Familiar Players in Health Bill Lobbying

July 6, 2009

Washington Post

By Dan Eggen and Kimberly Kindy

The nation’s largest insurers, hospitals and medical groups have hired more than 350 former government staff members and retired members of Congress in hopes of influencing their old bosses and colleagues, according to an analysis of lobbying disclosures and other records.

The tactic is so widespread that three of every four major health-care firms have at least one former insider on their lobbying payrolls, according to The Washington Post’s analysis.

Nearly half of the insiders previously worked for the key committees and lawmakers, including Sens. Max Baucus (D-Mont.) and Charles E. Grassley (R-Iowa), debating whether to adopt a public insurance option opposed by major industry groups. At least 10 others have been members of Congress, such as former House majority leaders Richard K. Armey (R-Tex.) and Richard A. Gephardt (D-Mo.), both of whom represent a New Jersey pharmaceutical firm.

The hirings are part of a record-breaking influence campaign by the health-care industry, which is spending more than $1.4 million a day on lobbying in the current fight, according to disclosure records. And even in a city where lobbying is a part of life, the scale of the effort has drawn attention. For example, the Pharmaceutical Research and Manufacturers of America (PhRMA) doubled its spending to nearly $7 million in the first quarter of 2009, followed by Pfizer, with more than $6 million.

The push has reunited many who worked together in government on health-care reform, but are now employed as advocates for pharmaceutical and insurance companies.

A June 10 meeting between aides to Baucus, chairman of the Senate Finance Committee, and health-care lobbyists included two former Baucus chiefs of staff: David Castagnetti, whose clients include PhRMA and America’s Health Insurance Plans, and Jeffrey A. Forbes, who represents PhRMA, Amgen, Genentech, Merck and others. Castagnetti did not return a telephone call; Forbes declined to comment.

Also inside the closed committee hearing room that day was Richard Tarplin, a veteran of both the Department of Health and Human Services and the Senate, where he worked for Christopher J. Dodd (D-Conn.), one of the leaders in fashioning reform legislation this year. Tarplin now represents the American Medical Association as head of his own lobbying firm, Tarplin Strategies.

“For people like me who are on the outside and used to be on the inside, this is great, because there is a level of trust in these relationships, and I know the policy rationale that is required,” Tarplin said in explaining the benefits of having government experience.

But public interest groups and reform advocates complain that the concentration of former government aides on K Street has distorted the health-care debate, and that it further illustrates the problem posed by the “revolving door” between government and private firms.

“The revolving door offers a short cut to a member of Congress to the highest bidder,” said Sheila Krumholz, executive director of the Center for Responsive Politics, which compiled some of the data used in The Post’s analysis. “It’s a small cost of doing business relative to the profits they can garner.”

Click here for the full story from the Washington Post.

Reform Needs Healthy Life Incentives

June 29, 2009

Wall Street Journal

by Scott E. Harrington

Much of the debate over health-care reform has focused on whether there should be a government insurance plan to compete with private plans. This focus is understandable given the stakes. Because equal competition between a public insurer and private plans is impossible, public coverage would crowd out private coverage and make a public, single-payer system inevitable.

Another important issue is the scope of regulation that will likely apply to private health plans regardless of whether a public plan is created.

Given budgetary and affordability concerns, the insurance market proposals by House Democrats and Sens. Edward Kennedy and Chris Dodd would permit some variation among plan benefits and cost-sharing provisions, such as deductibles and coinsurance percentages. The proposals otherwise would impose a regulatory straightjacket that would put upward pressure on health costs, thus undermining a major reform objective and creating additional pressure for government-mandated cost controls. Whether legislation being developed by Senate Finance Chairman Max Baucus will go as far isn’t clear.

The House Democrat and Kennedy-Dodd proposals do all they can to prevent health-insurance premium rates and coverage terms from reflecting the health status — and thus health-related behavior — of any insured person. Health status would not be permitted to affect coverage decisions, terms or pricing. Age-related variation in premium rates would also be significantly constrained in relation to risk.

Benefit design and marketing of coverage would be regulated in an attempt to keep insurers from rewarding healthier people. Retrospective “risk adjustment” would be employed to reallocate funds from insurers that experience lower medical costs to those with higher costs. If an insurer were to attract relatively more healthy people — or keep more people healthy — it would run the risk of paying some or all of the gains to competitors.

The proposals’ strong aversion to having insurance rates or coverage terms related to health status reflects the view that either the need for health care is immune from individual control, or that a person should not be financially responsible for behavior that contributes to poor health, or both. These views are difficult to reconcile with the consensus that unhealthy behavior contributes significantly to obesity, diabetes, heart disease and cancer, and thus accounts for a substantial proportion of health-care costs.

Regulation that seeks to divorce insurance rates and coverage terms from health status would deter potential innovation that might provide meaningful financial incentives for healthy behavior and lower costs.

Incentives for healthy behavior have traditionally been weak under employer-sponsored health insurance, in part due to federal and state regulation that constrains the ability to reward healthy behavior. Turnover among employees and policy holders also reduces incentives to make long-term investments to promote healthy behavior.

Health-care reform should seek to encourage rather than discourage private innovation to provide incentives for healthy behavior. Safeway’s program offering employee premium discounts related to tobacco use, weight control, blood pressure and cholesterol levels is a good example.

The Democratic proposals would retard or even strangle such innovation. Rather than strengthening incentives to invest in the long-term health of policy holders, they would make it more difficult to earn a reasonable return on such investment. They also send a message that a healthy lifestyle earns no financial reward for reducing medical expenses.

Financial incentives for healthy behavior have the potential to significantly reduce costs without reducing quality. A failure of health-care reform to permit or incorporate such incentives would make coercive government measures to control costs more likely. These controls might include limits on provider reimbursement, comparative-effectiveness or cost-benefit criteria that must be met for care to be reimbursed, or budget caps. The results would be less health — more obesity, diabetes, heart disease, and cancer — and eventually less health care.

An aversion to having health-insurance rates and coverage linked to individual behavior may be on the verge of becoming national policy. If that happens, the unintended consequences could be very costly.

Click here to read the full Opinion piece in the Wall Street Journal.