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The politics of Healthcare need reform

Democrats Hoodwink the Health Lobby

Kim Strassel, WSJ, Jul 2009

When Democrats recall their HillaryCare defeat, they like to decry those Harry & Louise ads.  What they choose not to recall so publicly is the help they got -- and are getting again -- from folks like Karen Ignagni.

The left today gets mileage out of claiming it was a unified private health sector that killed the 1993-94 Clinton health plan. It's a clever historical rewrite, offering not only an excuse for their prior defeat, but a bogeyman for today's health-care battle.

It's also allowed them to obscure the real lesson they took away from HillaryCare. Namely that, handled properly, industry groups can be played like banjos. Democrats are employing the same tactic this time -- only more deftly and with more muscle -- and the titans of the private sector are rambling straight into the ambush.

The old hands of the Clinton health fight know there never was uniform opposition to the government plan. Plenty of bigger players figured they could craft the regulations for bigger profits. In 1993 a number of insurance giants cut ties with their trade group, the Health Insurance Association of America (HIAA). Prudential, Cigna and others were salivating over Clinton proposals to pay for insurance for millions of uninsureds. The giants were in line to suck up these customers. They didn't appreciate the grousing of smaller association members who opposed regulations that would crowd them out.

Representing many HMO biggies was a one-time AFL-CIO employee named Karen Ignagni. While the rump HIAA was running its Harry & Louise ads, others like Ms. Ignagni were running with the Clintons to craft a regulation to the big insurers' liking.

The insurers have today reunited under a group called America's Health Insurance Plans. Its CEO? Ms. Ignagni. She, along with Billy Tauzin, head of the Pharmaceutical Research and Manufacturers of America, the American Hospital Association's Rick Umbdenstock, and others are back in Washington convinced they can outsmart, or at least outrun, the politicians. Democrats are happy to let them think so.

The industry's calculation is that by cutting deals, it can set the terms of its contributions to "reform" and even wangle upsides. The insurers came first, promising to squeeze $2 trillion in costs out of the system. Democrats are letting Ms. Ignagni believe that in return she'll get a mandate to require all Americans to carry insurance (which her members will supply), and be spared a public option (which would decimate her industry).

Mr. Tauzin came along, pledging that drug makers would cough up $80 billion to narrow a gap in Medicare drug coverage. He's been led to think Washington will forgo its plans to allow drug reimportation or give him a hand on generics. The hospital groups this week agreed to $150 billion in future Medicare and Medicaid cuts, in return for assurances it wouldn't be worse. The doctors are next, also seeking guarantees on Medicare payments.

Democrats have complemented their smiling encouragements with behind-the-scenes threats. After retaking the House in 2006, the party made clear that companies that did not hire Democratic lobbyists would not get a hearing in Washington. The ruling party is now seeing the fruits of its bullying. These days, a meeting of health-care lobbyists is better described as a reunion of Senate Finance Chairman Max Baucus's former aides. Health-care lobbying has been turned on its head: The new cabal of Democratic lobbyists does not exist to protect the industry from Congress. It exists to present Democratic ultimatums to business.

When Senate Republicans last month hosted a meeting to discuss reform ideas, Mr. Baucus's office called in a block of these Democratic lobbyists to deliver a message. "They said, 'Republicans are having this meeting and you need to let all of your clients know if they have someone there, that will be viewed as a hostile act,'" reported one attendee to the Baucus caucus. Message to companies that don't agree with their Beltway lobbyist: Pull a Rick Scott (the former hospital executive running ads critical of ObamaCare), and you'll be sorry.

All these actions -- the White House meetings, the strung-out negotiations, the muzzling -- have been taken with one aim: To buy silence. President Barack Obama is committed to a public option. Liberal Democrats intend to make the private sector fund their plans. They figure by the time they drop a bill that contains odious elements, it'll be too late for any industry player -- big or small -- to cut a Harry & Louise ad.

Industry players this week got a glimpse of how they will be treated. House Energy and Commerce Chairman Henry Waxman dismissed the $80 billion drug deal, claiming it did not have House support, and moreover that the White House "told us they're not bound to that agreement."

Mr. Waxman detailed his own demands, which, needless to say, made $80 billion look piddling. The Obama administration is already backing off the pharma and hospital deals. An anonymous White House official claimed this week that neither were set in stone, and, for the record, had been inked solely with Mr. Baucus. That's the same Mr. Baucus who has been losing clout with each day this process goes on.

The question is just how long it is going to take for America's health-care CEOs to realize they are being taken for a ride, both by Congress and their own lobbyists. Americans are wary enough about ObamaCare to maybe appreciate some straight talk from corporate America. If only corporate America can find the smarts to give it.