In an interview, Sen. Ben Nelson says Morgan Stanley believes the actual cost to the pharmaceutical industry on their deal with the White House is not $80 billion as reported, but only $20 billion.
"The Senate remains very unlikely to pass any bill containing an unbridled public plan that potentially could ultimately threaten significant price deflation for US sales," said Morgan Stanley pharmaceutical analyst Andrew Baum. "Any eventual healthcare reform is likely relatively benign to the pharmaceutical part of the healthcare value chain," Baum said in a note to clients.
In addition to the elimination of Medicare Advantage, which covers about 11 million seniors, the health care reform bill will also cut over $40 billion in Medicare on home care. These seniors will not be able to have the same health insurance plan and perhaps the same doctor as President Obama has promised.
http://www.washingtonpost.com/wp-dyn/content/article/2009/12/05/AR2009120503235.html
By Lori Montgomery and Shailagh Murray
Washington Post Staff Writers
Sunday, December 6, 2009
Heading into a make-or-break week, Senate Democratic leaders are struggling to preserve the fragile support of interest groups for an overhaul of the nation's health-care system, even as lawmakers seek to change the carefully crafted provisions that brought the groups on board.
On the floor and behind closed doors, the Senate wrestled Saturday with amendments that would impose additional cost-control requirements on hospitals, doctors and drug companies, squeezing out savings beyond the considerable sums those groups had already volunteered to give up.
Of particular concern to seniors groups is an effort to strengthen a new independent board that would determine the future of Medicare, raising the possibility of cuts much deeper than those envisioned in the $848 billion health-care bill.
President Obama is scheduled to visit the Capitol on Sunday to rally Democrats to overcome lingering disputes, including the major flashpoints of abortion and a government-run insurance option. But other unresolved issues that have attracted less public attention pose a direct threat to deals cut by the White House months ago to appease the American Hospital Association, the Pharmaceutical Research and Manufacturers of America and other industry groups whose opposition proved lethal to President Bill Clinton's 1994 quest for health-care reform.
Although those agreements helped to clear a political path for reform to move forward, many Democrats view them as overly generous.
Hospital, drug concerns
Hospital groups, for example, are quietly steaming over a measure unveiled Friday by Sens. Joseph I. Lieberman (I-Conn.), Arlen Specter (D-Pa.) and Susan Collins (R-Maine), aimed at improving quality and lowering costs throughout the health-care system. One provision would impose stiff penalties on hospitals with high infection rates -- a top priority for Collins, who is being wooed by Majority Leader Harry M. Reid (Nev.) as a potential GOP convert.
Another pending amendment causing heartburn for Reid is a proposal by Sen. Byron L. Dorgan (D-N.D.) that would permit U.S. pharmacies and drug wholesalers to import lower-priced medications from other countries, including Canada. Drug reimportation is a popular bipartisan cause on Capitol Hill. As a senator, Obama supported an earlier version of the Dorgan bill, and White House Chief of Staff Rahm Emanuel was a leading advocate of drug reimportation when he served in the House.
A preliminary estimate by the nonpartisan Congressional Budget Office shows that the Dorgan amendment would save the government about $19 billion over 10 years -- and consumers, presumably, many billions more. But the drug industry has remained loyal to the White House since striking a deal this year to offer discounts worth $80 billion to Medicare patients in exchange for the promise of millions of new customers, and Dorgan expects some colleagues to take that relationship into account.
"The pharmaceutical industry has a lot of clout," he said. "My hope is the American people also have some support here in the chamber."
The drug industry would suffer another costly blow under an amendment by Sen. Bill Nelson (D-Fla.) that would transfer about 6 million seniors eligible for Medicare into the Medicaid program, which pays much lower prices for the same drugs. Under Nelson's amendment, half the $106 billion in savings would be used to close the coverage gap in the Medicare prescription drug program known as the "doughnut hole."
Closing the hole, meanwhile, is the top priority of the AARP, which has sent signals that it could turn against the Senate bill unless Nelson's effort succeeds. Though AARP has not endorsed the legislation, the group's assurances have helped to inoculate Democrats in recent days from Republican charges that nearly $500 billion in proposed Medicare cuts -- the bill's major source of financing -- would decimate services for seniors.
AARP vs. the board
The unusual clout of AARP makes the behind-the-scenes battle over the scope of an Independent Medicare Advisory Board particularly sensitive. The board, consisting of 15 health experts, would be empowered to rein in Medicare spending if costs continued to soar after 2014, and Congress would be required to approve the panel's recommendations or enact savings plans of its own.
Senior White House officials view the board as a critical component of health reform, the enforcement mechanism to guarantee that all the well-intentioned ideas for making hospitals and doctors more efficient translate into savings for the government. But AARP and other groups have fought to weaken or kill the board, arguing that its narrow focus on Medicare could irreparably damage the program. The House has rejected the idea of relinquishing congressional control over Medicare.
"You can't, in isolation, whack away at Medicare if the broader health system isn't able to control costs, either," said David Sloane, AARP's senior vice president for government relations.
AARP and the National Committee to Preserve Social Security and Medicare, a nonprofit led by former congresswoman Barbara Kennelly (D-Conn.), are working with about a dozen Democratic freshmen on an amendment that would expand the board's duties to cover the entire health-care system, though any recommendation affecting the private sector would be strictly advisory.
The White House and other lawmakers are pushing in the opposite direction. Sen. John D. Rockefeller IV (D-W.Va.), the board's original author, wants to strip out exemptions in the first decade for hospitals and other providers who have agreed to reductions in Medicare payments. Rockefeller said he is also considering an amendment to undo changes Reid made that could tie the board's hands after 2019.
Those changes would allow the board to act only if Medicare spending rose faster than overall health spending. An earlier version, written by Senate Budget Committee Chairman Kent Conrad (D-N.D.), would have let Medicare grow just a bit faster than the national economy, a more frugal standard.
Deficit hawks, skeptical of assertions that the health-care bill would not increase deficits, say the changes would gut the board. Reid's version leaves it "essentially toothless," said Robert L. Bixby, executive director of the nonprofit Concord Coalition, which promotes balanced budgets. "It basically means that if health-care costs are growing out of control, so can Medicare."
But the endorsement of Kennelly's group is contingent on keeping Reid's language.
"If we're growing faster than overall health-care spending, it's a legitimate thing to cut the program back. But if we're doing our job and we're more efficient than health care in the general economy, then we should not have Medicare being punished," said Maria Freese, Kennelly's chief lobbyist and policy director.
