By MAGGIE MAHAR
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.
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