K Street’s healthcare winners and losers

The Senate healthcare reform bill looks to be a veritable mixed bag for health insurers, medical providers, employers, organized labor and practically every private-sector player in the market.
 
No special interest got everything they sought, but there was something for everyone.
 

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The full effects of the new spending needed to cover more than 30 million people without health insurance -- coupled with nearly $500 billion in cuts to Medicare payments for healthcare providers -- won’t be evident for years to come.
 
But as the measure inches closer to President Barack Obama’s desk, it’s not difficult to see why some special interests opposed the bill, others supported it and a few tried to occupy a shaky middle ground.
 
Health insurance: More than any other camp, health insurance companies and lobbying organizations like America’s Health Insurance Plans opposed the bill. No industry would warmly welcome a slate of stiff new regulations that hit them right in the pocketbook by setting limits on their pricing structure, product design and even compensation for their executives. Insurance companies are also aggravated that the legislation doesn’t cut deeper into the rising costs of medical services that, after all, is largely responsible for rising insurance premiums. On the other hand, the bill would require tens of millions of Americans to buy their products so it’s not all bad for the health insurance industry.
 
Large employers: Big business wanted two major things to come out of healthcare reform: They didn’t want federal requirements that they cover their employees, or at least offset the government’s cost of doing so, and they wanted tough cost-containment measures to make their health benefits less expensive. According to the U.S. Chamber of Commerce and most big-business lobbying groups, the Senate bill falls short in both respects. But if Democrats are right in their claims that the bill would reduce healthcare costs and health insurance premiums over time, large companies that cover their employees would also reap the rewards.
 
Small employers: Most groups, such as the National Federation of Independent Business, that represent small companies in Washington made similar objections to the Senate bill as their big-business counterparts. At the same time, however, the measure would provide subsidies to small businesses and their workers alike that could be a big help in changing the fact that about a third of people without health insurance are full-time workers at small firms.
 
Labor unions: The AFL-CIO, the Service Employees International Union and other organized labor organizations bet big on healthcare reform this year with their Democratic allies in control of Congress and the White House. The Senate bill would take significant strides toward labor’s long-time goal of extending health insurance coverage. But the bill has two major flaws from the unions’ perspective: an excise tax on the kind of high-cost, so-called Cadillac insurance plans many unions negotiated for their members in lieu of wage increases; and the absence of a government-run public option insurance program that labor thought essential as a check on private insurance companies.
 
Pharmaceutical companies: The drug industry has been in an odd place during the course of healthcare reform this year. A perennial nemesis of Democratic politicians, the industry was the first in the business to offer to take a hit in the bill – so long as the price tag didn’t continue to grow. In July, Obama forged a deal with the Pharmaceutical Research and Manufacturers of America (PhRMA): Support his campaign for healthcare reform in exchange for keeping Big Pharma’s tab at $80 billion. The White House and Senate Democratic leadership had to beat back several attempts by frustrated rank-and-file senators to promote longstanding priorities, such as allowing the reimportation of cheaper drugs from Canada and other countries. Anger lingers that the White House sided with drug makers over fellow Democrats so the industry might have to get its checkbook out. Democrats are more keen than ever to beef up the Medicare drug benefit – and are looking straight at PhRMA to give more to the effort.
 
Hospitals: There is at least one hospital in every House district in America, which means there are a bunch of them in every state, a fact not lost on a single senator. Hospitals not only are a vital part of any community’s safety net but they are also large employers and prominent civic institutions – so when their executive and lobbyists talk, lawmakers listen. Like PhRMA, the American Hospital Association (AHA) and other hospital groups came to terms with the White House and ultimately endorsed the Senate bill. In return for a guarantee that the White House and Congress would push for near-universal coverage, thus relieving hospitals of the burden of providing billions in free care to the indigent each year, the industry would accept $155 billion in Medicare cuts.
 
Physicians: For the better part of a decade, the American Medical Association (AMA) and other physician societies have had two items at the top of their agenda; neither is in the Senate bill. The AMA wants a permanent repeal of a broken Medicare payment system that forces them to scramble each year to lobby for a reprieve from cuts no one thinks are appropriate. Physicians have also clamored for federal reforms that would limit financial damages in medical malpractice lawsuits. Though the first proved too costly and the second too anathema to Democrats and their trial lawyer allies, the AMA still endorsed the Senate bill based on its longstanding principle of extending health insurance coverage. Like other healthcare providers, the lack of a public option in the bill helped bring doctors aboard.
 
AARP: The senior-citizens’ lobby might have spent more time and money promoting healthcare reform over the past two years than Obama and the Democrats in spite of polls showing continued resistance to reform among older people. The AARP withheld its endorsement of the Senate bill until nearly the last moment as it sought to extract promises on several issues, including that the final measure Obama signs would make bigger improvements to the Medicare drug benefit. Overall, the AARP can claim victory on a number of major priorities for its members. The Senate bill provides more generous drug coverage, adds prevention and wellness benefits to Medicare and limits health insurance companies’ ability to charge older, sicker people higher premiums – or deny them altogether.