stanford medicine



Armies of the status quo

The Washington health-care lobby

When Congressman Pete Stark became chairman of a key health subcommittee in the House 23 years ago, his education was just beginning: “In a week I learned that there were six organs in the human body I had never heard of, and each one of them had its own Washington lobbyist,” the California Democrat recalled recently.

Stark is exaggerating, but not by much. During the past 10 years, the health-care industry spent a staggering $2.9 billion lobbying members of Congress, according to the Center for Responsive Politics.

It makes sense for interest groups to use lobbyists as front-line warriors in the fight over the health-care dollar — the biggest pot of cash in the gigantic American economy. Millions in lobbying costs seem like small potatoes if they can protect or grow your share of the ever-expanding health-care pie. Some even argue that lobbying plays a crucial role in balancing the fiercely competing groups that profit from the health-care system: doctors, nurses, drug companies, HMOs, hospitals and insurers, to name a few.

At the end of the day, it's all about money

But there’s a problem: Some voices never get heard. No lobby represents the 46 million people without any health insurance. Nor the 25 million who are considered underinsured — they spend more than 10 percent of their income on health bills through co-payments and deductibles and other out-of-pocket costs. Millions more worry that their coverage at work, no matter how good it is, will disappear if they lose their jobs. What these people yearn for is major health-care reform. What they see is gridlock.

The pressure to do nothing is profound. The last attempt at major health-care reform tells the story. In 1993, a newly elected Democratic president, Bill Clinton, with Democratic majorities in the House and Senate, offered a major program that he claimed would cover the uninsured and keep costs under control. Big businesses with health benefits rebelled, fearing government regulation. Small business said no, to head off demands to start coverage. The insurance industry said the plan was un-American and bureaucratic. And public support plummeted from approval to disdain.

What’s different now? Health-care costs are higher, the stakes for the groups comprising the health-care lobby have grown proportionally — 8 million more people are uninsured than in 1994, when President Clinton’s proposal died in Congress without ever coming to a vote on the floor of the House or the Senate.

The nation’s output of goods and services increases every year, but the share devoted to health care expands even faster. In 1970, health spending totaled $75 billion or $356 for each American. In 2006, the tab was $2.1 trillion (yes, that’s trillion), or $7,026 per person. The share of the economy devoted to health care was just 7 percent in 1970; by 2006 it had jumped to 16 percent.

With this amount of money at stake, it’s no wonder that five of the top 20 spenders on lobbying over the past decade were organizations concerned to a large extent with health care. According to figures compiled by the Center for Responsive Politics, a nonpartisan watchdog group that tracks lobbying and campaign spending, the big contributors were: the American Medical Association (No. 2), $191 million; the American Hospital Association (No. 4), $153 million; AARP (No. 5), $140 million; the Pharmaceutical Research and Manufacturers of America (No. 6), $136 million; and Blue Cross Blue Shield (No. 11), $100 million.

Inaction in action

Lots of congressional time and some of lobbyists’ most intensive efforts are devoted to shifting regulations to favor their group, or blocking rules that might hurt them. It’s largely an insider’s game.

Consider the case of durable medical equipment, such things as wheelchairs and portable oxygen tanks. An effort by federal regulators to bring competitive bidding to this market and save taxpayers a billion dollars collapsed into an embarrassing defeat this past summer with the passage of legislation to control Medicare spending.

The home medical equipment industry is big and lucrative, with more than 114,000 companies doing business with Medicare, according to figures compiled by HME News, a newsletter that covers the industry. These companies charge Medicare more than individual consumers would pay if they went shopping in stores or online. “Medicare spent more than $21 million on pumps to help older and disabled men attain erections, paying about $450 for the same device that is available online for as little as $108,” according to an investigative report by The New York Times in 2007. “Even for a simple walking cane, which can be purchased online for about $11, the government pays $20, according to government data,” the newspaper reported.

The Center for Medicare and Medicaid Services came up with a plan to save the taxpayers money. A pilot program would have started competitive bidding in 10 cities for the equipment. Substantial savings were expected, and the open bidding would have been extended later to another 70 cities. Eventually, Medicare could save a billion dollars a year, real money even by Washington standards.

Competitions were conducted, winners were selected. Then Congress began hearing from the losers, some of the thousands of companies that had been selling merchandise to Medicare consumers but would be locked out of cities where they didn’t win the bid. When the final version of the bill was completed, the competitive bidding system had disappeared into limbo, and it was back to business as usual for equipment suppliers. The program will be delayed for 18 months, Congress decided, assuring a new round of lobbying by the equipment suppliers who will try again to kill or delay the open bidding system that threatens their sales and profits.

You scratch my back…

Health-care lobbying transcends ideology. Lobbyists can persuade the most liberal Democrat in Congress, or the most conservative Republican. They represent an industry back home, important to the constituents, and they keep the flow of campaign dollars coming.

Doctors and other health professionals have donated $419 million to campaigns since 1990, ranking as the fifth-most generous industry category in terms of campaign funding. Makers of pharmaceuticals and health-care products contributed $158 million over that period, ranking 16th among the 80 industries tracked by the Center for Responsive Politics.

Contributors want to go with the winner to maximize their influence. And this year, Democrats, expected to increase their margins in the Senate and House, have the edge, according to the center. “In the 1992 election cycle, doctors, nurses and other health pros split their contributions evenly between the two parties, but they have backed Republicans the rest of the time with up to 62 percent of their overall donations,” the group reports. “This cycle they’ve given $22.4 million to Democrats (or 53 percent of the total), compared with about $20 million to Republicans. For the first time ever, the pharmaceutical and health products industry is giving more to Democrats than Republicans, $7.4 million compared with $7 million.”

Giving money is a way of buying influence, according to Craig Holman, the government affairs lobbyist for Public Citizen, a group engaged in a perpetual uphill struggle to moderate the influence of corporate and industry lobbyists. In general, you don’t give to someone who necessarily supports your ideology, but rather to an incumbent who will be re-elected, or to a challenger who seems certain to win. If there is ever a close race, the money will flow to both sides, he notes.

In the unlikely event that an incumbent is defeated, or simply decides to retire, the lobbyists often can help find him or her a lucrative job joining their ranks.

“People come to Capitol Hill and never want to leave; we estimate that 43 percent of former members of Congress stay here and take lobbying jobs,” says Holman. Offering a job in return for a vote or legislative action is illegal, but the opportunities that exist in life after Congress are obvious. Jobs that pay $1 million a year or more are common, he says.

The lobbying firms offer big bucks not just to former members of Congress but to their aides and committee staff, who know how to make the system run, says Rep. Stark. The staff people “often know more than we do,” he says.

A case study

Some of the most intriguing struggles pit big players against each other, setting up a true test of lobbying skill and determination. A couple of heavyweight players — the insurers and the doctors — battled this summer over Medicare funding.

Every year since 2002, Medicare rules have called for reductions in payments to doctors, and every year Congress has prevented them. This year, it blocked a 10 percent reduction.

Lobbying connoisseurs gave the doctors groups high marks this year for their personal calls to lawmakers, an ad campaign targeting senators who stood in their way, and grassroots advocacy — organizing physicians and medical groups to complain vociferously to their representatives.

“The docs were more involved than usual; they really showed us what they could do,” says Stark.

And their alliance this year with the politically potent AARP certainly didn’t hurt. AARP mobilized e-mails from the ranks of its huge membership of 39 million, and dispatched members wearing red AARP T-shirts to Capitol Hill offices for personal lobbying.

AARP and the doctors faced off against the insurers who were defending the profits in the HMOs. The Medicare money for payments to doctors had to come from somewhere — and this time it was supplied by taking away $14 billion in payments to health maintenance organizations operated by insurance companies.

The result: The proposed cuts in fees paid to doctors were delayed for 18 months, and the issue comes up again at the end of 2009, when the potential reduction in physician incomes will be even larger. Once again it will be the doctors fighting to block any loss of revenue, and Congress looking for other targets to take the money from. Those targets, possibly the insurers again, will fight back hard.

At the end of the day, it’s all about money, getting more for me, or preventing you from taking away anything that I believe rightfully belongs to me. Political parties, ideology, even scientific evidence, rank far behind.

And so a crazy scenario like this starts to make sense: While insurance companies cut deals with hospitals for bargain rates, the uninsured pay full price. They might be billed $50,000 or more for a surgery that’s billed at $5,000 under an insurance plan. Hospitals are aggressive in collecting these bills, often sending collection agencies after people who are already financially squeezed.

“Why, there ought to be a law…,” you might say. But there isn’t. And with today’s health-care lobby, don’t expect to see legislation that puts the health of ordinary people first anytime soon.


A health lobby who’s who Who they are, what they want, how much they spend

Doctors and other health professionals

  • Rank for '08
    campaign giving:
  • Goal: Block cuts by Medicare in payments to physicians and other professionals.
  • Lobbying: Spent $72 million last year, including $22 million by American Medical Association and $4 million by American Academy of Family Physicians.
  • What they give to campaigns:
    • 419 million in campaign donations between 1990 and 2008
    • 57 million this year (through July), 53 percent to Democrats

Pharmaceuticals and health products

  • Rank for '08
    campaign giving:
  • Goal: Preserve current marketing system and block congressional efforts to control prices.
  • Lobbying: Spent $228 million last year, including $23 million by Pharmaceutical Research and Manufacturers of America, $16 million by Amgen Inc., $14 million by Pfizer, $8 million by Johnson & Johnson, $8 million by GlaxoSmithKline, $7 million by Sanofi-Aventis, $7 million by Biotechnology Industry Organization, $6 million by Novartis.
  • What they give to campaigns:
    • 158 million between 1990 and 2008
    • 18 million this year (through July), split 50/50 between Democrats and Republicans

Hospitals and nursing homes

  • Rank for '08
    campaign giving:
  • Goal: Prevent reductions in federal spending for their programs
  • Lobbying: Spent $92 million last year, including $16 million by American Hospital Association.
  • What they give to campaigns:
    • 102 million between 1990 and 2008
    • $14 million this year (through July), 62 percent to Democrats

Health services/HMOs

  • Rank for '08
    campaign giving:
  • Goal: Preserve current system of payments for Medicare Advantage HMOs.
  • Lobbying: Spent $53 million last year, including $5 million by United Health Group, $3 million by HealthSouth Corp., $2 million by Aetna.
  • What they give to campaigns:
    • $57 million between 1990 and 2008
    • 8 million this year (through July), 59 percent to Democrats

Information from Center for Responsive Politics, Dollar figures rounded to the nearest million.





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