ObamaCare’s ‘Sweetheart Deal’ for PhRMA
The New Republic’s Jonathan Cohn reports that back in March, IMS Health projected slightly negative revenue growth for the pharmaceutical industry but recently changed that projection to 3.5-percent annual growth from 2008 through 2013.
“What changed?” Cohn asks. “A major factor, according to IMS, was the emerging details of health care reform . . . Put it all together, and you have more demand for name-brand drugs . . . enough to boost revenue significantly.” And:
“If this bill is implemented,” the report concludes on page 138, “an increase in prices on new drugs can be expected.”
How could this be happening? Oh yeah:
That brings us back to the deal that the Pharmaceutical Researchers and Manufacturers of America, which represents those companies, made with the White House and Senate Finance Committee . . .
The industry agreed to embrace health care reform and, later on, launched a massive advertising campaign to promote the cause. In exchange, the White House and Senate Finance–which had been asking various industries to pledge concessions that would help pay for the cost of coverage expansions–promised not to seek more than $80 in reduced payments to drug makers.
To an industry as big and profitable as the drug makers, giving up $80 billion over ten years wouldn’t seem like much of a sacrifice–a point critics started making right away. But if IMS is right, the drug industry wouldn’t even be giving up $80 billion, in any meaningful sense of the term. If anything, it’d be making more money. Maybe quite a lot of it.
Which is what I predicted, both here and here.
Cohn concludes, “the drug industry has enormous leverage in Congress.” But Cohn still supports the president’s health care takeover. Or is it PhRMA’s health care takeover?
Filed under: General; Health, Welfare & Entitlements
Abortion Funding and Health Care
President Obama’s approach to health care reform — forcing taxpayers to subsidize health insurance for tens of millions of Americans — cannot not change the status quo on abortion.
Either those taxpayer dollars will fund abortions, or the restrictions necessary to prevent taxpayer funding will curtail access to private abortion coverage. There is no middle ground.
Thus both sides’ fears are justified. Both sides of the abortion debate are learning why government should not subsidize health care. Tip of the hat to President Obama for creating this teachable moment.
Meanwhile, Catholics should be outraged at the United States Conference of Catholic Bishops (to which my grandfather served as counsel). Yes, the USCCB helped prevent taxpayer funding of abortions in the House bill. But at the same time, those naughty bishops have abandoned the Church’s doctrine of subsidiarity by endorsing the rest of the Democrats’ plan to centralize power in Washington.
As it happens, Caesar is the main source of funding for Catholic hospitals. That may explain why the bishops are so eager to render unto, ahem, Him.
Cross-posted at Politico’s Health Care Arena.
Filed under: Government and Politics; Health, Welfare & Entitlements
Thursday Links
- Obama can twist words all he wants, but a government mandate to buy health insurance is still a tax. “Think of it this way: If the government took money directly from you, then turned around and gave it to an insurance company, everyone would agree that you’ve been taxed.” Nobody considers it a tax? Even his advisers call it a tax.
- More on the health care mandate: “Compulsory health insurance could require nearly 100 million Americans to switch to a more expensive health plan and would therefore violate President Barack Obama’s pledge to let people keep their current health insurance.”
- Why the U.S. slapped a trade tariff on Chinese tires: “President Obama’s decision was guided strictly by selfish, political considerations: He felt he owed American unions for their previous and continuing support, regardless of the economic and diplomatic fallout.”
- Vital data on climate change mysteriously disappear.
- Podcast: “Twenty Years Since the Fall of Communism” featuring Czech President Václav Klaus.
The President’s Health Care Tax
As Michael Cannon discussed in an earlier post, the White House is trying to claim that health care “reform” does not mean higher taxes. This is a two-pronged issue. First, there is a mandate to purchase health insurance. Second, there is a tax (the White House calls it a fee) on people who fail to purchase a policy.
The White House claims this mandate is akin to state-level requirements for the purchase of health insurance, and that the newly-insured people will be getting some value (a health insurance policy) in exchange for their money. These assertions are defensible, but that does not change the fact that a tax is being imposed.
It might be plausible to argue that the mandate is not a tax if the value of the insurance policy to the individual was equal to the cost. But since these are people who are not buying policies, their behavior reveals that this obviously cannot be true. So this means that they will be worse off under Obama’s plan and that at least some of the cost should be considered a tax.
Filed under: Health, Welfare & Entitlements; Tax and Budget Policy
Weekend Links
- Jack of all trades and master of none: What happens when the government gets so big that it fails to fulfill its most important role.
- The hard truth about end-of-life care in America.
- If current trends continue, the U.S. government will soon spend a greater portion of GDP on Medicare and Medicaid than Canada now spends on its entire single-payer government-run system. Here’s a way to fix that.
- How about a little honesty from time to time in the tobacco policy debate?
- More drug-related chaos along the Mexican border.
- Go North Young Man! Will Wilkinson becomes “forever Canadian.”
Obama’s Health Care Speech in Plain English
Hell of a speech last night, eh? Here are a few of my favorite gems.
Under this plan, it will be against the law for insurance companies to deny you coverage because of a pre-existing condition.
Translation: I, Barack Obama, ignoring thousands of years of failed price-control schemes, will impose price controls on health insurance. I will force insurers to sell a $50k policies for $10k. What could go wrong?
We were losing an average of 700,000 jobs per month.
True. And your employer mandate would kill hundreds of thousands of low-wage jobs that would never come back.
They will no longer be able to place some arbitrary cap on the amount of coverage you can receive in a given year or a lifetime. We will place a limit on how much you can be charged for out-of-pocket expenses…. And insurance companies will be required to cover, with no extra charge, routine checkups and preventive care.
Translation: Boy! Are we going to force you to buy a lot of coverage!
I will make sure that no government bureaucrat or insurance company bureaucrat gets between you and the care that you need.
…except for the bureaucrats I proposed to put between you and your doctor.
Some… supported a budget that would have essentially turned Medicare into a privatized voucher program. That will never happen on my watch. I will protect Medicare.
Translation: I will never let seniors control their own health care dollars. I will never give up Washington’s control over your health care decisions. Mmmmuuuuhahahahahaha!
…there are too many Americans counting on us to succeed.
Translation: There are too many lobbyists counting on me to succeed: drug-industry lobbyists, health-insurance lobbyists, physician-cartel lobbyists, large-employer lobbyists, hospital lobbyists….
It’s a plan that asks everyone to take responsibility for meeting this challenge – not just government and insurance companies, but employers and individuals.
Translation: I’m going to tax the hell out of you, but I don’t want you to notice how much I’m going to tax you. So I’m going to tax employers and insurance companies, and they’re going to pass the taxes on to you. Most of the taxes won’t even show up in the government’s budget. It’s all very clever. No, seriously – just ask my economic advisor Larry Summers.
It’s a plan that incorporates ideas from Senators and Congressmen; from Democrats and Republicans – and yes, from some of my opponents in both the primary and general election.
Translation: I may have savaged your ideas in the past, called them irresponsible…risky…dangerous…whatever. But that wasn’t about principle; I just wanted to become president. Now that I’m president, I need a win. So you’ll help me, won’t you? Hey, where’s Hillary?
Summing Up Obama’s Health Care Address
Cato health care experts dissected President Obama’s address Wednesday night, providing live commentary throughout the speech.
Overall impressions:
Michael D. Tanner: Can’t see this as a game-changer. I would give him an ‘A’ on delivery, but at best a ‘C’ on substance. There were surprisingly few details and very little new.
Patrick Basham: Strikingly political/partisan rather than statesmanlike speech. Obama chose to pressure Republicans to support his plan rather than attempt to persuade them to do so. He risks a another wave of (effective) opposition from conservative talk radio & cable TV.
Michael F. Cannon: Translation: My health plan cannot work if you are free to make your own decisions.
Filed under: General; Government and Politics; Health, Welfare & Entitlements
Co-ops: A ‘Public Option’ By Another Name
Politico reports that the so-called “public option” provision could be dropped from the highly controversial health care bill currently being debated throughout the country:
President Barack Obama and his top aides are signaling that they’re prepared to drop a government insurance option from a final health-reform deal if that’s what’s needed to strike a compromise on Obama’s top legislative priority…. Obama and his aides continue to emphasize having some competitor to private insurers, perhaps nonprofit insurance cooperatives, but they are using stronger language to downplay the importance that it be a government plan.
As I have said before, establishing health insurance co-operatives is a poor alternative to the public option plan. Opponents of a government takeover of the health care system should not be fooled.
Government-run health care is government-run health care no matter what you call it.
The health care “co-op” approach now embraced by the Obama administration will still give the federal government control over one-sixth of the U.S. economy, with a government-appointed board, taxpayer funding, and with bureaucrats setting premiums, benefits, and operating rules.
Plus, it won’t be a true co-op, like rural electrical co-ops or your local health-food store — owned and controlled by its workers and the people who use its services. Under the government plan, the members wouldn’t choose its officers — the president would.
The real issue has never been the “public option” on its own. The issue is whether the government will take over the U.S. health care system, controlling many of our most important, personal, and private decisions. Even without a public option, the bills in Congress would make Americans pay higher taxes and higher premiums, while government bureaucrats determine what insurance benefits they must have and, ultimately, what care they can receive.
Obamacare was a bad idea with an explicit “public option.” It is still a bad idea without one.
Good News: Health Care Express Slows
Health care “reformers” (meaning those who want to effectively nationalize America’s medical system) have long understood that their best hope in the new political environment is to ram through legislation with the claim that it is an emergency and won’t wait. The longer the American people think about the increased cost, decreased choice, and other negative impacts of a a government takeover, the less likely they are to support it.
Thankfully, the government health express has slowed noticeably in recent weeks. Even supporters are coming to doubt that legislation can be approved before Congress goes home in August. Reports Politico:
Health care reform proponents are growing pessimistic that they can meet President Barack Obama’s August target for passing a bill — saying the next four weeks must fall together perfectly, without a hitch or a hiccup.
The number of weeks that’s happened recently? Zero.
A series of setbacks has made the task of completing floor votes in both chambers virtually insurmountable, given the plodding pace of the Senate. The official line from the White House and the congressional leadership is it’s possible, but privately, there are a dwindling number of aides who would put money on it.
And without a deal by August, the ripple effects could start to endanger the prospect of health care reform this year altogether — chief among them, the closer it gets to the 2010 midterm elections, the harder it will be to get members to make the toughpolitical decisions needed to vote on a bill.
This is good news. The U.S. health system needs fixing. But the more rushed they are, the less likely policymakers are to do the right thing. We need a medical system that is more responsive to consumers and market forces rather than to political forces and government dictates.
Filed under: Government and Politics; Health, Welfare & Entitlements
If You Have Health Insurance Today, You Can Keep It (or Not)
During his speech yesterday to the American Medical Association in Chicago, President Obama said not once, but twice that if you have health insurance today and like it, you will be able to keep it under his reform. Shortly afterwards, the congressional budget Office released its initial scoring of the health care bill drafted by Sen. Edward Kennedy (D-MA) and the Senate Committee on Health Education Labor and Pensions (HELP), concluding that it would result in roughly 23 million people losing the insurance they currently have. Oops!
Obama’s Health Care Speech
In his speech to the American Medical Association today, President Obama repeatedly denied that he supports “socialized medicine” or “government-run” health care.
But what is important is not the terminology, but under the proposal supported by the president, government would control more and more of our health care decisions. Government would compel Americans to purchase health insurance, controlling its content, how much we pay, and the relationships between insurers, doctors, and patients. Government bureaucrats would determine whether Americans receive certain medical services.
There may be no better salesman than Barack Obama, but his product is deeply flawed. The so-called “Public Option,” or government-run plan, that President Obama supports would slowly but inexorably lead to the destruction of the private insurance market and the imposition of a government-controlled single-payer system.
But the problems with Obamacare go well beyond the Public Option, which the AMA opposes. The mandates on businesses and individuals, taxpayer subsidies, insurance regulation, and government interference in private medical decisions pose serious threats to American businesses, taxpayers, and most importantly patients.
That’s bad medicine, no matter what you call it.
Cato on Facebook
Cato on Twitter
Cato on YouTube
Cato Tweets