Business and drug groups blast bill; doctors are uneasy

Business groups blasted the House healthcare bill released Thursday, and a key trade association for doctors declined to endorse it.

Health insurance and pharmaceutical industries that take hard hits from the bill also took shots, saying it would drive up costs for seniors and companies alike.

Organizations representing employers remain deeply concerned about the bill’s mandate for employers to provide insurance, the public insurance option and the income surtax on people earning more than $500,000.

A coalition of big-business groups, including the U.S. Chamber of Commerce, the Business Roundtable and the National Association of Manufacturers, issued a letter opposing the House bill outright.

“The legislation falls short of the bipartisan goal of controlling costs and jeopardizes employer-sponsored coverage which now serves more than 160 million Americans,” the groups said in a point-by-point criticism of the bill.

The House bill is the “ ‘how to’ on how not to do healthcare reform,” said Brad Close, vice president of the National Federation of Independent Business, which represents small businesses. “It will actually harm small-business owners with its expensive employer mandates, punitive payroll taxes and new government-run program.”

The American Medical Association (AMA) had endorsed an earlier version of the bill, largely because it blocked a 21 percent cut in the Medicare fees physicians would receive in 2010, as well as further cuts in future years.

But the payment fix isn’t in the new bill; instead, Democrats have introduced a separate bill on physician payments. On the heels of a similar fix failing in the Senate last week, the AMA expressed disappointment that the House bill does not resolve the problem.

The bill introduced on Thursday includes important changes from the measure Democrats introduced over the summer, but the framework is the same.

It would create a government-run healthcare program and a health insurance purchasing exchange, subject health insurance companies to stiff new regulations, slash Medicare payments to providers by more than $400 billion and require nearly all employers to provide health benefits to their workers.

Because of the need to win votes from centrist Democrats, the public option in the new bill is less objectionable to the insurance industry, but it is still a problem. Under the bill, the public option would negotiate payment rates with providers, rather than the rates being based on Medicare’s fees.

The industry maintains the public option would not be a fair competitor because it would use its clout to underpay medical providers, who would in turn jack up their prices for private insurers, driving more people to the cheaper government plan.

The House bill would result in “increasing healthcare costs for families and employers across the country and significantly disrupting the quality coverage on which millions of Americans rely today,” said Karen Ignagni, president and CEO of America’s Health Insurance Plans.

Insurance companies also would have to comply with sweeping new federal regulations that would practically remake their marketplace for individual and small-group policies.

The measure would create a health insurance exchange open to individuals who do not get offered health benefits by their employers and to those working at small businesses.

Under the House bill, insurance companies would have to offer a minimum benefits package and accept anyone who applies for coverage regardless of pre-existing conditions. Insurers would also be severely limited in their ability to vary premiums by age, gender, health status or other factors it currently employs and in their ability to cancel policies. Families could keep their children enrolled in their plans until age 26.

In addition, the companies would be required to spend at least 85 percent of the premiums they collect on medical services for their customers, could not set annual or lifetime limits on benefits and would be required to adopt a standard set of forms for medical providers and patients to use.

Insurers also strongly object to the House’s proposed $170 billion in cuts to federal subsidies for private Medicare Advantage insurance plans.

Insurance companies would get access to 21 million new customers, many armed with federal subsidies to help them purchase insurance and most required to buy coverage.

House Democrats, as promised, utterly ignored the deal the pharmaceutical industry worked out with the White House and Senate Finance Committee Chairman Max Baucus (D-Mont.) to limit its exposure to $80 billion over 10 years.

In exchange, the industry agreed to support reform efforts and offer half-price discounts to Medicare Part D beneficiaries during the annual coverage gap known as the doughnut hole.

“We continue to oppose the approach the House is taking,” said Ken Johnson, senior vice president of the Pharmaceutical Research and Manufacturers of America (PhRMA). The House bill, he said, “contains a number of problematic provisions for seniors, patients and the continued development of new therapies.”

The bill unveiled Wednesday takes the drug makers up on their Part D but would go further, eventually eliminating the so-called doughnut hole. The legislation also would allow the federal government to directly negotiate the prices Medicare pays for prescription drugs. In addition, the bill would require drug companies to pay rebates on medicines purchased for low-income seniors enrolled in both Medicare and Medicaid.

Like PhRMA, hospital industry groups worked out an arrangement with the White House and Baucus. Unlike PhRMA, one of them — the Federation of American Hospitals (FAH) — issued a notably positive statement about the House bill.

“The House health reform bill announced today by Speaker Pelosi reflects further progress toward a reformed healthcare system anchored by meaningful coverage for virtually all Americans,” Federation President Chip Kahn said in a statement. “The FAH is grateful to Speaker Pelosi, the Democratic leadership and the committee chairmen for succeeding in reaching this pivotal moment.”

House Democrats did make one change to their bill that brought a healthcare industry group closer to the fold. Though the bill includes $20 billion in taxes on medical devices, that amount is scaled back from earlier proposals. Advanced Medical Technology Association (AdvaMed) President Stephen Ubl praised the House for its move. “AdvaMed appreciates the decision by House leaders to reduce the device tax,” he said, adding it should be postponed and should exempt small firms.