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Now the Health Care Lobbying Really Begins

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If President Obama thought that ramming through his health care bill would help reduce the role of lobbyists and special interests, he was as mistaken as he was about health insurance premiums declining by $2,500 by the end of his first term. Now that the Institute of Medicine (IOM) has released its essential benefits recommendations (i.e., the coverages a health insurance policy must include), health care lobbying will explode—just like premiums.  And that’s not a coincidence.

ObamaCare requires people to have health insurance, so the government must decide what is “qualifying coverage” in order to determine who is complying with the law—and who’s breaking it and subject to fines.

The IOM just made its recommendations, which were very general and stressed keeping the package affordable for small business.   Now the Department of Health and Human Services (HHS) with the all-powerful—because the legislation made her so—HHS Secretary Kathleen Sebelius will rule from on high.

Every person with a medical condition, every health care provider, and every manufacturer that makes medical products, such as pharmaceuticals and medical implants, has a strong incentive—a “special interest”—in ensuring that their specific area is covered in the essential benefits package.

Thus hordes of patients, hospitals, manufacturers, insurers and health care providers, and their associations and advocacy groups, will plead their case to whomever they think can affect the decisions.

Most of them—especially if they are not standard medical doctors delivering routine medical care—will claim that by covering their particular product or service patients will get better care at lower costs.

In most cases, the claim is not true.  That doesn’t mean these products or services are bad; they may be widely used by satisfied patients.  It just means that covering them will likely increase health care spending, not reduce it.

There are three primary reasons why patients and providers lobby to be included.  If patients are insulated from the full cost of care by insurance coverage:

  • They spend less money out of their own pockets;
  • They will likely consume the product or service more often or in larger quantities; and
  • Providers can raise their prices because patients are less price sensitive—ultimately negating the “we charge less” argument made by some.

If the lobbyists and special interests are successful, the essential benefits package will be very comprehensive and very expensive—something the IOM warned against.  Doing so creates fiscal problems for businesses that are supposed to buy the coverage, and because ObamaCare subsidizes coverage within the exchanges up to 400 percent of poverty.  The more expensive the coverage, the more taxpayer money is needed.

How do we know all of this will happen?  Because it’s been happening in the states for decades.

Before ObamaCare, health insurance was regulated almost entirely by the states.  In every legislative session, the special interests—which I do not use pejoratively, as the president and many others do; they have a constitutional right to a “redress of grievances”—would reach out to state legislators in every state trying to get them to mandate that insurance cover their particular concern, always claiming that doing so would lower costs.  In some cases the claim is just bizarre.

Some years ago a television network asked me to respond to a new study from the in vitro fertilization lobby, which claimed that by requiring health insurance to cover $15,000 in vitro procedures, health care spending would go down.

The Council for Affordable Health Insurance—full disclosure: I ran the organization from 2001 to early 2010—tracked these state mandates and published a state-by-state list of them at the end of a legislative session.  We also included an actuarial assessment of how much the mandates would increase the cost of an average health insurance policy.  In the 1960s there were only a handful of state mandates; by 2010 there were 2,156, according to CAHI.

To be sure, most of the mandates have a relatively small cost impact—less than 1 percent.  But by the time a state has 40 or 50 such mandates, about the average, there could be a significant increase in the cost of a policy.

If advocacy groups and industry associations were willing to spend lots of money targeting one state legislature lobbying for mandated coverage of their issue, how much more will they be willing to spend at the federal level to be included in coverage for an estimated 68 million Americans in the exchanges?

These groups will reach out to members of Congress, the Obama administration, HHS officials, and any K Street lobbying group that promises access to someone who has the right connections.

If the coverage is as comprehensive as most Democrats and the special interests want, it will be very expensive, making a mockery of the president’s claim that it will be “affordable” coverage.

Defenders of the legislation will then lash out against the greedy insurers and health care providers, and lawmakers or regulators could begin the process of imposing price controls—a process made easier by Sebelius’s health insurance “rate review” regulations.

And we will have set the stage for a massive regulatory takeover of an increasingly expensive health care system, where patients lose and lobbyists win.

Merrill Matthews is a resident scholar at the Institute for Policy Innovation in Dallas, Texas.  Follow at http://twitter.com/MerrillMatthews