Industries See Reform as Victory

Posted March 22, 2010 at 6:31pm

They may not be popping the corks on the Champagne bottles yet, but a number of medical stakeholders are cheering the health care package that could sweeten their bottom lines and bolster their political clout on Capitol Hill.

The brand-name drug companies, hospitals, doctors and senior citizens group AARP were all early supporters of the Democrats’ effort to overhaul the health care system. As a result, the Democratic leadership sought to protect these key interests in the final package approved by the House, part of which will be signed into law by President Barack Obama this week.

The Senate still has to consider fixes to the legislation under an unpredictable budget reconciliation process, and the administration must figure out how to implement the complicated and massive policy changes.

Nevertheless, the legislation’s goal to provide dramatically expanded health coverage is a winner for hospitals and drug and insurance companies, which could soon be flooded with new business.

“I believe the health care industry leaders stayed at the table because they knew the health reform law will benefit them,” said Ralph Neas, president of the National Coalition on Health Care, which supports reform.

“They realized from the beginning there could be tens of millions of new customers.”

Neas noted that even the health insurance industry, which was more critical of the legislation, did not run nearly as aggressive a campaign against this health care effort as it did in 1994 when it helped sink the Clinton health care plan with the “Harry and Louise” ads.

An insurance industry official said that while the bill would theoretically bring in many new customers, the financial penalties for failing to enroll are not sufficient to force many people to sign up.

But the official said the industry was “in a much better place” than when the debate started, noting that the decision to drop the public insurance option was one major improvement.

The image of health insurance companies, however, may have been one of the casualties of the rancorous high-profile process, according to one expert.

“The health insurance industry took the biggest battering,” said Bob Blendon, professor of health policy and political analysis at Harvard University. Obama and Congressional Democrats repeatedly blasted the industry for rising health care costs while unions and other liberal groups have been running ads attacking insurance companies for months.

Conversely, Blendon noted that the drug companies, which in the past have been a target for those advocating health care reform, emerged largely unscathed.

“The most visible political success story was the pharmaceutical industry,” Blendon said. “They really were able to use their influence.”

The Pharmaceutical Research and Manufacturers of America reached a deal early on with the White House and key Senators to contribute tens of billions of dollars to reducing drug prices for seniors.

In return, the drug companies also secured substantial benefits in the bill, including a 12-year exclusive period to develop biologic drugs.

The drug companies also beat back efforts to allow importation of drugs from Canada — a huge victory for the industry.

Drug subsidies were a high priority for AARP, which invested considerable political capital in the passage of the health care overhaul. Speaker Nancy Pelosi (D-Calif.) even singled out the group for lavish praise in her speech on the House floor during the debate over the bill.

“We stayed focused on what was important and did not go off on tangents,” said Nancy LeaMond, AARP executive vice president. The group’s top priority was filling the gaps in Medicare drug coverage, which is addressed in the reconciliation measure.

Republicans have accused the seniors group of backing the bill because it cuts federal reimbursement for private Medicare advantage plans and thus will increase the demand for supplemental plans marketed by AARP.

But LeaMond said that AARP was “focused on health care for our members,” not on the products the group markets.

While health care reform has caused anxiety among some elderly Americans who fear cuts in their Medicare, LeaMond said the group has lost only about 1 percent of its membership. She also said that the seniors group successfully pressed for improvements in the health care bill that affected AARP’s younger members, between the ages of 50 and 64, who are not on Medicare but are worried about issues such as whether they will be able to keep their current health care policies.

The Senate bill expected to be signed by Obama today includes a raft of insurance reforms lobbied for by AARP, including a ban that would prevent insurance companies from denying coverage to people with pre-existing conditions.

The American Medical Association also put its prestige on the line by backing the bill despite vocal dissent from some doctors who feared the measure would result in too much government oversight of their industry. But by being involved in the process, the AMA was able to help kill one proposal the doctors opposed that would have lowered the age when people could apply for Medicare.

The AMA, however, still remains frustrated that Congress has not approved a permanent solution to Medicare reimbursement rates for physicians.

And, of course, not everyone is happy with the health care package, particularly a coalition of business groups led by the U.S. Chamber of Commerce, which committed millions of dollars to defeating the effort.

On Sunday after the vote, U.S. Chamber of Commerce President Thomas Donohue said the House “made a wrong and unfortunate decision that ignores the will of the American people.”

But chamber spokeswoman Blair Latoff contested the suggestion that the chamber was a loser in the debate, saying the business group had improved the final product by getting certain provisions such as the public option and tougher employer mandates spiked.

“As bad as the bill is, we were able to get many of the provisions removed that would have made it worse,” Latoff said.

Anti-abortion-rights groups were also on the losing end of the health care debate, having failed to persuade conservative Democrats to oppose the bill because it did not include the groups’ preferred language prohibiting federal funding of abortions. Instead, anti-abortion Democrats led by Rep. Bart Stupak (Mich.) reached an agreement with the White House whereby Obama issued an executive order that directed that no federal funds be used for abortions.

Matthew Faraci, a spokesman for Americans United for Life, said the anti-abortion group would now turn its lobbying focus to the states. The measure approved by the House allows states to opt out and not offer health insurance plans on private exchanges that cover abortion.

Not all groups were easily classified as winners or losers. For example, the Retail Industry Leaders Association successfully lobbied against efforts to force businesses to provide health coverage to part-time workers and for a 90-day waiting period before enrolling employees in health care plans.

At the same time, the group opposed the overall health care bill because RILA believed it did not sufficiently curb health care costs and was too prescriptive in what it required health plans to cover.

“I can’t picture us in one column or the other,” said RILA spokesman Brian Dodge when asked if his group was a winner or loser. “Success is viewed in shades of gray.”