March 28 2012

Obamacare: The Perils Of Cronyism

Charlotte Hays

The Supreme Court today hears arguments about severability—or whether Obamacare could survive if the so-called individual mandate requiring all citizens to purchase a product (health insurance) is struck down.

But here’s something interesting from the Washington Free Beacon  that highlights the perils of cronyism:

Healthcare interest groups spent tens of millions of dollars cutting deals with the Obama administration and Congress in 2009 and 2010. The Supreme Court may soon leave those deals in tatters—and saddle the healthcare industry with multi-billion dollar losses. …

Industry lobbying group PHRMA spent $32 million negotiating with lawmakers for a deal favorable to drug companies. The group agreed to $80 billion in price controls after months of exchanges with the administration.

Obama used the individual mandate as a selling point for the pharmaceutical industry, arguing that more insured individuals would translate into a larger market of customers. If the court severs the mandate, however, companies would still have to abide by the price controls while receiving little in the pledged market growth.

“These concessions are already written into the bill; they are part of the law,” said Dr. Jerry Isaacson, the report’s author. “The price controls will become stricter, but the industry will lose out on 30 million new (customers) if the mandate is unconstitutional.”

Hospitals will be even harder hit than big pharma, thanks to the many deals they cut with the administration.

Nobody wants to see hospitals in trouble, but their willingness to deal is the root of their potential problems--and it might be better for the patients if the problems are fixed sooner rather than later.

 

 

 

 

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