Health Industry Fighting Reform

WASHINGTON (CN) - The release of a faulty and biased report by the health care industry last week is the latest blow dealt by an aggressive, nonstop lobbying campaign that is spending a record $1.5 million each day in an effort to break the back of health care reform.

Many on the sidelines are now crying foul.

"The study was not balanced," Henry Aaron, a senior fellow at the Brookings Institute, said in an interview. "Virtually all of the changes that promise cost savings were ignored and the subsidies that bring savings to tens of millions of individuals were ignored."

The report -financed by America's Health Insurance Plans, a large lobbying firm that represents insurance companies- was released a day before the Senate Finance Committee passed its version of the health bill and predicted that the average cost of family coverage would grow more if the bill were adopted than if the government took no action at all.

The findings contrast with those of the Congressional Budget Office, which found that the premiums would shrink under the bill.

The timing of the report's release, the factual questionability, and its contrast with Congressional Budget Office predictions have caused many to label the report as biased and politically motivated.

"Everybody says everything is politically motivated and biased," Thomas Miller, a resident fellow at the American Enterprise Institute, said in a phone interview. "Regardless of when the report arrived, I think we should look at what it's talking about."

'The general direction and approximate magnitude are approximately correct," Miller said, but conceded, "This is far from state-of-the-art precision."

But Aaron from Brookings casted doubt on the report's accuracy. "The Congressional Budget Office is as near to a detached and objective referee as we are likely to find," he said. "Anyone whose estimates differ significantly from CBO's has a very heavy burden of proof to shoulder."

"We are all sinners," Aaron added. "Where a study comes from matters, particularly when it is flawed and simultaneously trumpeted as if it were a major contribution to public information."

The report flies in the face of Congressional Budget Office predictions that the health care legislation passed by the Senate Finance Committee would reduce the average cost of health care, lower the federal deficit by $81 million by 2019, and insure an extra 29 million Americans.

The study also follows a record-breaking lobbying movement, where the health industry spent an average of $1.4 million per day in the first quarter of 2009, a record, and then broke the record during the second quarter, when it spent $1.5 million per day. Pharmaceutical companies, insurance companies, hospitals, and other health firms now spend more than any other industry on lobbying.

The Pharmaceutical Research and Manufacturers of America doubled its lobbying funds to $7 million in the first quarter of 2009, and Pfizer, one of the world's largest pharmaceutical companies, increased spending to $6 million.

The report's authors admit they did not take the bill as a whole when making their calculations.

"The reform packages under consideration have other provisions that we have not included in this analysis," it reads. "We have not estimated the impact of the new subsidies on the net insurance cost to households. Also, if other provisions in health care reform are successful in lowering costs over the long term, those improvements would offset some of the impacts we have estimated."

Some have argued that this is not the first time insurance companies have been deceitful. Nor the last.

Insurance policies themselvers can be misleading and are responsible in part for the many underinsured Americans. These Americans often go without adequate insurance because they do not understand the limits of their insurance policies or because they cannot afford better insurance.

Just last week, a House subcommittee held a hearing to study the underinsured problem. The three witnesses, who had all suffered financial crises after medical emergencies, had misunderstood their policies.

One woman was stuck with a $40,000 bill after her breast cancer treatments. She had thought she was responsible for a maximum of $5,000 under her policy.

Another example is found in May, when various segments of the health care industry pledged to slow health care cost increases in an effort to save $2 trillion or more over the next decade, but just days later, hospitals and insurance companies said Obama had overstated their commitment.

The incident is only one point of contention between the White House -which expressed its support after the Senate Finance Committee passed the health bill- and the health insurance industry, which criticized the bill.

The public option in particular, and Obama's efforts to raise taxes on some high-end insurance policies, have met strong opposition from the industry.

The increased efforts of insurance companies to influence reform promise more political drama as the august power of the presidency clashes with the cash-fueled strength of the insurance lobby.

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