You are using an outdated browser.
Please upgrade your browser
and improve your visit to our site.
Skip Navigation

The Health Care Lobbies: A Field Guide


The big national insurers that cater to large businesses can survive, and even thrive, in a reformed health care system. What regulation will cost them in profits, they can make up in volume. But those insurers that focus on individuals and small businesses could be in trouble, since they make most of their money by picking and choosing the healthiest enrollees. Reform would prohibit their basic business practices. Meanwhile, both groups are dead set against a public insurance option. Is there a way to finesse these concerns--and bring the insurers on board? Or should reformers tell them to stick it? It all comes down to the votes. One discouraging sign for the insurers: Nebraska Senator Ben Nelson has indicated he won't filibuster a public plan. Maybe those donations to his campaign weren't so well spent after all.


Reform would give employers more predictability--and, over time, it should at least soften the blow of health care costs. But the big employers are loath to give up control over what their employees get. And small employers fear they'll be required to pay for benefits, without sufficient subsidies or exemptions. These differences can be negotiated, but not easily. A lot will depend on the willingness of progressive-minded CEOs to break with their colleagues and step out in front of the reform effort. Watch for names like Steve Burd of Safeway, Carl Camden of Kelly Services, Howard Schultz of Starbucks. And don't be surprised if somebody from Wal-Mart has something to say, too. Lately even the bete noire of liberals has been feeling the squeeze of rising health care costs.


Historically, the most entrenched and effective opponents of reform, the medical community has splintered--and evolved--in the last few decades. Generalists tend to be more liberal, specialists more conservative. But managed care convinced virtually all doctors that private-sector bureaucracies can be as frustrating as public-sector ones. They're also desperate for malpractice reform and a permanent adjustment of Medicare reimbursements, so that fees don't automatically ratchet down every year. Progressives could be perfectly happy with either move; among other things, they could tie malpractice reform to compliance with quality guidelines, giving them a win-win scenario.


Along with the insurers who work the individual and small business markets, hospitals are proving to be the most obstreperous special interest. A serious focus on reducing the cost of medical care would require some serious changes in the way hospitals do business. It's not coincidental that, after the White House summit in May, the American Hospital Association was the organization that started hastily backpedaling. And the same hospital executives who are complaining to their trade group also know how to reach their congressmen.


Profit margins for the drug industry will likely go down with reform; that much seems certain. Maybe the government will start wielding more bargaining power. Or maybe it will start making clear which drugs add real value--and which ones just generate profits. Still, Pharma can look for a silver lining. With the pipeline for breakthrough drugs drying up, the prospect of millions of extra customers offers the appeal of financial stability. Besides, the manufacturers learned from the Medicare drug benefit that they can make money on government programs, assuming they have friends in Washington designing the program. So they're not trying to blow up reform--yet. If enactment seems likely, they'll focus their energy on trying to make sure it's not too unfriendly.


Labor is united behind reform and has already put its boots on the ground. If reform passes, it will be in no small part because of union advocacy. But, within the house of labor, unity breaks down over details. Publicemployee and industrial unions don't like the idea of curbing the tax break on health plans, since their members--older, and beneficiaries of generous contracts over the years--have relatively expensive plans. But the Service Employees International Union, which has practically branded the health issue as its own, will do just about anything to get universal coverage--even if it means alienating some union brothers and sisters in the process.

By The Editors