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Health Care Reform: Is it all Unraveling?

Editor’s note: This analysis from Greg Scandlen:

For the past year all of the special-interest groups in Washington have been trying to cooperate with health reform proposals. Their strategy has been to get a “seat at the table” so they could protect their privileged positions in health care. It has amounted to a powerful coalition in support of massive health reform.

But now that coalition seems to be unraveling. A new report from PriceWaterhouseCoopers commissioned by AHIP was the opening shot. The report found the legislation just passed by the Senate Finance Committee would raise family premiums by $4,000 a year. The Blue Cross Blue Shield Association released a similar report by the Oliver Wyman firm that had similar findings.

In both cases, the reports focused on the effect of guaranteed issue and modified community rating with only weak penalties to require the young and healthy to enroll. When combined with a host of new taxes on providers and reduced payment for Medicare and Medicaid, there will be an explosion of costs passed on to the insured population.

None of this is the least bit surprising to anyone but the administration and Congressional Democrats. The White House immediately responded by calling the report distorted, flawed, and self-serving. Senator Chuck Schumer (D-NY) has threatened to punish the industry by removing current federal anti-trust exemptions that have been in place since 1946.

SOURCE: AHIP reportBCBSA ReportWhite House ResponseSchumer’s reaction
It isn’t just the insurance industry. Many of the groups that were willing to go along, so long as “reform” was just a bunch of platitudes and feel-good promises, are discovering it isn’t so appealing once the costs are revealed. The medical device industry met in Washington this week and discovered the prospect of paying $40 billion in new taxes is pretty daunting. Some of the companies report the new tax would be greater than their entire R&D budgets. One of the executives was quoted in the Washington Post as saying, “My European competitors are sitting on the sidelines smiling. We’re one of the few industries in the U.S. that is still growing. How many of those do you have left?”

SOURCE: Washington Post
And the American Medical Association may be having second thoughts about the wisdom of its full-throated support, according to the Washington Post. The Senate Finance bill was able to avoid contributing to the deficit only because it dumped the “SGR fix” that was included in the House bills. SGR requires annual cuts in Medicare payments to doctors, but every year Congress passes legislation to delay the cut from going into effect. This is the AMA’s biggest priority and it would cost $250 billion over 10 years.

The AMA’s House of Delegates is meeting in Houston during the first week of November. It promises to be a raucous meeting, as many doctors will show up to express their disenchantment with AMA leadership on this issue. Leadership keeps repeating Obama’s flimsy line that “we can’t afford to do nothing.” But that reasoning infuriates many practicing physicians who argue the choice is not between doing nothing and turning the entire medical profession over to the federal government.

Don’t be surprised if the AMA is the next big interest group to give up its seat at the table.

SOURCE: Washington Post
Even labor is getting ready to walk away from the table. It doesn’t like the 40 percent tax on high-cost health plans one bit. But the Obama administration is all for it. An article by Martin Vaughan in Dow Jones says, “When Baucus unveiled the plan to the Senate’s Group of Six with whom he was negotiating, he noted that there would be opposition from unions but that the White House would ‘keep the unions at bay,’ according to people present in those meetings.” Now the AFL-CIO is running ads in newspapers that say, “Unless the bill that goes to the floor of the U.S. Senate makes substantial progress to address the concerns of working men and women, we will oppose it.”

SOURCE: Union Rift
The generic and name-brand drug companies are at each other’s throats over how they will be treated, according to Kaiser Health News. The generics do not think they should be subject to a $460 million tax since they already do a lot to lower health costs. But the name brands scoff at the amount, since they will be subject to $80 billion (over 10 years). Congress is also giving the biologics a 12-year exclusivity patent and allowing generics to be prescribed with no co-payment for the first prescription. So, here we go with Congress trying to micromanage every teensy bit of the health care system. I mean, why should the level of copayments in an insurance policy be a matter for the United States Congress?

SOURCE: Kaiser Health News

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October 22, 2009 - Posted by | Federal Government, healthcare | , ,

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