ACA a Boon to Special Interests

Tim Carney continues to highlight the role special interests— including the largest players in the health care industry—played in crafting the socalled Affordable Care Act, dispelling the myth that President Obama took on these vested interests:

Obama largely let the drug lobby write the bill. I was screaming this at the time, and recently published memos have cemented this fact. The drug lobby isn’t merely a huge part of the health industry’s lobbying force, it’s the single largest part. In 2009 and 2010, Pharma and health products was the No. 1 industry in federal lobbying according to the Center for Responsive Politics.

The Pharmaceutical Research & Manufacturers of America spent more on lobbying than any other single-industry lobby group in 2009. Number 2 was the American Medical Association, which also endorsed the bill. In the health sector, No. 3 was the American Hospital Association, which wholeheartedly supported the bill.

In a PA Independent piece on state lawmakers’ reaction to the proposed Medicaid expansion, Sharon Ward—who often demagogues about “corporate greed”—acknowledges that it is big health care companies that are most likely to benefit from billions in new taxpayer subsidies.

Sharon Ward, executive director of the legislative think tank Pennsylvania Budget and Policy Center, said expanding Medicaid would help reimburse hospitals for uncompensated care, while other federal funding measures expire.

“It’s more dollars coming into the state going to our health-care providers,” Ward said. “It’s critically important that this occur.”

The SEIU Union—another special interest group that lobbied for the Affordable Care Act—also admits that the Medicaid expansion is really intended to benefit hospitals’ bottom line.

Neal Bisno is the executive director of SEIU Healthcare PA, a union representing 20,000 health-care workers in the commonwealth. Bisno said the group will work with legislators to try to enact the Medicaid expansion, as the effect on hospitals would be positive because of other cuts to reimbursements.

“Hospitals and other health-care providers that are facing federal and state payment cuts are really counting on the Medicaid expansion to help them provide quality care,” he said to PA Independent. “Frankly it’s fiscally irresponsible to not implement the Medicaid expansion. The funding of the Medicaid expansion is heavily subsided by the federal government.”

There are three main problems with the logic of these special interest groups. First, there is no such thing as free “federal” money. These subsidies will be paid for through dozens of new and higher taxes.

Further, the Medicaid expansion will impose additional costs on states, causing further strain on their budgets. Pennsylvania is already facing a four-alarm fire with out-of-control Medicaid costs.

Finally, expanding Medicaid does not guarantee care. Because of low-reimbursement rates and bureaucratic red tape, many doctors won’t even see Medicaid patients. This results in longer wait times and lower quality care for Medicaid beneficiaries. Additional cuts to reimbursement rates – which is about the only thing states can do to reduce Medicaid spending without federal flexibility – will only make a bad situation worse.

These problems with the new health care law were the topic of a forum I participated in last week. In contrast, the Commonwealth Foundation has outlined a path to real Medicaid reform.