The Health-Care Coalition is Breaking Apart

FOR THE PAST YEAR key special-interest groups in Washington have been trying to cooperate with health-reform proposals. Their strategy has been to get a “seat at the table” so they wouldn’t be “on the menu,” and so they could protect their privileged positions in health care.

It amounted to a powerful coalition in support of a massive health-care overhaul by the federal government.

But now that coalition seems to be unraveling. A new report from PriceWaterhouseCoopers, commissioned by the insurance industry, was the opening shot. The report found the legislation passed Oct. 13 by the Senate Finance Committee would raise family premiums by $4,000 a year.

The White House immediately responded by calling the report distorted, flawed and self-serving. Sen. Chuck Schumer (D.-N.Y.) threatened to punish the industry by removing current federal antitrust exemptions that have been in place since 1946.

The happy days of feel-good cooperation are over.

This is not surprising. It is easy to support generalities and platitudes such as “let’s cover all the uninsured, while lowering costs and improving quality.” But when it gets down to the details of who gets how big a share of the pie, suddenly the knives come out.

There is no question that the current bills will raise the cost of coverage for most consumers. Ignoring pre-existing conditions and charging everyone the same premium will mean young, healthy people will have to pay far more than the coverage is worth to them. They will resist that, possibly to the point of deciding simply to pay the fine and stay uninsured. All of those healthy consumers that the insurance industry was counting on getting a windfall of premiums for covering may not be there after all.

But the insurance industry is probably just the first to leave its seat at the table. Physicians probably will be next. The Senate Finance bill is “deficit-neutral” only because it assumes there will be a 25-percent cut in physician payments under Medicare in 2011. Other provisions assume that a federal commission will look over physicians’ shoulders to reward some behaviors and punish others.

The American Medical Association is already getting substantial pushback from its members and is facing a contentious meeting of its House of Delegates in November.

Support from the pharmaceutical industry is contingent on an agreement with the White House that there would be no price controls and no “reimportation” of drugs from other countries. Influential members of Congress have said they won’t be bound by that deal.

The hospitals have been supportive because they assumed virtually all Americans would suddenly be well-insured, and costs for uncompensated care would drop. But the best-case scenario from the Congressional Budget Office estimates that 25 million people would remain uninsured after 10 years. Many millions of others will be covered by Medicaid programs that don’t pay hospitals enough to cover their medical costs.

Organized labor always has supported “universal” health care, but the reality that labor’s hard-won benefits may be subject to a 40-percent excise tax will be hard to explain to the membership.

All of these groups, and many others (nursing homes, insurance brokers, equipment manufacturers, and so on), are coming to realize that life under these reforms will be no better, and may be a whole lot worse, than under the current system.

These groups have all stayed at the table to see what the main dish would look like. Now that they have seen it, they may decide not to stay for dessert.

Greg Scandlen is director of Consumers for Health Care Choices at the Heartland Institute, a conservative think tank that receives money from business groups (gscandlen@ heartland.org).