Democrats Fire Back at Health Industry - washingtonpost.com

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By Lori Montgomery and David S. Hilzenrath
Washington Post Staff Writers
Thursday, October 15, 2009

Days after the insurance lobby began an aggressive campaign against a Senate plan to overhaul the nation's health-care system, senior Democrats fired back, threatening Wednesday to revoke the industry's long-standing antitrust exemption.

Health insurance is one of only a few industries exempted from certain federal antitrust regulations, and Sen. Charles E. Schumer (D-N.Y.) said the exemption was "one of the worst accidents of American history. It deserves a lot of the blame for the huge rise in premiums that has made health insurance so unaffordable."

Senate Majority Leader Harry M. Reid (D-Nev.) and Senate Judiciary Committee Chairman Patrick J. Leahy (D-Vt.) joined Schumer in a stinging denunciation of health industry practices, but the insurance lobby dismissed their threat as "a political ploy."

The dispute came as House leaders pushed off a vote on health care until the first week in November and as Reid and other Senate leaders met for the first time with senior White House officials to discuss how to craft compromise legislation. High on their agenda was the array of contentious matters that must be resolved before a bill can come before the full Senate.

Among them is whether to create a government-run insurance plan, whether to fine people who do not purchase insurance and whether to require employers to offer coverage to their workers.

Meanwhile, Senate Democrats sought Wednesday to shore up the support of a critical player in the health-care debate: the American Medical Association.

Senate leaders met with representatives of the AMA and other doctors' groups, then said they would press to repeal within days a decade-old law that subjects physicians who treat Medicare patients to regular pay cuts. The repeal would increase the federal budget deficit by nearly $250 billion over the next decade, but the influential organizations, whose members will face a 21 percent pay cut in January, had demanded a resolution to the issue as part of any health-care overhaul.

"It wipes the slate clean," said one representative from the medical groups who participated in a meeting Wednesday with Reid, Finance Committee Chairman Max Baucus (D-Mont.) and Sen. Christopher J. Dodd (D-Conn.). Instead of fighting pay cuts, the participant said, speaking on the condition of anonymity to describe a private meeting, doctors could pursue pay "updates."

The first of those updates -- giving Medicare doctors a 0.5 percent pay increase in 2010 -- will remain in the Senate health-care bill, Democratic aides said. But by repealing future pay cuts before the debate reaches the floor, the chamber's leaders hope to short-circuit any Republican plans to add the expensive repeal to the larger bill, which could threaten its prospects for passage.

The move could, however, trigger a fight with House leaders, who want the Senate to approve strict pay-as-you-go budget rules before consenting to such a large increase in future deficits.

Experts differ as to how much latitude the antitrust exemption gives health insurers.

To the extent that it provides insurers with market clout, repealing the exemption could shift power to doctors, hospitals and other health-care providers, potentially leading to higher premiums, some experts said.

A repeal, said lawyer Richard T. Greenberg of the firm McGuire Woods, would allow the federal government to regulate arrangements by which insurers steer their customers to particular hospitals and other health-care providers.

David Dranove, a professor at Northwestern University's Kellogg School of Management, said the exemption permits health insurers to exchange information about potential customers' medical risk before issuing policies.

Robert Zirkelbach, press secretary for the industry group America's Health Insurance Plans, said, "The health insurance industry is one of the most regulated industries in America," subject to regulators at the federal and state levels. "The focus on this issue is a political ploy designed to distract attention away from the real issues in this debate."

Staff writer Shailagh Murray contributed to this report.