Interest Groups Redouble Fight on Healthcare Reform

As healthcare reform starts to look more and more inevitable, various interest groups are stepping up their efforts to influence the legislation. And, while special interests have traditionally been branded as profit-driven at the expense of the public interest, some of them have potent arguments.

Take Medicare HMOs. Reformers in both the House and the Senate want to trim government payments to Medicare Advantage plans, citing the fact that they are paid 14 percent more, on average, than the cost of traditional Medicare. But in Florida, 950,000 seniors-29 percent of the total-belong to Medicare HMOs, which are paid only slightly more than fee-for-service Medicare in the Miami area. Because the HMOs are more efficient than the providers that supply services to seniors in the traditional government program, they can offer free dental care, gym memberships, and other services that the fee-for-service program doesn't cover. So members of these plans are not thrilled about the prospect of health care reform cutting HMO payments to about 80 percent of traditional Medicare, if the competitive bidding provision of the Senate Finance Committee bill is adopted.

On the other hand, Medicare HMOs across the land made $3.3 billion in profits for their owners last year, partly because of the favorable provisions in the Medicare Modernization Act of 2003. The AARP supports cutting payments to these and other Medicare Advantage plans, because people in the traditional program are subsidizing those in the Medicare HMOs through higher monthly premiums.

Then there are children's hospitals, which complain that they have more to lose than full-service hospitals do under the proposed reforms. The National Association of Children's Hospitals claims that reform could cut their government payments by as much as $876 million over 10 years. That's above and beyond the $155 billion that all of the nation's hospitals agreed to surrender in return for getting millions of new insured customers. The problem with this theory, from the pediatric hospitals' point of view, is that they won't be able to counterbalance the reduction in federal "disproportionate share" payments for charity care, as the full-line hospitals will, with the new business. The reason is that far more children than adults already have coverage, partly through Medicaid and the State Children's Health Insurance Program.

Medical device manufacturers are also fighting an effort to tax them to raise money to cover the uninsured. The measure that the House of Representatives passed last weekend would levy a tax of $20 billion on the device makers, half the level of the Senate Finance Committee bill's toll. Some manufacturers still oppose any levy, but national lobbyists for the industry are said to be reconciled to the lower amount. If the final Senate bill retains the $40 billion price tag, however, expect a major lobbying battle.

So here's the good, the bad, and the ugly: Reform will create winners and losers. But in the final analysis, everyone will benefit if the end result actually moves us closer to a sustainable healthcare system.

Health Wonk Review: Louise Norris of Colorado Health Insurance Insider has done a particularly well-written, insightful edition of this indispensable guide to the nation's wonkers.