street Journal

2019 Healthcare M&A Report: Physicians Key Targets for Hospitals, Private Equity

Per VMG’s latest report:

  • The most popular acquisition targets for PE firms in 2019 were ophthalmology, optometry, and dermatology practices. While deal volume was higher for these specialties, the transactions tended to involve groups with fewer physicians compared to other specialties.

  • Hospitals and health systems remain active acquirers of physician practices. From 2012-18, the number of hospital-owned practices increased at an average annual growth rate of about 12.3%.

  • The number of hospital-employed physicians rose at an average annual growth rate of about 17.5 % from 2012-18. Hospitals today own at least 31% of physician practices.

“VMG Health’s healthcare M&A Report: Before & after Covid-19: 2019 Trends & 2020 Expectations” VMG Health

JAMA Study: Integrating Pharmacy in ACO Improves Savings

A JAMA study examined the impact of integrated specialty pharmacy utilization on medical expenditures at a large ACO in Massachusetts from 2016 to 2018. Findings:

  • Patients enrolled in UMMACO who used the organization’s integrated specialty pharmacy were younger compare with those who did not age, 63 vs, 70.6.

  • Costs decreased by $267 for those who did use integrated specialty pharmacy while increasing by $1007 for patients who did not.

Soni et al “Association of Use of an Integrated Specialty Pharmacy With Total Medical Expenditures Among Members of an Accountable Care Organization”; October 6, 2020; JAMA Network

Medicaid Director Survey: Enrollment, Spending up from FY20

Per Kaiser Family Foundation’s 20th annual survey of state Medicaid directors:

  • Enrollment is expected to grow by 8.2%and combined federal and state Medicaid spending expected to increase by 8.4% in FY21. This follows total Medicaid spending growth of 6.3 % for fiscal 2020, a year in which enrollment remained basically flat.

  • Even with the extension of the enhanced 6.2% FMAP funding for non-expansion enrollees whose funding is covered through the ACA, revenue budget shortfalls that range from 1% to 30% are expected for FY 2021 according to the National Conference of State Legislatures.

“States Expect Medicaid Enrollment and Spending to Increase by Over 8 Percent Each in FY 2021, Primarily Driven By a Slumping Economy and Federal Conditions to Maintain Eligibility to Access Enhanced Federal Medicaid Funds” October 14, 2020; KFF

AMA: Insurance Markets Concentrated, Monopolistic

Last week, the American Medical Association released its 19th edition of the American Medical “Competition in health insurance: A comprehensive study of U.S. markets” which examines insurance plan activity in 384 metros across the 50 states. Highlights:

  • Based on the DOJ/FTC Horizontal Merger Guidelines, 74% of MSA-level markets were highly concentrated (HHI>2500). (HHI of 3473)—an increase from 71% in 2018.

  • in 92% of MSA-level markets, at least one insurer had a commercial market share of 30% or greater, and in 48% of markets, a single insurer’s share was at least 50%.

  • 56% of markets experienced an increase in the HHI, and in 17% of markets the increase was at least 500 points. In markets with a rise in the HHI, the average increase was 481 points.

“Competition in Health Insurance: A comprehensive study of U.S. markets” American Medical Association

Bain: Business Services Valuations Driven by Revenue Growth, not Margin Improvement

Since 2010, the business services sector has been among private equity’s most active categories Over accounting for 12% of investment value and 23% of deal count globally. PE funds have averaged more than 750 business services deals worth $48 billion each year. Business services deals have relied almost exclusively on revenue growth (often via mergers and acquisitions) and multiple expansion; margin improvement hasn’t been a factor. Median value creation 2010-2020: enterprise value entry and exit-100 to 182; revenue growth +38%, margin expansion -3%, exit EBITDA multiple +47%,

“Private Equity’s New Business Services Challenge” September 8, 2020; Bain

Altarum: National Health Spending Back to 2019 Level

Altarum latest analysis of national health spending found…

  • As a percent of GDP, health spending in August reached an all-time high of 18.2%, primarily because health spending has recovered more quickly than GDP.

  • Recovery rates vary significantly among sectors: At the extremes, spending on home health care is 7.0% higher than in August 2019, while spending on dental services remains 18.3% below its August 2019 level.

  • Health care prices in September rose 2.7% from the previous year, keeping 2020 on pace for the fastest year of health sector price growth since 2010.

“October 2020 Health Sector Economic Indicators Briefs”; October 16, 2020; Altarum

Study: Medicare Advantage Plans Fall Short in End of Life Care

In this cross-sectional study of 2119 individuals who died while enrolled in Medicare, the family and friends of people who were enrolled in Medicare Advantage were more likely to report that care was not excellent and that they were not kept informed in the last month of life compared with family and friends of those enrolled in traditional Medicare. Perception of end-of-life care was measured with 9 validated items, with the primary outcome variable being overall care rated not excellent.

Ankuda et al “Family and Friend Perceptions of Quality of End-of-Life Care in Medicare Advantage vs Traditional Medicare ”; October 13, 2020; JAMA Network