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Healthcare reform: Obama cut private deals with likely foes

President Obama struck agreements with insurers, doctors, drug companies, and hospitals to keep them from turning against healthcare reform. What are they?

By Staff writer / November 6, 2009

President Barack Obama makes a surprise visit to the daily briefing to comment about the health care reform bill at the White House in Washington, Thursday.

Jim Young/Reuters

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By the time the Clinton administration launched its bid for sweeping healthcare reform in 1993, corporate interests opposed to the idea had already taken the field. Health insurers alone raised and spent $50 million in advertising to sink the bill. Together, insurers, doctors, hospitals, and drug manufacturers spent more than $100 million on lobbying. The bill never got off the ground.

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That’s the scenario the Obama administration set out to avoid.

At a May 11 White House meeting that US officials called a “game changer,” drugmakers, the insurance and hospital lobbies, and the American Medical Association, representing physicians, committed to finding a total of $2 trillion in savings in the healthcare system over the next 10 years. Hospitals and the pharmaceutical industry even agreed to fund a multimillion-dollar ad campaign to promote reform.

Call it a preemptive strike. Early on, the Obama White House reached out to key corporate stakeholders to enlist their support – and, it’s becoming clear, cut them deals to get it. The challenge now, as the House of Representatives is poised to vote on reform legislation, is that not everyone in Congress approves of the private handshakes. Balky Democrats in particular fret that President Obama did not extract enough from these stakeholders in return for the windfall profits they stand to gain if all Americans are required, for the first time, to obtain health insurance.

The White House acknowledges that drug manufacturers agreed to contribute $80 billion in product discounts over 10 years to reduce the cost of brand-name prescription drugs. In turn, Big Pharma stands to get some 30 million new customers and White House help in holding at bay congressional demands for further concessions.

Hospitals, for their part, agreed in July to kick in $155 billion over 10 years toward lowering healthcare costs, the White House confirms. The Senate Finance Committee, a key panel drafting reform legislation, worked out most of the deal’s specifics; the White House agreed to an amount. In return, hospitals got some assurances that government will adequately reimburse them for services. Call it a political insurance policy: If healthcare reform includes the so-called public option (the choice of a government-run insurance plan), hospitals don’t want to be forced to accept Medicare rates because they don’t cover the providers’ full cost of care.

Some stakeholders, such as medical equipment providers, were invited to the table but didn’t cut a deal with the White House and faced stiff penalties as a result. The Senate Finance panel assessed the industry $40 billion over 10 years in its bill, which passed the committee Oct. 13.

“We are committed to working with Congress and the White House to advance health reform and to eliminate the $40 billion tax on medical devices and diagnostics,” said Stephen Ubi, president and CEO of the Advanced Medical Technology Association (AdvaMed), the industry trade group, in a statement after the Oct. 13 Finance panel vote.