How the Democrats sold out health care reform

August 18, 2009

Why backroom deals with the health insurance industry bosses could be called a genuine bipartisan effort.

THE RAUCOUS right-wing protesters who have stormed congressional town hall meetings have thrust the debate over health care reform into the 24-hour news cycle. As a result, the effort to overhaul the U.S.'s broken health care system has become bogged down in a surreal discussion about "death panels," forced euthanasia and Big Brother government.

In this respect, the town hall meetings have the feeling of a reality show being acted out far from where the real "debate" is. And that is in the back rooms of the White House and the Congress where health industry "stakeholders" are really shaping the policy.

To understand this, Chad Terhune and Keith Epstein's August 6 BusinessWeek cover story, "The Health Insurers Have Already Won," provides essential reading. In it, Terhune and Epstein describe how the major health insurance companies, such as UnitedHealth and Aetna, crafted a sophisticated and strategic approach to shape health care reform to their liking.

Oriented primarily on the so-called "Blue Dog" conservative Democrats, this strategy isn't simply based on the crude legalized bribery by which industry lobbies buy off politicians in exchange for campaign contributions.

In fact, the industry has used its power to provide expertise and research to congressional staffers to assure that it has a major role in determining the problems that health reform is meant to address and the solutions that are being proposed. Pro-industry research is driving the reform debate in Congress, and the end result will be a health care bill with an industry seal of approval on it.

If this kind of industry influence might be considered the soft touch, the health insurers are also willing to bring down the hammer if necessary. Terhune and Epstein focus primarily on the role of UnitedHealth, the largest health insurer in the country, showing how the company has catered to members of Congress with seemingly reliable actuarial projections, and fact-filled PowerPoint presentations. "This puts a halo on us," Terhune and Epstein quote a UnitedHealth corporate flak as saying about one of its congressional outreach efforts. "It humanizes us."

These efforts are nothing like the nefarious role of the Lewin Group, an industry front group whose suspect research has abetted conservative propaganda against publicly funded health insurance, right? Liberal MSNBC cable show hosts Keith Olbermann and Rachel Maddow have called out the Lewin Group for producing corporate propaganda masquerading as research.

One problem with this picture, though: UnitedHealth owns the Lewin Group. So there you have it: the health insurers, not to mention Big Pharma, the hospital lobby and the rest, have health reform coming and going.

In fact, one might even describe this as bipartisanship in action: while the Lewin Group provides the GOP with its talking points, UnitedHealth and their friends are supplying congressional Democrats with theirs.

Industry then uses the "Astroturf" (i.e. fake grassroots) pressure of rank-and-file right-wingers to create an atmosphere in which their insiders can more effectively bend congressional ears to accept more "realistic" goals. As Terhune and Epstein note, the industry has too much invested in health care reform to simply walk away from it:

What people in Washington tend not to discuss, at least on the record, is the open secret that insurers are minimizing their forecasts of the eventual windfall they will enjoy from expanded coverage for Americans. UnitedHealth has given certain key members of Congress details about its finances and tax liability--both historical numbers and figures projected under various cost-sharing scenarios. But some on Capitol Hill are skeptical. "The bottom line," says an aide to the Senate Finance Committee, "is that health reform would lead to increased revenues and profits [for the insurance industry]...There will be [added] costs [to the companies], but we're not sure the revenues and profits will be as low as they say."

And while taking this look behind the curtain, let's dismiss the idea that the Obama administration's and the Democrats' good intentions are simply falling victim to a multimillion-dollar campaign by medical industry lobbyists.

For one thing, as the New York Times reported on August 13, Obama himself has been intimately involved in behind-the-scenes negotiations with lobbyists. For months, the administration has pursued a strategy of trying to neutralize industry opposition by encouraging industry help in drafting the bills.

The poison fruit of one of those deals, according to a secret memo the Huffington Post obtained, was a commitment from the White House to the main pharmaceutical industry lobby that it wouldn't press for any more than the $80 billion in savings that the industry pledged to implement over 10 years. Off the table, therefore, was Obama's oft-made promise (usually a sure applause-getter during his campaign) to end the Bush administration's stupid policy of preventing Medicare from negotiating for lower drug prices with the pharmaceutical manufacturers.

Although both the White House and Big Pharma have denied that such a deal was struck, it would fit perfectly within the overall strategy that the White House is pursuing.

WHAT IS likely to end up in the bill for "health insurance reform" (as the White House recently rebranded the effort)? We can get a good idea from looking at the common features of the bills that have so far cleared congressional committees.

They include features such as an expansion of Medicaid, new regulations to set minimum standards for health insurance and a requirement that all people who don't receive health insurance from their employers or from some other program like Medicare to buy insurance through an insurance "cooperative." For those at the lower end of the economic ladder, government subsidies would be available to help them.

Only through the insurance cooperative, a non-profit clearinghouse for different insurance plans, would the "public option"--publicly funded insurance--be available. Only people who meet certain income requirements would be eligible to enroll in it. The Congressional Budget Office estimated a maximum of 12 million enrollees in the public option plan--a far cry from the 100-130 million that its proponents initially proposed.

If the private insurance companies don't succeed in getting Congress to eliminate the public option altogether--something the Obama administration is signaling it may be planning to do--they have already succeeded in weakening it so thoroughly that it will pose little challenge to the big health insurers. Former Democratic National Committee chair Howard Dean has said that dropping the public option would make the bill "not worth voting for," but he and many other liberals have left the door open to accepting a small-scale plan that will provide substandard coverage.

Still to be worked out are details such as who will be taxed, and for how much, to support the plan; the rate at which individuals will be expected to share the cost of care with insurers; whether and by how much Medicare reimbursement rates to doctors and hospitals will be cut. Although these sound like details that make one's eyes glaze over, how they are resolved will have a real impact on people's lives.

For example, the industry is pushing for individuals to be responsible for 35 percent of their bills, compared to 10 percent or 20 percent in most employer-provided plans today. The Senate Finance Committee is currently looking at requiring $500 billion in "savings" (aka cuts) in Medicare as a way to help finance the health care expansion. These are hardly trivial matters.

Whatever the outcome of these details, one piece isn't really in dispute in the mainstream discussion--and that is the requirement that all Americans carry health insurance. This isn't the notion of all Americans having a "right" to health care. It's a requirement that uninsured Americans must insure themselves--a reality that has yet to sink in amid the media cacophony.

The problem with forcing the uninsured to buy insurance was aptly summed up by Dr. Steffie Woolhandler of Physicians for a National Health Program: "Private health insurance is a defective consumer product, and Congress has no business forcing uninsured Americans to buy it."

Even Obama's promise that people with employer-paid plans will be able to keep them isn't so assured, according to an August 16 Washington Post analysis of the House and Senate bills. According to the bills, "you" may want to keep your health plans, but your employer won't be barred from dropping its plan--and forcing you to buy insurance on your own.

Already the voices of "realism" and "moderation," starting with former President Bill Clinton's address to the liberal Netroots Nation conference in Pittsburgh last week, are urging liberals to accept a much less ambitious bill than they had hoped for. But people who want genuine health care reform should ask themselves if a bill written to placate the health insurers, the pharmaceutical manufacturers and hospitals deserves any support at all.

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