Healthcare reform: Obama cut private deals with likely foes

The House version of reform requires the industry to contribute $140 billion to lowering drug costs for seniors. It also allows the government to negotiate lower Medicare drug prices for seniors – an option the industry thought it had excluded with its deal with the White House and Senator Baucus. As the Senate merges the Finance and HELP versions of the bill, Senator Harkin and other liberals are demanding more concessions from drug companies, including the right of drug reimportation from Canada.

Hospitals

The leading hospital groups – the American Hospital Association, the Federation of American Hospitals, and the Catholic Health Association – agreed to accept $155 billion less in Medicare reimbursements over 10 years. In exchange, Sen. Max Baucus (D) of Montana, the Finance Committee chair, agreed to exempt hospitals from the cost-cutting regime under a proposed new Medicare Commission for its first few years of operation. That deal was not clear until the committee released legislative language on its bill. The Congressional Budget Office, for example, was not aware that hospitals were exempt from cuts when it estimated the bill’s impact on the federal deficit.

But the key to the deal from the hospital industry’s point of view is that Congress produce legislation that will insure at least 97 percent of Americans, says Rich Umbdenstock, president and CEO of the American Hospital Association. Anything less than that damages the level of care at hospitals and will not serve the needs of the newly insured, he says.

Device manufacturers

After the Senate Finance panel voted to impose a $40 billion tax, the industry rallied home-state lawmakers in Minnesota, Indiana, and New Jersey to roll it back. In a big win for device manufacturers, the House version of the bill cuts the tax to $20 billion over seven years. Last month, 14 senators wrote to Senate majority leader Harry Reid, who is leading closed-door negotiations on a final version of healthcare reform, urging him to reject the tax.

“AdvaMed appreciates the decision by House leaders to reduce the device tax,” said spokeswoman Wanda Moeblus in a statement Nov. 6. "We look forward to working with Congress and the administration on critically important implementation issues. The tax should be delayed to 2013 to give companies time to plan and adjust, and rates should be tiered by product type to reflect the diversity of the industry.”

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