Myths and Facts About Health Reform Part II

Lobbyists representing the many who profit from our $2.6 trillion health care industry spent millions in the war over healthcare reform. Yet National Journal Contributing Editor Eliza Newlin Carney suggests that “it’s unclear whether all that lobbying, advertising and check-writing yielded much.”

No question, the reform legislation that finally passed falls short of many reformers’ hopes. The public option is gone. Private sector insurers will scoop up all of the new business.  Meanwhile, by agreeing to support reform—and make some financial concessions—Pharma bought protection from generic competition, plus  a promise that it can continue to set prices, without worrying about Medicare trying to bargain for discounts.

Nevertheless, as I argued in part one of this post, Carney has a point. Lobbyists lost on many issues. Under the legislation, insurers who offer Medicare Advantage  are going to lose their windfall payments. Some relied on that corporate welfare to stay in the black.  In addition, insurers who cover large groups will have to pay out 85% of premiums to physicians, hospitals and patients, keeping only 15%. This rule kicks in next year, and makes raising premiums far less attractive. If an insurer lifts premiums by 10%, it will have to increase pay-outs by 8 ½%. Meanwhile a 10% hike means that it the company likely to lose market share, particularly in the more transparent new exchanges that open up in 2014.

Insurers will gain millions of new customers, but the majority will be expensive. Some patients suffering from pre-existing condition will need extensive care, and many others will come from low-income families who, as a rule, are not as healthy as more affluent Americans.  Moreover, between now and 2014, it’s likely that Congress will bring back the public option.

Drug-makers also will face new challenges. As I explained in part one there are various ways that Medicare can cut its drug bill without bargaining with drug-makers. The legislation also contains  additional funding for comparative effectiveness research;; this spells trouble for an industry that is not accustomed to head-to-head comparisons. When the research is published, insurers, physicians, journalists and patients will pay attention. Already, the mainstream media has begun questioning the value of two of Pharma’s most profitable products: statins (a.k.a. cholesterol-lowering drugs) and the newest, most expensive cancer drugs.

Lobbyists also worked to protect health care providers, with mixed results. Those who represented primary care physicians and others near the bottom of the providers’ income ladder (gerontologists, pediatricians and family practitioners) won a 10% raise from Medicare. The 10% hike begins next year, and continues every year for the next 5 years. Primary care physicians and pediatricians who care for Medicaid patients also will enjoy a well-deserved raise: going forward they will be paid Medicare rates—which typically are 30% higher than what the government pays doctors who care for the poor.

But better-paid specialists are likely to see their fees sliced for some services. Some physicians are particularly concerned that an Independent Payment Advisory Board (IPAB) will have the authority to recommend changes to the fee schedule Medicare uses when paying doctors. IPAB’s changes will go into effect unless Congress votes against them and the president agrees with Congress.  If the President disagrees, the changes automatically become law—unless Congress can find 60 votes to overcome the presidential veto.  (IPAB begins its work in 2014, though it won’t begin to recommend changes in payments to hospitals until 2020.)

Providers who take fees from drug-makers and device-makers and then recommend their products could find themselves in an awkward position. The final legislation requires pharmaceutical and medical device companies to report all payments over $10 to physicians and teaching hospitals. This data will be made public on a searchable website.

Reform also includes new regulations for hospitals. Those that report an excessive number of preventable readmissions will find that Medicare no longer pays for patients who bounce back. (Private insurers will no doubt follow Medicare’s example).  Hospitals also will have to go public with their infection rates. And every three years, they will have to justify their tax-exempt status. (Here, I’m just skimming the surface of what reform means for hospitals; I’ll be writing a post about this in the near future.)

All in all, a close look at the details of the final bill suggests that the lobbyists representing hospitals and doctors did relatively little to undermine reform.

Politicians Weakened the Legislation

Carney’s thesis is that politicians did the damage:
“Partisan rifts and fickle political winds have done more to derail proposed health care changes than any lobbying campaign. . . That stands in contrast to President Clinton’s failed health reform plan 16 years ago, which ran aground in part because of deft insurance industry lobbying.”

I tend to agree.

One would prefer to think that lobbyists are responsible for the legislation’s limits. But I’m afraid that our elected representatives–and the conservative grassroots voters who made their voices heard—deserve most of the credit. Maybe this battle really was driven by “ideas” rather than money—however tattered some of those so-called ideas might be.

Admittedly, it’s hard to separate the lobbyists form the politicians they fund. But lobbyists didn’t fund the tea-baggers. Sure, some of the protests were staged. And a GOP consultancy created the brand name and used the bus tours that became the Tea Party Express as a vehicle to promote Our Country Deserves Better.

But Lobbyists don’t pay millions of Americans to watch Fox News, or listen to Limbaugh. (In fact, only about 3 million viewers tune in to Fox, and no one knows how many are addicted to Limbaugh. We don’t have an accurate count on how many protesters traveled to Washington carrying signs reading “Compassion is Voluntary, Not Compulsory,”  or “The Only Thing We Have to Fear is Obama Himself.”  But moderate Democrats in Congress perceive vocal conservative voters as a major force in this country. And in some states, they are. Moderates have reason to fear them. George Bush is no longer in the White House, but many  right-wingers are still bitter that President Obama won.

A Divided Electorate

It’s worth remembering that only 43 percent of all white voters chose Barack Obama in November of 2008; 55 percent picked McCain. As Timothy Noah noted at the time the lack of support from white voters wasn’t necessarily about race: No Democratic presidential candidate has won a majority of white votes since Lyndon Johnson. (Jimmy Carter came close—losing the white vote by only 4 points, and Bill Clinton narrowed the gap to two percent.)

The history of presidential voting patterns over the past 45 years suggests that Obama lost the white vote, not because of the color of his skin (or at least not only for that reason), but because he was perceived as a liberal Democrat. Conservative white Republicans just don’t like Democrats, and they’ve been making that clear at the polls ever since LBJ lost the South when he signed the 1964 Civil Rights Act and the 1965 Voting Rights Act into law.

That these were the events that caused Dixiecrats to desert Democrats does suggest that the divide does have something to do with race.  But, for the purposes of this discussion, the more important point is that in January of 2009 Barack Obama became the president of an extraordinarily polarized nation. And this is what made it impossible to pass health care legislation that many reformers would have preferred: a bill that included a public option, gave Medicare the right to negotiate for lower drug prices, imposed stiff penalties on individuals who decide to wait until they’re sick before applying for insurance, and insisted on federal regulation of private insurers.

Yes, lobbyists contributed millions to the battle over reform–they have the money.  But Xtreme Conservatives own the hearts and the minds of a significant slice of the American public. That is what made the difference. Carney quotes Richard Kirsch, national campaign manager for Health Care for America NOW, a liberal coalition that spent millions to support comprehensive reform: “I think the larger political narrative, and what’s going on in the grassroots around the country, is much more important than any traditional lobbying.”

Kirsch should know. As campaign manager for HCA, he watched his organization spend millions to promote reform. And yet, Carney contends that liberal lobbyists like the industry lobbyists, failed to get full value for their dollars: “Some of the biggest spenders were progressive advocates such as organizers at Health Care for America NOW, who found themselves playing defense by August, when conservative activists crowded town hall meetings to shout down comprehensive reform. Having been surprised and swamped by industry opposition during the Clinton health care debate, such groups lobbied early and aggressively for the Obama plan this time around. But they lost control of the narrative.”

“Ralph Neas, CEO of the National Coalition on Health Care Action Fund told Carney ” I don’t believe we’ve done a good enough job explaining to the American people how health care reform will help every family. Too many people think that health care reform is getting taxed to pay for those who don’t have health care insurance.”

I agree. But I don’t blame groups such as  Health Care for America NOW or the National Coalition for failing to persuade Americans that they will benefit from reform. The opposition was spreading easily-framed lies:

  • “You will be paying for healthcare for illegal immigrants.”
  • “Death Panels will decide when Grandma dies.”
  • “Seniors Will Lose Medicare Benefits”
  • “Doctors Will Stop Taking Medicare Patients”

Lies fit nicely into one-liners. The truth is usually much more complicated and far more nuanced. If you’re going to tell the whole truth, you are forced to qualify what you say. This usually takes more than one sentence. Try explaining palliative care (a.k.a “Death Panels”) in eleven words.

Or, consider this question: Under reform, will your premiums go up? This depends on whether you have employer-based insurance, what state you live in, and how many sick people were excluded from your state’s insurance pool in the past. I plan to write a post addressing that question. If I’m going to give HealthBeat readers accurate information, I’ll probably have to write at least 500 to 800 words. And spend two or three hours researching the answer to make sure I get it right.

Meanwhile, a great many opponents of reform have already given you the answer: “Your premiums will rise.”

That’s nice and concise. But it isn’t true.

In the months and years ahead, the lobbying and the lying will continue. Some in the health care industry will be trying to change certain planks in the reform bill. But the big effort will come from conservatives who hope to take back Washington, “break Obama,” and roll back reform.

As Carney observes: “with the midterms fast approaching, health care lobbying expenses are already starting to morph into campaign messages.” Indeed, the Wall Street Journal has already reported that the U.S. Chamber of Congress plans to spent $50 million on the election in an effort to unseat vulnerable Democrats who voted for reform.

“Carney quotes Henry J. Aaron, a senior fellow at the Brookings Institution: “ The way the bill is drafted, health care is certain to be the number one or two domestic political issue for the next five to six years. It just won’t go away.”

If you’re inclined to engage in the battle, find out where legislators in your district stand on reform, and work for a candidate who shares your views.  If you can, try to explain what the bill will mean to friends, family and neighbors.  But don’t attempt to match conservative bumper stickers with your own one-liners. That’s a contest you’ll never win. The truth is complicated, particularly in this case: the strength of the bill lies in the details.

If you want to help combat the campaign of misinformation try explaining just one of those details, in full. You might point out that the legislation addresses the shortage of primary care doctors: they will be getting 10 percent pay hikes, each year, from 2011 to 2016. Reform also includes generous scholarships and loan-forgiveness programs for med students who choose primary care.  Or you might describe how, beginning next year, insurers who try to raise premiums will be able to keep only 15 percent of the increase, making premium hikes far less profitable.

As I continue my “Myths and Facts About Reform” series, I’ll delve into more of the often-overlooked details that make this a pretty good bill. Despite what you may have heard, the lobbyists representing our medical-industrial complex did not win.

Maggie Mahar is an award winning journalist and author. A frequent contributor to THCB, her work has appeared in the New York Times, Barron’s and Institutional Investor. She is the author of  “Money-Driven Medicine: The Real Reason Why Healthcare Costs So Much,” an examination of the economic forces driving the health care system. A fellow at the Century Foundation, Maggie is also the author the increasingly influential HealthBeat blog, one of our favorite health care reads, where this piece first appeared.

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