Corporate Profits Muscle Out The Public Opition

By Robert L. Borosage, Campaign for America's Future. Posted June 17, 2009.

For example, early in President Bush's first term, Republicans decided that passing a prescription drug benefit for seniors would help cement Karl Rove's permanent majority. The benefit would help 41 million Americans with a soaring cost of care not yet covered by Medicare. It would also create a massive new market for the drug companies. And, of course, Medicare could do what governments across the world do—use its buying power to lower the cost of the drugs.

Only, when Republicans passed the law—in the dead of night, twisting arms to get it done—it actually prohibited Medicare from negotiating a lower price for drugs. Don't worry, they argued, competition would lower drug costs (even as they banned the import of cheaper drugs from Canada or Mexico).

Why? Well, using government muscle violated "free-market" sensibilities. More importantly, the drug companies have one of the most powerful lobbies on Capitol Hill. Rep. Billy Tauzin, the chair of the key House committee ushering the bill through, left soon after to get a $2 million-a-year job as a head of PhRMA, the drug company lobby. Tom Scully, the Bush administration's point person who helped keep the actual cost of the bill secret, was already negotiating his million-dollar job as the debate was going on. In all, 15 congressional representatives, aides and administration officials involved in the debate left shortly thereafter to take jobs with the drug lobby. With a $9 billion increase in annual profits at stake, the drug industry got an amazing return on its investment.

Today, seniors pay 60 percent more for the same drugs than the price charged veterans becuse the Veteran's Administration does negotiate lower prices.

Extreme? Not really. The health insurance companies decided they should be allowed to compete with Medicare in providing health insurance options to seniors. Seniors would get more choice; Medicare, the bureaucratic behemoth, would get agile competition. Win, win, they argued, calling the program "Medicare Advantage."

Only the insurance companies couldn't compete with Medicare straight up. So they demanded subsidies from the government to enable them to vie with the Medicare program they described as horrendously inefficient, unpopular and bureaucratic.

And they stand to pocket an estimated $177 billion in excess payments over 10 years to compete with Medicare—subsidies that Obama would sensibly cut to help pay for health care reform.

Money talks. Nine Republican Senators on the key Senate Finance Committee wrote President Obama to say they would oppose any reform with a public plan. The Center for Responsive Politics reports that the nine had had pocketed $17.7 million in contributions from insurance and health care interests over the course of their careers.

Not surprisingly, the 20 largest insurance and drug companies and their trade associations have pumped up their lobbying by 41 percent over last year—with reported spending over $75 million in the first quarter alone.

This is the corruption of crony capitalism; a compromised congress using taxpayer's money to enrich entrenched interests. Only now, the cost of this in health care is not sustainable. Dramatic reform is vital or we all follow the auto companies and go belly up.

So if your senator says he or she is opposed to a public option, or wants a weaker public option, or a nonprofit co-op that isn't big government, or prates about the "government takeover of health care," about losing your choice of doctor, about bureaucrats not doctors prescribing medicine, don't fall for it. Either he or she is either utterly clueless or more likely is representing the interests of the industry, not the voters.

This business as usual is no longer affordable or acceptable. We shouldn't let cynicism lower our expectations. Soaring health care costs and the human tragedy of those without insurance can no longer be ignored. Reform can't be postponed. It is a stunning disservice that Republicans have taken themselves out of serious discussion. And it is an open scandal that senators are catering to the private insurance industry that has profited from the problem rather than helping to solve it. We must expect more and demand more from those given the privilege to represent us.

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Robert Borosage is co-director of the Campaign For America's Future, and he has written on political, economic, and national security issues for publications including The New York Times and The Nation.

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