Industry Winners and Losers of Obamacare

Friday, 19 Mar 2010 12:39 PM

 

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Drugmakers, device companies and health insurers all got some good news when Democrats in the U.S. House of Representatives released changes to healthcare reform legislation on Thursday.

Hefty taxes on those three industries were delayed by at least a year, among other adjustments to the bill that seeks to overhaul the nation's healthcare system.

Following are some of the winners and losers for the healthcare industry based on the reconciliation bill the House is considering along with the Senate's bill.

A vote is expected on Sunday.

WINNERS

Brandname Drugmakers

• The pharmaceutical industry largely keeps its $80 billion agreement to provide savings and rebates. Its fees, to be parceled out among companies such as Pfizer and Merck , would be delayed from 2010 to 2011, increasing from the initial $2.3 billion a year to $2.7 billion.

• Overall, wider insurance coverage could help offset the costs by providing more potential customers.

• Drugmakers warded off deeper price cuts in the Medicare program for the elderly. The House had sought to fully close the so-called "doughnut hole" where coverage drops temporarily after reaching a spending limit, but the bill maintains the industry's 50 percent discount. The government will pay for another 25 percent discount.

• Lawmakers rejected Obama's plan to end lucrative "pay-for-delay" settlements with brand-name drugmakers, a win for both generic and brand name companies.

• The bill also discards an earlier provision that would have extended a hospital drug discount program.

Device Makers

• Fees for medical device makers such as Boston Scientific and Medtronic would be delayed until 2013 after initial bills called for 2010. The sector earlier won a reduction in an industry tax to $20 billion, down from $40 billion.

• Rather than an overall industry fee, the bill now contains a 2.9 percent sales tax. Certain products, such as eyeglasses, contact lenses and others bought by consumers at stores are exempt.

Hospitals

• Hospitals, which include companies such as Universal Health Services and Tenet Healthcare , say they kept their a $155 billion, 10-year deal accepting lower government payments from Medicare and Medicaid in exchange for an expected boost in insured customers.

• A provision that could have helped certain rural and children's hospitals through an expanded hospital drug discount program was dropped.

LOSERS

Health Insurers

• While health insurers overall still face tighter regulation, there was some good news. Insurers such as Aetna , Cigna , UnitedHealth Group and WellPoint saw their $67 billion, 10-year tax delayed until 2014.

• Private Medicare plans called Medicare Advantage would see their payments frozen in 2011, then lowered in 2012. The plans, which can offer more benefits than traditional Medicare coverage, would also have to spend at least 85 cents out of every dollar on medical costs — leaving 15 cents toward overhead and salaries, among other things.

• Consumer protection provisions still aim to change the way companies do business, banning denial of coverage for preexisting medical conditions and ending limits on how much coverage patients can get from their insurers over their lifetime. Certain curbs would be expanded to all health insurance plans six months after the bill passes, while others take effect in 2014.

• The bill changes penalties for individuals who do not buy health insurance as mandated. The fine is lowered from $495 to $325 in 2015 and from $750 to $695 in 2016, but the alternative method of fining people using a percentage of income increased slightly to 2.5 percent by 2016.

• There are some potential bright spots: The bill does not include President Barack Obama's call for federal oversight of health insurance rates and premiums. It also expands tax credits and other financing to help more people afford insurance.

• Lawmakers have said up to 30 million more Americans could have insurance with the reform.

Generic Drugmakers

• Overall, companies that make generic versions of brand-name drugs still see little direct help, although increasing insurance access could help more people buy medicine.

• Generic drugmakers had been concerned that closing the Medicare "doughnut hole" would turn people away from cheaper, generic medicines. The bill includes a 75 percent discount on generic drugs, the same as brand-name.

Tanning Bed Makers

• The bill keeps a 10 percent tax on consumers who use indoor tanning salons, seeking to raise $2.7 billion by 2019 while discouraging use that can cause skin cancer.

© 2014 Thomson/Reuters. All rights reserved.

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