By Sreedhar Potarazu, ,
Published October 27, 2015
With the passage of the Affordable Care Act not everybody is losing out.
In fact, there are many industries and executives who have actually benefited tremendously from the windfall of millions of dollars coming from the government to implement the new law. As a disclaimer, I am not only a physician, but an executive in the health IT industry, so I am by no means taking sides, but merely describing the situation.
A key provision within ObamaCare was the passage of legislation to encourage physicians and hospitals to implement electronic medical records. Between 2008 and 2012 was an intense time of lobbying for the passage of this legislation and how the rules for government incentive would be shaped.
Glen Tullman until recently was the chief executive of AllScripts, a major player in the electronic medical record space. He was also an advisor to the Obama Campaign in 2008, and according to the New York Times, he personally made more than $200,000 in political contributions to the Obama Campaign.
AllScripts, of course, was a major beneficiary on terms of their revenue growth over the last few years. He was also a an adviser to the White House.
Cerner, another major player in EMR space, spent nearly $400,000 in lobbying between 2006 and 2012 according to the Center for Responsive Politics. Cerner, of course, has continued to achieve record growth with Neal Patterson, their CEO and Founder, often referred to as one of the ObamaCare billionaires as reported on the cover of Forbes. Interestingly, the former head of the White House Office for Health Reform, Nancy de Parle, used to sit on the board for Cerner prior to her appointment.
From the period of 2009 to 2010 hundreds of millions of dollars were spent on lobbying the issue to electronic medical records, according to the New York Times.
The winners, of course, are the companies that we mentioned and others, in addition to the lobbying groups (remember them, the ones the President wanted to deter from access?).
There are other winners, as well.
The Insurance Industry and Pharmaceutical Industry spent enormous dollars in lobbying to ensure that an adequate mandate was put in place so that the cost of covering dependents under the age of 26, and those with pre-existing conditions, was offset by mandating coverage. In fact, America’s Health Insurance Plans gave $86 million to a conservative lobbying group in order to fight the medical loss ratio provision.
According to the National Journal’s Influence Alley, at the very same time the American Health Insurance Plans (AHIP)—the health insurance industry super lobby—was cutting a deal with the White House leading to its stated support of the proposed ObamaCare legislation, they were also paying the Chamber of Commerce to be spent on advertising designed to convince the public that the legislation should be defeated.
While one would not think that so much money could be spent in secret, AHIP pulled it off by utilizing a completely legal process of funneling the cash to the Chamber under the radar while.
In its 2009 IRS filing, AHIP reported giving almost $87 million to unnamed advocacy organizations for “grassroots outreach, education and mobilization, print, online, and broadcast advertising and coalition building efforts” on health care reform. That same year, the chamber reported receiving $86.2 million from an undisclosed group. Bloomberg’s Drew Armstrong first reported the AHIP-chamber link. The $86 million accounted for about 42 percent of the total contributions and grants the chamber received.
While we may never truly understand the absolute impact of these lobbying dollars, it is clear money talks in Washington, and has had a beneficial impact to key stakeholders that made the investment.
At the end of the day, insurance companies may argue that their ability to remain profitable is diminishing because the enforceability of the mandate is not as stringent, but, in the meantime, premiums continue to rise to the benefit of these companies. The provider side of the industry did not necessarily receive as much financial benefit, at least thus far. The lobbying efforts of the American Medical Association appear miniscule compared to what insurance and pharmaceutical companies spent. The American Hospital Association spent more than $19 million in lobbying in 2011.
Hospitals were counting on improved patient volume from the expansion of Medicaid to offset their drop in reimbursements, but the states are split in terms of their livelihood to comply. Hospitals, especially, not for profits, continue skyrocketing revenue through its aggressive billing practices. There are no current measures in ObamaCare that will help Medicare and the private market gain better transparency on the "chargemaster” of hospitals and until this happens, there are many hospital executives who will continue to bring in enormous salaries at the expense of the market and consumers.
The implementation of the state level exchanges also created a major opportunity for technology companies and consulting firms that are advising on strategy. The chaos and uncertainty of what these market places will look like creates an opportunity for consulting firms to capitalize on this ignorance.
There is a renewed focus for companies focused on big data and analytics. A lot of the key provisions for the success of ObamaCare depend upon the necessary information exchange and analysis of data that key stakeholders will require. The opportunity and the challenge in this space is that ObamaCare has created a number of different “communities” of providers and hospitals that are supposed to be connected, but there is nothing connecting these communities, the states, the employers, and the consumer. So essentially, we are creating a number of gated communities that have streets within them, but no highways connecting the communities.
Over time, if ObamaCare works the way it has been pitched, then maybe the provider side of the health care system will also end up winning financially.
In the meantime, there are enough new industries who have engaged in the Obama Gold Rush that when this movie is over it’s unclear what will be left at the end of the rainbow.
By no means is the delivery of health care predicated on pure financial gain, and this is not to undermine the satisfaction and nobility of the profession. There is nothing wrong with capitalism, as long as the incentives are equally aligned for everyone in the system.