[Ip-health] Lobbyists Fight Last Big Plans to Cut Health Care Costs

[Gabriela Arguedas]

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 October 11, 2009
 Lobbyists Fight Last Big Plans to Cut Health Care Costs By DAVID D.
KIRKPATRICK<http://topics.nytimes.com/top/reference/timestopics/people/k/da=
vid_d_kirkpatrick/index.html?inline=3Dnyt-per>

WASHINGTON =97 As the health care debate moves to the floor of Congress, mo=
st
of the serious proposals to fulfill President
Obama<http://topics.nytimes.com/top/reference/timestopics/people/o/barack_o=
bama/index.html?inline=3Dnyt-per>=92s
original vow to curb costs have fallen victim to organized interests and
parochial politics.

And now the last two initiatives with real bite that are still in contentio=
n
=97 a scaled-back =93Cadillac tax=94 on high-cost health plans and a nonpar=
tisan
Medicare<http://topics.nytimes.com/top/news/health/diseasesconditionsandhea=
lthtopics/medicare/index.html?inline=3Dnyt-classifier>budget-cutting
commission =97 are under furious assault.

Most economists=92 favorite idea for slowing the growth of health care
spending was ending the income tax exemption for employer-paid health
insurance<http://topics.nytimes.com/top/news/health/diseasesconditionsandhe=
althtopics/health_insurance_and_managed_care/index.html?inline=3Dnyt-classi=
fier>to
make lower-cost plans more attractive. But that would hurt workers
with
big benefit plans, and a labor-union lobbying blitz helped kill that idea b=
y
the Fourth of July.

Lobbying by doctors,
hospitals<http://topics.nytimes.com/top/news/health/diseasesconditionsandhe=
althtopics/hospitals/index.html?inline=3Dnyt-classifier>and
other health care providers, meanwhile, dimmed the prospects of
various
proposals to cut into their incomes, including allowing government
negotiation of Medicare drug prices and creating a government insurer with
the muscle to lower fee payments.

=93The lobbyists are winning,=94 said Representative Jim Cooper, a conserva=
tive
Tennessee Democrat who teaches health policy.

Total health care costs in the last 20 years have doubled to about 16
percent of the economy, with no signs of tapering. Along with universal
coverage, Mr. Obama has made controlling those costs a central pillar of hi=
s
health care overhaul, calling the current course =93unsustainable.=94 The e=
ffort
is a pivotal test of his campaign promise to break the stranglehold of
special interests.

In his weekly radio address on Saturday, Mr. Obama applauded the bill set
for a vote next week in the Senate Finance Committee. =93By attacking waste
and fraud within the system,=94 he said, =93it will slow the growth in heal=
th
care costs, without adding a dime to our deficits.=94

In an interview, Peter R.
Orszag<http://topics.nytimes.com/top/reference/timestopics/people/o/peter_o=
rszag/index.html?inline=3Dnyt-per>,
the White House budget director and the official most associated with the
drive to cut costs, singled out the proposed Medicare commission and the
=93Cadillac tax=94 as evidence of progress. =93A key priority now,=94 Mr. O=
rszag
said, =93is to make sure cost containment holds up as we move through the
legislative process."

Neither element appears in any of the other four health care bills on
Capitol Hill, and both face dug-in resistance in the House.

Although the bills contain other measures aimed at medical costs, most of
the surviving ones do not antagonize any organized interest. Among them are
voluntary efficiency measures like encouraging the coordination of medical
records, disseminating information comparing the effectiveness of treatment=
s
and various pilot projects.

White House officials argue that in any case it is prudent to start with
such tests, and that many could be expanded to more comprehensive programs.
But their real impact is hard to gauge, and the nonpartisan Congressional
Budget Office<http://topics.nytimes.com/top/reference/timestopics/organizat=
ions/c/congressional_budget_office/index.html?inline=3Dnyt-org>assigns
them little weight. (The budget office credited the Finance
Committee bill with reducing the federal deficit, but how much it will slow
the growth of total public and private health spending is another question.=
)

The tax on gold-plated insurance plans is the last vestige of most
economists=92 favorite idea, eliminating the tax exemption for employer pla=
ns.
The finance bill would impose a 40 percent excise tax on insurance plans
that cost more than $8,000 a year for an individual or $21,000 for a family=
.


The bill has aroused the frantic opposition of labor and business lobbyists
who appear to have found friends in the Capitol. On Wednesday, 157 House
Democrats =97 a majority of the party =97 signed a letter to Speaker Nancy
Pelosi<http://topics.nytimes.com/top/reference/timestopics/people/p/nancy_p=
elosi/index.html?inline=3Dnyt-per>opposing
the tax.

=93It has no legs in the House,=94 said Representative Pete Stark, the
California Democrat who is chairman of the health subcommittee of the
tax-writing panel.

The proposed Medicare commission, aimed at providers instead of consumers,
is becoming a case study in the political difficulty of reducing medical
payments.

The commission was intended to side-step the interest-group pressure that
often stymies Congress. Modeled after the nonpartisan commission for
military base closings, it would present a roster of Medicare cuts that
Congress could block only with legislation.

But along the way, the White House and the Senate Finance Committee have cu=
t
deals for political support with lobbyists that may circumscribe the cost
cuts, potentially including the recommendations of the commission.

For example, the White House and the panel=92s chairman, Senator Max
Baucus<http://topics.nytimes.com/top/reference/timestopics/people/b/max_bau=
cus/index.html?inline=3Dnyt-per>,
Democrat of Montana, reached an agreement with the drug industry for its
companies to contribute a total of $80 billion =97 but no more =97 over 10 =
years
in reductions to their government payments.

Many Democrats would like to see the government negotiate far lower prices
for the Medicare drugs it buys. But drug industry lobbyists say =97 and the
debate on the finance bill appears to confirm =97 that Mr. Baucus=92s agree=
ment
to limit the industry=92s costs excludes such price negotiations. Now the d=
rug
lobbyists are pushing to be sure the Medicare commission could not force
negotiations either. The relevant text of the bill is still being written.

Some analysts contend that in other ways the drug industry deal could even
encourage unnecessary spending on brand-name drugs. As part of its $80
billion, the industry would provide discounted drugs for certain Medicare
patients who had previously been forced to pay for them until their bills
reached a certain level. The deal will thus eliminate what had been an
incentive to switch to cheaper generics. =93It is market protection,=94 one=
 drug
company lobbyist said of the deal, speaking anonymously for fear of
alienating the White House.

Senate finance staff members counter that their bill encourages the use of
generic drugs in other ways by waiving the first co-payment for patients wh=
o
try them.

A parallel White House deal with hospital lobbyists is posing a more seriou=
s
political problem for the Medicare commission. The White House and the
Senate finance chairman agreed to limit the hospitals=92 payment reductions=
 to
$155 billion over 10 years, and in this case they added a guarantee to the
hospitals that for that 10-year period the proposed Medicare commission
would not extract any more. (The hospitals are also gaining new income from
the expansion of insurance.)

A Senate Democratic aide said the hospitals had already agreed to
significant cuts and noted that 10 years was not very long. (White House
officials previously disputed the hospital lobbyists=92 account of the deal=
,
but the Senate finance bill confirms it.)

Now other heath care interests, led by the powerful American Medical
Association<http://topics.nytimes.com/top/reference/timestopics/organizatio=
ns/a/american_medical_association/index.html?inline=3Dnyt-org>,
are complaining that it is unfair to protect hospitals from the commission,
especially since they are the biggest recipient of Medicare money.

=93This presents a serious inequity,=94 the group said in a letter to Mr.
Baucus. The association and others also complain that the commission could
cut only provider payments, without authority over benefits or premiums.

Some Democratic lawmakers are upset, too. =93To work, it has to look at the
full picture,=94 Senator John D. Rockefeller
IV<http://topics.nytimes.com/top/reference/timestopics/people/r/john_d_iv_r=
ockefeller/index.html?inline=3Dnyt-per>of
West Virginia, one of the commission=92s principal sponsors, said in an
e-mailed statement. =93There can be no carve-outs for specific provider
groups.=94

Mr. Cooper, the Tennessee Democrat and another supporter, predicted the end
of the commission. =93This will start a race for the exits,=94 he said. =93=
Every
other provider group will say, why are you letting these guys out? Why
should we have to participate?=94

The House committee chairmen were already hostile to the commission as an
unconstitutional intrusion on their budgetary powers. At a dinner with
Democratic lawmakers at the Capitol Hill home of Representative Rosa DeLaur=
o
of Connecticut a few months ago, Representative Henry A.
Waxman<http://topics.nytimes.com/top/reference/timestopics/people/w/henry_a=
_waxman/index.html?inline=3Dnyt-per>,
the chairman of the Energy and Commerce Committee, practically =93tackled
Orszag=94 in a dispute over the commission, one lawmaker present said.

Mr. Waxman confirmed a =93spirited=94 disagreement. When he learned last we=
ek
about the hospital exemption, =93it amazed me,=94 he said. =93If they think
Congress is too political to be involved in Medicare cuts, it seems rather
political to have exempted the hospitals.=94

A spokesman for Ms. Pelosi said she also opposed the commission.

How the measures fare in the final weeks of debate could determine how well
the bill lives up to its original promise of curbing health care costs, sai=
d
Dr. Mark B. McClellan, an administrator of Medicare and Medicaid in the Bus=
h
administration who is now tracking the legislation at the Brookings
Institution<http://topics.nytimes.com/top/reference/timestopics/organizatio=
ns/b/brookings_institution/index.html?inline=3Dnyt-org>.


=93It is still up in the air,=94 Dr. McClellan said, adding, =93I=92d give =
them an A
for effort, but there is a lot more they could do.=94
http://www.nytimes.com/2009/10/11/health/policy/11cost.html?_r=3D1&th=3D&em=
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Gaby Arguedas