GOP Health Expert: Medical Industry to ‘Boom’ Under New Law

By Kay Tillow
FireDogLake, Saturday June 19, 2010

The Republican Party recently told its leaders to call the Obama administration’s new health law “Exhibit A” of a “runaway Washington government.”

But that’s not how longtime GOP health expert Thomas Scully sees it.

“The bill signed by Obama is not a big-government takeover,” Scully told a pro-business audience in Louisville, Ky., last month, adding the new law will result in “an explosive boom for the medical industry.”

Scully, a staunch Republican who worked in George H.W. Bush’s White House and was later President George W. Bush’s top administrator for Medicare and Medicaid, said, “The health care reform bill that passed in March is very much like the Bush 1 plan. I know. Richard Darman and I wrote that 1992 plan.”

Scully, who now works in the private sector, was the keynote speaker at a gathering of health industry entrepreneurs sponsored by the Health Enterprises Network, an affiliate of the local Chamber of Commerce, here on May 27.

Three of us from Kentuckians for Single Payer Healthcare attended the forum, curious to see what the reform looks like to those who seek financial fortune in the health industry.

For-profit companies win, taxpayers lose

Early in his talk, Scully projected a slide on a large screen with a smiley face over the left seven-eighths of the frame and a frowning face over the right eighth.

Under the smiley face were the “winners” under the health law, including the private health insurance firms, pharmaceutical companies, hospitals, dialysis and hospice companies, and disease management groups. Also listed were the device manufacturers who would pay a special tax but would simply pass it on to others and come out ahead. Home health care would take a hit in the short run but prosper in the long run, he said.

On the far right-hand side of the slide, under the frowning face, was the sole “loser”: the taxpayers. (In case you’re wondering, patients didn’t even make the slide.)

While complimenting the bill’s backers for their shrewdness (“The bill is politically smart — the doctors, drug companies and hospitals were bought off early”), he said the new law’s main weakness was its inability to control spending.

“In 10 years there will be $1.5 trillion in new spending,” a half-trillion dollars more than the administration has projected, he said. In short, the law is “a fiscal disaster,” and U.S. taxpayers will end up paying for it.

“Someone will have to raise the Medicare and Social Security age to 70, and we will have to have tax increases,” he said.

His prediction of devastating changes to these cherished social safety-net programs caused no stir in a room full of people sporting health industry badges.

Scully should have some insight into the implications of health reform for taxpayers and businesses. In 2003, when he was administrator for the Centers for Medicare and Medicaid Services (CMS), he withheld from Congress the real costs of the Medicare Modernization Act, which barely passed in an arm-twisting vote.

The bill blocked Medicare from negotiating prices with pharmaceutical companies, something that has since proven wildly lucrative for insurers and drug makers. The Medicare Modernization Act also gave away the store to the privatized Medicare Advantage plans.

Along these same lines, Scully told the audience, “We need to turn all of Medicare over to Medicare Advantage.”

Likes Obama plan

Scully said he was a big fan of the Obama plan, but he confessed that it was not his first choice in health reform: “Of course, the Wyden plan is really the best thing to do — it gets rid of Medicare and Medicaid — that is the totally right thing to do.”

The bill offered last year by Sen. Ron Wyden, D-Ore., would have put health care financing entirely in the hands of private insurers, with mandatory individual purchase taking the place of employer-sponsored coverage.

Nonetheless, Scully was clearly pleased with the bill passed by the Democrats, which reinforces, not undermines, profit-seeking in health care.

Scully’s last words at the meeting were, “All is driven by money.”

We left even more determined to build the movement for single payer.

Kay Tillow is a native of western Kentucky and is a leader of All Unions Committee for Single Payer Health Care–HR 676.