Following the Money in the Health Care Debate

NY Times By REED ABELSON

Congress appears ready to confront one of the nation’s most contentious issues — health care reform — and arguments will fill the air in the coming months.

Much of the discussion so far has focused on President Obama’s proposal for a government-sponsored health plan that he says will reduce costs. Insurers and doctors argue it will limit patient choice. Drug companies warn that the quality of care could be compromised.

But Mr. Obama’s proposal is only one of many that await Congress as it wrestles with how to rein in exploding health care costs while taking care of the country’s nearly 50 million uninsured. The size and complexity of the issue are daunting. To help understand what’s going on, you need to follow the money.

Roughly $2.5 trillion is at stake, the amount the nation spends each year on health care, nearly a fifth of the American economy. How that money is divided up — or prevented from rising at its current pace — is at the center of the debate. Many doctors, insurance companies and drug companies say they fear that their revenues could shrink significantly and patient care could be threatened.

Their arguments may prove to have merit. But “people are voting with their own economic interests,” said Les Funtleyder, a Wall Street analyst who is following the debate closely for Miller Tabak & Co. in New York.

When you hear nothing from one of the interest groups on an issue that is part of the larger debate, you can assume the silence means it has no financial stake in the outcome, he said. “You wouldn’t probably weigh in if you don’t have any skin in the game because if you weigh in, it makes you more of a target,” Mr. Funtleyder said.

What all of the interest groups reliably support is any new program that would expand coverage to the uninsured. Such a program would translate into tens of millions of new, paying customers for hospitals, doctors, insurers and drug makers.

But what worries those groups is the accompanying talk in Washington about how to address the skyrocketing cost of health care, since any decline in spending would correspond to a reduction in revenues. The discussion has become particularly heated over exactly how the government will find the savings necessary to help generate the $1 trillion or so that the government will need over the next decade to pay for universal coverage. The nation’s doctors, for example, say they wholeheartedly support health care reform. But the American Medical Association has a long history of being opposed to legislation that threatens the status quo. It opposed the creation of Medicare more than 30 years ago.

What concerns doctors about a government-run insurance program that looks like Medicare is the possibility that it will pay like Medicare, said Robert Laszewski, a health policy consultant in Alexandria, Va. “Medicare pays doctors 80 percent of what an insurance company pays,” he said. “If you get a public plan, the doctors are going to get a 20 percent pay cut.”

But doctors are also likely to disagree among themselves over how different types of physicians should be compensated. Congress is thinking about raising the pay of primary-care doctors — general practitioners, family physicians and the like — as a way to encourage them to more actively oversee the care of patients and reduce expensive visits to specialists and hospitals.

The specialists — the cardiologists, neurologists, surgeons and others — may have a different take on the discussion, Mr. Laszewski noted, especially if Congress cannot raise salaries of primary-care doctors without taking money from the highly paid specialists. “The question is, how are you going to help the primary-care doctors without cutting the cardiologist and the other specialists?” he asked.

But even the family physicians, who stand to benefit the most, say they are opposed to a government-run plan if it reimburses them at the Medicare rate.

Another group with a lot to win or lose is the nation’s private health insurers. With the number of people who are privately insured through their employer or their own policy not increasing, insurers are eager to find a new source of business. Health reform promises them at least some new customers who cannot afford insurance now but who might receive government help to pay for coverage.

But the trade association, America’s Health Insurance Plans, has clearly staked out its opposition to any kind of government-run health plan, which it says would have an unfair advantage. The trade group fears its members would be driven out of business as the government uses its purchasing power to demand much lower prices from doctors and hospitals.

Karen Ignagni, the chief executive of the association, has criticized the government’s track record in running Medicare as a good reason not to expand government health insurance beyond the elderly and disabled. She says the program has done a poor job in taking care of people when they are very sick. “Medicare has not effectively coordinated care, addressed chronic illness, or encouraged high performance,” she recently told Congress.

As one way of finding savings to pay for health reform, Congress is also discussing lowering payments to private insurers who are now being compensated to cover some Medicare patients. The A.M.A., perhaps mindful that such savings would not come from doctors if it comes from insurers, says it supports such cuts.

The hospitals have also voiced concerns about a government-run plan. They, too, are paid much less by Medicare than they are by private insurers.

The nation’s drug makers are also lining up against a public plan, predicting that it would ultimately lead to a government takeover of the entire system. “I don’t think that American patients would — or should — accommodate themselves to the long waits for care, limited options and other forms of rationing that inevitably accompany government health care monopolies,” John C. Lechleiter, the chief executive of the drug maker Eli Lilly & Co., recently told a meeting of business leaders. “American doctors and patients need to retain the ability to make choices based on the real value of treatment options.”

But drug companies are also wary of the government’s pull in demanding lower prices for their products than the insurers they deal with today. “The more government intervention you have, the less payment you have,” said Mr. Funtleyder, the analyst.

These companies are also concerned that the government will play a greater role in determining the effectiveness of different drugs and medical devices and use that information to decide which should be covered and how much the government will pay for those products. Insurers, not surprisingly, support the government’s taking a harder line against drug and medical device makers so they don’t have to.

As Congress gets closer to finalizing any legislation, the opinions of the many stakeholders are likely to become more strident and self-interested, Mr. Laszewski predicted. As in watching the last lap of the Daytona 500, he said, there will be attempts by some of these groups to break out of the pack. “When you get the last lap, there are no friends — it’s me, me, me,” he said.