Thursday, September 17, 2009

Getting a Health Bill Done—Special Interest Politics Versus Public Support

It is becoming more and more clear to me that the White House health care strategy this fall is based upon a belief they have been very successful in neutralizing the health care special interests and have therefore prepared the way to a legislative victory.

Each of the key stakeholders—doctors, hospitals, drug companies, device makers, and insurers are in a terrific place should any of the health care bills pass without a public option.

Each has put a fairly small amount of “savings” on the table that amounts to only about 1% of what the group, as a whole, would have received over the next ten years.

In simple math, any of the Democratic health care bills will increase the aggregate revenue of the key stakeholders by almost twice what they would give up.

In the Baucus Senate Finance bill for example, there would be $463 billion in new spending on insurance subsidies and $287 billion for Medicaid. Another $24 billion would go to small businesses so they could buy insurance. That is a total of $774 billion in new revenue for the big stakeholders.

Health care reform will be very good for the health care business. Insurance companies would benefit from all of the new premiums and even some of the Medicaid money in states where they provide those benefits. Health care providers would receive most of this money as it was passed through by private insurance and Medicaid to pay the providers.

In turn, health care providers and insurers would give up $409 billion in Medicare and Medicaid savings. Insurance companies, drug companies, labs, and device makers would pay $88 billion in new taxes. Insurers would pay excise taxes on high cost health plans which would raise another $215 billion. Both the excise tax and stakeholder taxes would almost certainly be passed on to the customer as new premium or sales taxes. Penalties for employers who did not offer health insurance, and penalties for individuals who did not buy insurance, would add another $47 billion in federal revenue.

So, under the Finance draft, hospitals, doctors, drug companies, and medical device makers would benefit from $774 billion in new spending (less insurance company and Medicaid overhead) and only lose $409 billion in Medicare and Medicaid cuts.

Insurers would lose about $130 billion in “extra” Medicare Advantage payments but would gain $463 billion in new insurance business from federal premium subsidies, likely more than $100 billion from new premiums paid out of the pockets of these new customers now required to buy insurance, and some share in the new Medicaid expansion. Even in the Baucus bill, insurers would stand to gain something beyond $500 billion net of their Medicare Advantage cuts.

You have to give the White House and Democratic Congressional leaders credit—they have neutralized the powerful health care stakeholders.

This has to be a textbook example of smart special interest politics!

But the special interest deals had already been cut before the August recess and the uneasy public reaction to the Democratic health care bills. Those deals clearly didn’t help the Democrats last August.

The White House may have the big health care special interests onside but they cannot ram through anything so big as health care without public support.

It is clear that the recent Obama health care offensive has been aimed at turning around the public perception of the Democratic health care plans and lining up that support.

The problem the White House now has is that it is not working. While the snap polls in the wake of the speech to Congress looked good, they have not held.

As one person told me this week, “The President keeps saying the same things he’s been telling us all along as if we weren’t smart enough to get it the first one, two, or three times.”

In fact, the President’s approval ratings on health care are as bad as they have been all summer.

This from Thursday’s (September 17) Rasmussen Health Care Tracking Poll:
Just before President Obama gave his speech to Congress last week, 44% of voters nationwide supported his health care reform proposal and 53% were opposed. Today, eight days after the speech and a brief bounce, a new Rasmussen Reports national telephone survey finds that 44% support the health care plan and 53% are opposed. Absolutely no change.

It’s worth noting that support and opposition were at precisely the same levels in mid-July. In fact, other than brief blips following a nationally televised press conference by the president and his recent speech to Congress, opposition to the plan has been stable at 53% throughout July and August and now into September.

The latest figures show that 25% Strongly Favor the plan and 43% are Strongly Opposed. In late August, those figures were 23% and 43% respectively.

This suggests public opinion is hardening when it comes to the plan proposed by the president and congressional Democrats that is currently working its way through Congress.
The President and Democratic leaders have done a masterful job of managing special interest politics.

But they may have overlooked, or taken for granted, the most important special interest of all—the voter/patient.

Whether the Democrats can pass a bill or not will depend on whether wavering Democrats ultimately see voters back home for or against all of this.

One more time: You can’t ram anything through as important as health care with a 44% approval rating.
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