Wednesday, July 1, 2009


Three news stories this week seem to suggest that health care reform is getting closer. Cynics may have some doubts, however.

In the first story, the pharmaceutical industry announced a $80 billion proposal to help pay for health care reform, a proposal that could reduce net reform costs and encourage other provider-side offers to control costs (like a revival of the health care industry’s on-again, off-again $2 trillion offer to President Obama a month ago).

The cynics’ view: This was good PR for Big Pharma, still worried by congressional threats to allow drug importation. However, most of the $80 billion is based on percentage discounts from current prices. Could it be that drug manufacturers might feel that their responsibility to their shareholders will force them to increase prices as soon as the discounts become effective? (And, just maybe, universal coverage might see more drugs being sold?)

In the second story, Wal-Mart – along with the SEIU and the Center for American Progress – announced its support for an employer mandate. Given Wal-Mart’s past unwillingness to offer more than limited health care coverage to just some of its employees, this seemed like a huge change in direction, and one that did much to undercut the US Chamber of Commerce’s opposition to a mandate.

The cynics’ view: Good PR for Wal-Mart, too, to offset earlier criticisms. More to the point, Wal-Mart –which has improved its employees’ coverage after extensive public censure -- does NOT want any form of reform that leaves smaller competitors with no requirement to provide coverage.

In the third story, White House advisor David Axelrod sent clear signals that President Obama would not insist on a public plan option or strongly resist taxing employee benefits, in spite of his earlier statements.

The cynics’ view: The President is so determined to achieve health care reform that he is willing to abandon any of his previous positions. This also means that he can not only leave all the heavy lifting to the Congress, but can divorce himself later on from reform’s problems (which will inevitably happen, regardless of the details of the legislation). So, reform still depends primarily on the Senate Finance Committee’s being able to find a formula that won’t bankrupt us all.

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