Tag Archives: Max Baucus

Big Pharma Is Big Winner in Health Care Fight

Bloomberg has a rundown on winners and losers to date in the health reform fight. The pharmaceutical companies come out on top, with labs and health insurers close behind. Winners so far:

DRUGMAKERS: New York-based Pfizer and other pharmaceutical companies overcame attempts to torpedo a deal they made with Finance Committee Chairman Max Baucus and Obama that limits their contribution to the overhaul to $80 billion over 10 years. Baucus joined with all the panel’s Republicans and Democrats Robert Menendez of New Jersey and Thomas Carper of Delaware to uphold the agreement with the drug companies. London-based AstraZeneca Plc has its U.S. headquarters in Delaware, while Menendez represents Whitehouse Station, New Jersey-based Merck & Co., among other companies. … “If you look at drug spending over the next 10 years, it will be something like $4 trillion,” said Uwe Reinhardt, a Princeton University economist who specializes in health care. “Well, $80 billion out of $4 trillion; what a bargain.”

LABORATORIES: Quest Diagnostics Inc., Laboratory Corp. of America Holdings and Celera Corp. escaped $700 million in annual industry fees proposed by Baucus. Before the committee began work, the Montana Democrat shifted that assessment to health insurers, bringing the total fees to $6.7 billion for an industry led by Minnetonka, Minnesota-based UnitedHealth Group Inc. and Indianapolis-based WellPoint. Madison, New Jersey-based Quest, Burlington, North Carolina-based LabCorp and Alameda, California-based Celera would also benefit from provisions in all of the committees that encourage greater use of disease screening. And increased preventive care may boost providers as a whole. …

HOSPITALS: Community Health Systems of Franklin, Tennessee, Nashville, Tennessee-based HCA Inc. and hospitals across the nation may end up winners after a deal in which they pledged $155 billion in cost savings largely survived. As part of that agreement, payments for taking care of charity cases would be reduced only if certain insurance- coverage levels are met, insulating hospitals, said Paul Heldman, senior health-policy analyst at the Potomac Research Group in Washington.

How the GOP Scams Seniors on Health Care Reform–While the Dems Stand By

The Republican strategy for defeating health care boils down to a game of smoke and mirrors, with conservatives scamming seniors into thinking that reform will be bad for them. In fact, most of the proposed changes to Medicare would be positive. As the New York Times explained in a Sunday editorial, ” the various reform bills now pending should actually make Medicare better for most beneficiaries—by enhancing their drug coverage, reducing the premiums they pay for drugs and medical care, eliminating co-payments for preventive services and helping keep Medicare solvent, among other benefits.”

That’s not to say there won’t be cuts. The Times points out:

The Obama administration and Congressional leaders are hoping to save hundreds of billions of dollars by slowing the growth of spending in the vast and inefficient Medicare system that serves 45 million older and disabled Americans. The savings would be used to help offset the costs of covering tens of millions of uninsured people.

One of the main reasons for the confusion that reigns over all things health care right now is the Democrats’ refusal to make a clear case for reform.They aren’t willing to go after the real enemies of affordable health care for all: drug and insurance companies. And so as usual, the ideological vacuum left by the Democrats is being filled by Republican misinformation and fear mongering.

The result is that any decent proposals that are quickly whittled down in favor of the drug and insurance industries. Last week, Sen. Max Baucus and two other Democrats—Thomas R. Carper of Delaware and Robert Menendez of New Jersey—joined all the Finance Committee Republicans to defeat an amendment by Florida Senator Bill Nelson that would have demanded more concessions from drug companies. Most notably, the amendment would have allowed Medicare to buy drugs for low-income seniors at the same prices as Medicaid.

Meanwhile, Obama’s hands are tied. He can’t stand up for seniors, because he already made a deal with the drug companies. In a June agreement with the administration, Big Pharma promised $80 billion over 10 years towards health care reform. Thinking this was a solid deal, the drug companies began running ads in support of Obama’s plan. Nelson’s proposed schemes of cuts in the form of rebates, according to the New York Times, “would have more than doubled the amount of money to be given up by the industry.” But fortunately for the drug industry, and unfortunately for everyone else, the finance committee senators ensured Nelson’s amendment went nowhere.

A Banner Week for Big Insurance, Part II: Medicare Advantage

The so-called Baucus bill is a gift to the insurance industry in more ways than one. As I wrote earlier, it hand-delivers to the private insurance companies a whole new customer base that is government-mandated and government-subsidized. And if offers no competition in the form of a public option.

In addition, the Baucus plan preserves the Medicare Advantage program, which is one of the insurance industry’s most overt rip-offs of the public purse. As most Unsilent Generation readers will know, Medicare Advantage (MA) plans offer managed care run through private insurers, paid for by the federal government. In recent years, MA plans have come under increasing fire for their hard-sell tactics to elderly Medicare recipients, shoddy coverage, and rip-offs of the Medicare system. “Competition” from the private plans was supposed to reduce growth in Medicare spending–but in fact, they cost the government more. Recent estimates say that the government pays 14 percent more for those enrolled in Medicare Advantage vs. those in traditional Medicare. Eliminating these overpayments could save the government $177 billion over the next ten years.

Republicans (and at least one Democrat, Bill Nelson of Florida), are already complaining about the Baucus plan’s proposed cuts to MA plans. But the Baucus plan doesn’t eliminate Medicare Advantage, and might not even do it much harm. It simply introduces a new formula for calculating payments to private insurers who offer MA plans. As Tim Foley writes:

Medicare Advantage plans–private HMOs paid for by the feds at 114% the rate for a regular Medicare beneficiary but with no better health outcomes–would keep their overpayments until 2014, at which point they’d be paid the “weighted average” of all the Medicare Advantage plans combined. In layman’s terms, they’d still be getting paid more than traditional Medicare, albeit possibly less than the 14% extra they get now.

This change is rendered even more meaningless by the fact that the Obama Administration had already announced, back in April, its plans to begin incrementally cutting back on overpayments to Medicare Advantage–something it doesn’t need legislative approval to do.

Nonetheless, the insurance industry is pulling out all the stops to protect every cent they make through Medicare Advantage plans. They spent the spring and summer trying to plant astroturf on the issue by luring old people to “community meetings” (with free lunch and door prizes) where they were encouraged to “join the fight” to save the plans.

Now the insurance industry lobby group AHIP (America’s Health Insurance Plans) is offering up reports claiming that Medicare Advantage plans are especially helpful to the poor and people of color–an idea that has already been widely debunked. Cuts to MA, the report says, will hurt the most vulnerable elders.

In response, Pete Stark, (D-CA), chair of the House Ways and Means Health Subcommittee, issued a statement:

AHIP’s reports attempt to portray taxpayer overpayments to MA plans as indispensable for low-income, minority Medicare beneficiaries, when the opposite is true. These overpayments to private insurers increase premiums for all Medicare beneficiaries to pad the pockets of insurance companies….

Any report commissioned by Jay Gellert – the CEO of HealthNet and Chair of AHIP – should be taken with a healthy grain of salt, especially one claiming that beneficiaries are being helped.  Under his leadership, HealthNet has been fined hundreds of millions of dollars for illegally rescinding people’s health coverage when they get sick.

A Banner Week for Big Insurance, Part I: Mandating Profits

This is turning out to be a very good week for the private health insurance companies (or as I like to think of them, the bloodsucking middle-men whose only role in the health care system is to squeeze some profits out of human illness and suffering). Yesterday, AP/Forbes reported on the uptick in insurer stocks, which jumped from 3 to 6 percent in a single day:

Shares of health insurers jumped Wednesday after an key Democrat released a much anticipated Senate version of a health care reform bill that excluded a government-run insurance option.

The so-called public option had been a contentious issue with health insurers, with the industry viewing it as unfair competition. Instead, Sen. Max Baucus released a proposed bill that would require every American to obtain health insurance, which would be a financial boon for the health insurance industry.

It doesn’t take Einstein to figure out why this is great for the insurance industry: If there’s no public alternative to compete with private insurance companies, guess where all those people will have to go to buy their government-mandated insurance? As for the touted co-ops and exchanges, all they are ultimately likely to offer is better access to private insurance. And people of limited means will get government subsidies, mostly in the form of tax breaks, to buy private insurance–which means a transfer of funds from the taxpayers to private insurers. We might as well be writing our checks directly to United Healthcare, Wellpoint, and Humana, instead of the the IRS.

As Mark Karlin pointed out on Buzzflash yesterday, taxpayer subsidies are the only way to solve the “issue of how for-profit insurance can co-exist with the goal of reducing medical costs.” Karlin continues:

This isn’t a ‘free market’ solution; it’s socialized support of “profits”–basically a shakedown. It’s the only way– under the myth of Big Insurance providing enhanced “value,” which it doesn’t–that for-profit insurance companies can survive, because they are…unnecessary (essentially, a expensive redundancy) except for the explicit purpose of enriching a select few: the executives and shareholders.

We saw this happen under Medicare Part D, which was written by Big Pharma under the Bush Administration.  Seniors got a reduction in prescription costs, but without the government being able to negotiate the costs of the prescriptions. It was a multi-billion dollar socialized medicine gift to Big Pharma.

Karlin is right to compare what’s going on now to the Medicare Part D scam, which I’ve written about often. For decades, the drug companies had opposed the idea of a Medicare prescription drug plan. But at a certain point, they realized that if the plan was constructed the right way, it stood to reap them huge rewards in the form of government-subsidized profits, without the onerous burden of too much government control. That’s how we ended up with the convoluted, overpriced, privatized system that is Medicare Part D, instead of the comparatively simple and efficient structure of original Medicare.

The insurance companies also cashed in on Medicare Part D, since the whole program is financed by the government but run through them. So when health care reform came up this time, they were prepared: From the start, they showed a willingness to support health care reform, as long as it was the right kind of health care reform–i.e. one that expanded, rather than threatened, their role in the system, and thus their profits. As Robert Pear wrote in the New York Times last week:

While the White House has struggled to define its position, insurance companies have never wavered. Starting two weeks after the 2008 election, they have said they would accept greater federal regulation of their market practices if Congress also required everyone to have health insurance.

These may have been tactical concessions, to abate public wrath, but they were well received in Congress. While making these offers, the industry conserved its resources for the bigger battle over a public option.

In other words, so what if the law says that private insurers have to accept some people with pre-existing conditions, or stop cutting them off when they get sick, as long as the law also provides them with a huge set of new, government-subsidized  customers–and absolutely no competition.  It could hardly have worked out better for the insurance industry if they’d written the plan themselves.

Baucus Bill: No Public Option

As expected, Senator Max Baucus released the full text of a health reform bill that was noteworthy primarily for what wasn’t there: the bill is minus a public option. As long predicted here, the legislation includes “co-ops” and “exchanges,” which are similar to the federal health employees health care plan. And Medicare Advantage stays, albeit at lesser rates.

And in return for this sellout on the most meaningful planks of health care reform, the Baucus plan has gotten…so far, not one single, solitary Republican vote.

Kaiser Health News provides a concise summary:

Senate Finance Committee Chairman Max Baucus today unveiled a health care bill that would require most individuals to have health insurance. Insurance companies could not deny health coverage based on a pre-exisiting medical conditions or place yearly or lifetime limits on coverage.

People who earn as much as 133 percent of the federal poverty level ($14,440 for an individual, $29,400 for a family of four) would be eligible for Medicaid, the government insurance program for the poor. The measure includes a health insurance ‘exchange’ where people could buy insurance and a system of health care “co-ops” rather than a government-run health insurance plan. Subsidies would help low-income workers purchase health insurance and small businesses would receive tax credits to help offset the cost of providing coverage.

The bill is projected to cost $856 over 10 years. It would be paid for with an excise tax on high-end health insurance policies, lower payments to the Medicare Advantage program and with fees on medical device manufacturers, clinical labs, drug makers and health insurance companies. Baucus negotiated the plan with five other finance committee members – including three Republicans – but no one in the GOP has endorsed the package.

Obama’s Health Care Speech: Too Little,Too Late

As the summer has waned in an atmosphere of misinformation and recrimination, so too have hopes for real health care reform. Many people have by now sadly come to the conclusion that the moment for such reform has come and gone. In this context, Obama’s inspiring speech tonight was simply too little and too late.

It may just be that Obama, using the Democratic majority as a hammer, can achieve some limited change for the better. If so, that change most likely will be built on a base set forth by the Baucus plan announced yesterday, further embellished and/or weakened in the joint House-Senate conference that will draft a final bill. That final bill will be such a study in compromises that most people in America won’t notice any change at all–which is pretty much the point, as Obama himself admitted tonight.

Obama tonight eloquently defended the need for a public option, only to kick it to the curb, insisting that it is “only one part of my plan”–and one open to further tinkering and dilution. He promised the American people: “If you can’t find affordable coverage, we will provide you with a choice.’’ The “choice,’’ however, could be any one of a number of things—co-ops or exchanges accompanied by tax breaks, with special subsidy programs or perhaps expanded Medicaid to pick up the slack for the poor. One thing is clear: It won’t be a challenge to the private insurance industry. Obama said flatly, “I have no interest in putting insurance companies out of business.”

Giving the speech was brave. But its politics remains a muddle. The core problem here is the Obama administration’s inability to project a vision for real change or take an ideological stance that might have some populist appeal. The only time Obama reached toward that ground tonight was when he quoted Teddy Kennedy’s belief that health care is a human right–something the president himself apparently couldn’t bring himself to say in his own words. Instead, the administration has dawdled in a swamp of tehnocratic mumbo jumbo, leaving ideology, once again, to the Right.

In the end, the model here is not the lawmaking carried out by Teddy Kennedy–or Teddy Roosevelt, John Dingell’s father, Harry Truman, LBJ, or anyone else Obama cited tonight. The model is Obama’s own wishy-washy credit card legislation enacted earlier this year, which sands down some of the freemarket’s hard edges by outlawing its most outrageous abuses, and otherwise lets business go on as usual. This approach seems destined to become the hallmark of the Obama administration–and as I predicted months ago, the final health care reform bill will undoubtedly bear this stamp:

Under a propaganda blitz heralding sweeping reform, we get legislation that reins in some of the very worst abuses, while making no significant change at all to the underlying flawed system. So, for example, we may see insurance companies required to provide coverage in spite of pre-existing conditions–something Obama referred to in his AMA speech, with moving references to his mother’s own battle with cancer. We might see what the President called “more efficient purchasing of prescription drugs,” which presumably means more power to haggle with Big Pharma over drug costs, as well as speeding up approval of generics. We will see health care providers given incentives for more cost-effectiv–and, we can hope, better–treatment. These things are not meaningless, and they will provide a modicum of help to some struggling Americans. But they do virtually nothing to strike at the basic American system of health care for profit. And at the same time, they offer only a fraction of the savings a single-payer system could offer.

What to Look for in Obama’s Speech Tonight

First, nothing specific. Here’s how the BBC reports it this morning:

When asked if Americans will find out in his speech whether or not he is willing to sign a healthcare reform bill without a public scheme, he said:

“Well, I think the country is going to know exactly what I think will solve our healthcare crisis.”
Mr Obama said the speech will be directed at the American people, as well as members of Congress…..

“The intent of the speech is to, A, make sure that the American people are clear exactly what it is that we are proposing,” Mr Obama said.

“And B, to make sure that Democrats and Republicans understand that I’m open to new ideas, that we’re not being rigid and ideological about this thing, but we do intend to get something done this year.”

Second, some version of the Baucus plan seems likely to survive. Mitch McConnell, the Senate Republican leader, is softening opposition to the idea of of “reform” –if it’s the “right” reform. That means spending less money, which means cutting existing benefits in Medicare and elsewhere. Remember–Republicans apparently think we are over-insured!

Meanwhile in the House, the Blue Dog leader Mike Ross says he’s flat out against a public option. There are 52 Blue Dogs. In addition, Pelosi,with her stated insistence on a public plan, is beginning to look isolated as part of the leadership caves on that issue. Steny Hoyer, House Majority leader, indicates he won’t insist on the public option.
What’s likely to survive as pivotal in the final plan will be the “exchanges,” which, in fact, are modeled on the federal employees health benefit plan. It will be through these exchanges that insurers will be required to meet certain standards, including accepting everyone with or without pre-existing conditions. Pricing will be left to the insurance companies.

In the end, my guess is Baucus will carry the day with details of a weak bill hammered out in conference.