Health Industry Holds Fire, For Now

Legislative process grinds on

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    NEWSLETTERS

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    Obama's health care bill is on the up and up.

    In almost any other congressional debate, today would have been when powerful special interests open fire on a bill that violates the handshake deals they'd reached with lawmakers.

    But as Democrats in both chambers advanced proposals today that conflict with agreements struck with the pharmaceutical and hospital industries, the business groups are calmly riding the wave of reform.

    First the Senate Finance Committee moved forward with a vote on its health care reform bill, even though it violates the deal Chairman Max Baucus cut with hospitals to help fund it. The industry said it agreed to $155 billion in reduced Medicare payments if the bill provided insurance coverage to 97 percent of legal residents. Yet the bill introduced by Baucus, and the one that will be voted on Tuesday, only covers 94 percent of them.

    But no one’s yelling double cross, as least just yet.

    “There’s no unraveling of the deal. We knew this is where we would be. We’re doing everything we can to continue to keep that pressure up. If we’re on the floor and it continues to look like this then … we’re really going to have a problem,” said a senior hospital industry lobbyist.

    House leaders, meanwhile, are considering slapping drug makers with a windfall profits tax that violates the deal the industry struck with Baucus and the White House to cap their contribution at $80 billion. Perhaps because the industry has been here before – House Democrats have also proposed forcing drug makers to sell some drugs at a discount – officials were unruffled by the news.

    Or because they don’t expect the House version, no matter what it says, to have much impact if the Senate bill passes and the two chambers negotiate a final bill.

    “We remained convinced that the Senate Finance Committee bill will serve as the blue print for comprehensive health care reform. At the same time, we will continue to reach out to House leaders to try and find some middle ground,” said PhRMA senior vice president Ken Johnson.

    The industry's cool responses to both developments are another reminder of how much K Street and the Hill have come to see each other as integral to advancing their respective self interests. And after so many months spent hashing out deals, there’s a certain level of trust that they will be upheld.

    The senior hospital industry official, for example, describes a collaborative relationship with the Finance Committee staff where both sides are working toward the goal of strengthening the individual mandate.

    To get more people covered, the industry is pushing for higher subsidies to help people afford insurance and higher fines for those who don’t buy it. Hospitals are pushing for universal coverage because it lowers the amount of uncompensated care they must provide to the uninsured.
    Democrats, under pressure to keep the bill’s cost below $900 billion, have not been able to provide subsidies as generous as some senators would like. As a compromise, they lowered the penalties for those who don’t buy insurance, which means fewer people will have it.

     

    Because the penalties were reduced, the lobbyist said the industry was braced for Baucus’ amended bill to cover less people than it did originally.

    “It’s not like we just woke up and said, ‘Wow, we just got screwed,’” the lobbyist said, adding that the focus has shifted to ensuring that the bill Majority Leader Harry Reid brings to the Senate floor will increase coverage.

    PhRMA, which for months has portrayed its $80-billion deal as ironclad, continued to bang home the message that the industry is already doing more than its fair share.

    Reform, Johnson argued, will not bring an influx of new customers to the market because most of the uninsured are younger than 35 and relatively healthy. The newly insured, who used to pay full retail for their prescriptions, will now benefit from negotiated drug prices. If reform was going to boost drug makers' bottom lines, Johnson argued, then the industry’s sagging stock prices would have gotten a boost.

    “We continue to be supportive of comprehensive health care reform and we’re convinced that at the end of the day smart people will recognize that we’re making a huge commitment toward making that a reality,” he said.