Winners, Losers in Senate Health Bill

Democrats in the Senate cleared the first procedural hurdle for sweeping healthcare reform Saturday by voting to open debate on the historic legislation.

The Senate debate due to start on Nov. 30 is expected to last for at least three weeks.

Senate Democrats want passage by the year-end but the bill faces challenges before a final vote. If approved, it would have to be reconciled with a bill already passed by the House and approved again by both chambers before it could be signed into law by President Barack Obama.

The $849 billion Senate bill aims to extend coverage to tens of millions of uninsured and to cut costs in the healthcare system, which accounts for one-sixth of the U.S. economy. The measure looks to several industries to help finance it.

Following are some of the health industry winners and losers based on the Senate leadership’s bill.

WINNERS…

DRUGMAKERS

• The pharmaceutical industry kept its previous $80 billion agreement with the Senate Finance Committee to provide savings and rebates, including a $2.3 billion annual industry fee to be parceled out among companies such as Pfizer Inc, Merck & Co. Inc. and others. Wider insurance coverage could hel.p offset the industry’s costs by providing more potential customers.
• Drug companies avoided provisions found in the House bill calling for greater rebates under the government’s low-income Medicaid insurance program and price negotiation under the Medicare program for the elderly.
• However, the bill allows an Independent Medicare Advisory Board to make recommendations to lower Medicare payments for private drug insurance plans, which could in turn reduce prescription drug usage.

DEVICEMAKERS

• Medical devicemakers won a major reduction in an industry tax to be imposed over 10 years to $20 billion from $40 billion to conform with the House bill. Devicemakers had fought to eliminate the tax.

HOSPITALS

• Hospitals maintained their $155 billion, 10-year deal accepting lower government payments from Medicare and Medicaid in exchange for what the industry hopes will be an increase in insured customers.
• Hospitals, including companies such as Universal Health Services Inc. and Tenet Healthcare Corp., were exempted from decisions made by the Medicare advisory board, sparing them from future potential payment cuts.

BRAND BIOLOGIC DRUGMAKERS

• Biological drugmakers such as Amgen Inc, Roche’s Genentech unit maintained their 12-year period of exclusive sales for brand-name drugs before they would face competition from generic rivals.
• The bill calls for the development of user fees that generic biologic drugmakers would pay for the FDA to review their products. This could put them on par with brand name biologic drugmakers but could keep some generic companies from pursuing rival products. Traditional generic drugmakers do not currently face such fees though they are under consideration.
• Still, the bill would reimburse doctors 6 percent more for using generic biologic drugs over more expensive, branded ones, possibly affecting their use among the tens of millions of Medicare and Medicaid patients.

LOSERS…

HEALTH INSURERS

• The bill includes a government-run health insurance program but allows states to opt-out of the program, which insurers see as a competitive threat.
• Insurers such as WellPoint Inc, Humana Inc., Cigna Corp. and Aetna Inc. face a $6.7 billion annual industry tax, to be allotted according to their market share.
• Additionally, insurers would have to contribute to a reinsurance program to help protect insurance companies against losses. According to America’s Health Insurance Plans, that would cost insurers $25 billion in 2013, 2014 and 2015.
• Individuals must buy health insurance, but penalties are likely to be lower than the cost of insurance, starting at $95 a year per adult in 2014 and $350 in 2015. By 2017, the penalty would be $750 per adult.
• Allows the Medicare advisory panel to make recommendations on lower payments to both private Medicare Advantage plans for the elderly as well as private prescription “Part D” plans. Reimbursement rates for Medicare Advantage plans, which can offer more benefits than traditional fee-for-service Medicare coverage at a higher cost, would also be tied to a competitive bidding process.

COSMETIC SURGEONS, PRODUCT MAKERS

The bill imposes a 5 percent tax on elective cosmetic procedures such as face-lifts, breast enlargements and tummy tucks in an effort to raise roughly $5 billion. The excise tax would be collected by surgeons and other providers and it could reduce demand for their services. That in turn could cut sales for companies such as Allergan Inc. and Johnson & Johnson’s Mentor unit that make breast implants, wrinkle fillers and other cosmetic medical products.

PHARMACY BENEFIT MANAGERS

• Companies like CVS Caremark Corp. and Express Scripts Inc. must give the Department of Health and Human Services information about rebates they get from drugmakers for medications sold through retail and mail-order pharmacies compared to those through Medicare drug plans.

(Reporting by Susan Heavey; Editing by Arshad Mohammed and Sandra Maler)

Topics Politics