- The Washington Times - Tuesday, March 23, 2010

When historians write the book on how President Obama’s health care overhaul became law, they’ll need to leave space for some unlikely advocates: lobbyists for the drug, insurance and hospital industries.

Last summer, executives from those groups visited the White House and pledged to do their part to help pay for the health bill. By signing onto the effort early and agreeing to absorb some of the costs, they were able to help shape its final form.

Only time will tell how smart that trade-off was for the industries, but a quick look at the bill passed by the House late Sunday shows it was far from their worst-case scenario:

• A government-run health care plan that would compete against private insurers? Never made it out of the Senate.

• Price controls on Medicare’s prescription-drug program that would squeeze drug-industry profits? Quietly dropped from consideration last fall.

• Cuts in payments to hospitals serving Medicare patients? Trimmed to modest levels and delayed until 2014.

To be sure, the shift in the nation’s health care landscape will challenge companies. But most experts think the short-term profit squeeze ultimately will be outweighed by the business of millions of new patients entering the system.

Health care stocks have risen over the past year with the broader market, with insurers seeing the biggest gains. The Standard & Poor’s Health Care Index has gained 30 percent since the market bottom last March and is just 12 percent from its 2007 peak.

Here is a breakdown of how various sectors fared in the overhaul effort.

c HEALTH INSURERS:

No sector had more to gain or lose than the health insurance industry, which pulled in more than $275 billion last year.

The bill headed for Mr. Obama’s desk offers insurers both opportunities and challenges:

Insurers will gain customers because the bill requires most Americans to carry health insurance. Roughly 32 million more Americans will be covered under Mr. Obama’s plan, either through buying private policies or an expansion of Medicaid.

The bill bans insurers from denying coverage to people with pre-existing conditions such as diabetes or cancer, limits how much premiums can go up based on age and allows people to stay on their parents’ health plan up to age 26.

*PHARMACEUTICALS:

Thanks to drugmakers’ early support and willingness to pay an estimated $90 billion in new taxes and fees, most analysts think the industry walks away with a good deal.

Drug prescriptions are expected to rise as more people get preventive care and insurance helps them pay for medicine. On top of that, seniors are expected to use more medicine because the bill closes a gap in Medicare coverage.

The health care bill also hands the drug industry a victory in a years-long debate over generic versions of biotech drugs.

Biotech drugs, made using living cells instead of chemicals, are expensive to make but can be extremely lucrative. Unlike for their chemical counterparts, there is no system in place in the U.S. to introduce cheaper generic equivalents of biotech drugs.

Mr. Obama’s plan gives new biotech drugs 12 years of competition-free sales - a victory for the biotech industry. Consumer groups and the generic-drug industry had been pushing for exclusivity of seven years or less, saying it would bring down costs.

*HOSPITALS:

Of all U.S. health care businesses, most experts say, hospitals stand to benefit the most from the health bill.

The economic downturn has only added to long-standing problems for hospitals. High unemployment drove the newly uninsured to emergency rooms for expensive treatment and left more patients unable to pay their bills.

Increased insurance coverage will go a long way toward easing hospitals’ financial pain.

*MEDICAL DEVICES:

If hospitals are the big winners of health reform, most analysts agree that makers of medical devices - everything from artificial hearts to hospital beds - appear to be the losers.

Companies like Medtronic Inc. and Boston Scientific Corp. will face $20 billion in new taxes over the next 10 years, with little certainty they can make it up in new sales.

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