Budget Bribery and Medical Costs

Now that the Congress has switched sides, we're beginning to see the outline of the centrists who are running economic policy.  The reality is that the progressive movement's real enemies are not the Republicans in Congress, or the DLC, but the business coalitions that fund and control them.  And we're seeing as the switchover of power occurs that these coalitions are changing tactics, moving away from reliable Republicans to Democrats who will do their bidding either unwittingly or on purpose.  And this corruption is behind the spiraling costs in medical care and ultimate it's going to ruin our ability to implement any policies.

Let's take a small example: kidney dialysis.  Kidneys clean your body.  Sometimes they stop working, and when your kidneys stop working, you need to get your body cleaned out in a process called dialysis.  Kidneys fail in lots of people.  Of course, this happens more often to poor people because our society puts them closer to pollution and provides incentives towards a horrible diet.  My doctor friends call it a 'toxic environment' and just leaves it at that.  Anyway, Medicare pays for dialysis, which is a good thing.  What's weird is that Medicare's payment for this social service has a lot of support from a strange coalition - corporate members of the CBC, like Al Wynn, and New Democrats from suburban districts, like Ellen Tauscher, and various Republicans, like Indiana's own Dan Burton.

In fact, John Lewis (D-GA) and Dave Camp (R-MI) in the house and Kent Conrad (D-ND) in the Senate introduced a bill called the Kidney Care Quality and Education Act of 2007.  This bill increases the amount Medicare pays for dialysis, and while it's not supposed to pass, the increase in payments will be tucked into the overall budget process in some unnoticeable legislative corner.

It's strange who's backing this legislation to get more funding for dialysis to poor people: industry groups that usually aren't particularly concerned about matters of social justice.  And of course, this legislation assumes that dialysis is underfunded.  Lots of government services are underfunded, but it's not at all clear that dialysis is one of them.  In fact, the two companies that dominate the field, Fresenius Medical Care and DaVita, are wildly profitable.  For the five years 2002-2006, Fresenius and DaVita generated $1.16 billion and $1.1 billion in net income, respectively.  Operating profit margins are in the mid-teens, and return on equity and assets is significantly higher than the median in health care, and even the median public company.  

More directly, the claims of the sector - that kidney dialysis is unprofitable - are disputed by MedPAC, the government arm set up to make recommendations on Medicare issues.  The 'who's who' pushing the bill through a front group called the Kidney Care Partners are impressive:

Abbott Laboratories, American Kidney Fund, American Nephrology Nurses' Association, American Regent, Inc., American Renal Associates, Inc., American Society of Nephrology American Society of Pediatric Nephrology, Amgen, Baxter Healthcare Corporation, California Dialysis Council, Centers for Dialysis Care, DaVita, Inc., DaVita Patient Citizens, Fresenius Medical Care North America, Genzyme, Medical Education Institute, National Kidney Foundation, National Renal Administrators Association, Northwest Kidney Centers, Renal Advantage Inc., Renal Physician's Association, Renal Support Network, Roche Laboratories, Satellite Health Care, U.S. Renal Care, Watson Pharma, Inc.

What's really going on here is that the biotech companies that make medicine for dialysis want to sell more of it at a higher price, the clinics that make money offering the service want to stiff the government for more money, and doctors want to get paid more as well.  This should be called the 'Doctors and companies that want to be paid more' Association.  And since 2000, lobbyists associated with these groups have spent around $48M for kidney dialysis.  And there's more in campaign contributions - just as an example, Max Baucus got $15K from these people, Kent Conrad got $37K, Republican Dave Camp got $35K, and John Lewis got $18K.  Go through FEC.gov or OpenSecrets and just scroll through donations by the medical sector.  It'll astonish you.

So where's the media on this?  Well, if you look at Open Congress and HR 1193, what you'll see is that there is literally no coverage of this issue except for a few laudatory press releases.  Press releases.  Billions go out the door with little scrutiny except for lobbyists, trade associations, and members of Congress.  Fortunately, these trade associations can be easily caught engaging in this kind of behavior.

The medical system is full of waste, fraud, and abuse.  The for-profit incentive model just doesn't work, because it creates incentives for lobbying and corruption, with no one in control and these coalitions pushing taxpayers for more money.  We have the money for universal health care, it's just sitting in the bank accounts of Amgen, Fresenius Medical Care, and DaVita executives.

Tags: CBC, Ellen Tauscher, John Lewis, Kent Conrad, kidney dialysis (all tags)



Re: Budget Bribery and Medical Costs

This sort of thing is why I agree with Chris and disagree with Jerome about the desirability - more like the long-run necessity - of some sort of thorough and wide-ranging campaign finance reform legislation.

As long as the money that pays for the campaigns still comes from the same corporations and interests, there's a limit to how much good it can do to have the Dems in power.

by RT 2007-04-25 10:42AM | 0 recs
Thanks Matt

Billions for healthcare corporations--bill collectors for poor patients.

That's why we should always remember one thing in healthcare debates: do we want to move towards a plan that makes healthcare a non-profit service open to all members of society, or a market with winners, losers, and high profits for corporations?

Obviously California's think the former, and that's why we're supporting guaranteed healthcare, also known as universal healthcare guaranteed with non-profit, single-payer financing.

by California Nurses Shum 2007-04-25 11:43AM | 0 recs
Great Post
My significant other is starting med school at UVA this fall. She comes from a whole family of doctors (mother, father, grandparents). Im just 23, and fortunately, paying attention to things like health insurance and medicare coverage haven't been a huge part of my life to this point. But its common dinner discussion at her house, and Im learning a lot about how it operates. Its very interesting stuff, and this post was very enlightening as well. Thanks!
by faithfull 2007-04-25 10:43AM | 0 recs
Re: Budget Bribery and Medical Costs

Excellent essay. Thanks.

by Akonitum 2007-04-25 10:51AM | 0 recs
Ghastly - but can it get salience?

I didn't know about the dialysis bill - and forewarned is forearmed. (Especially when someone else has done the research!)

But - how could this be used to advance the cause of universal health care?

My sense would be that, even if the scam got missing white girl-level media coverage for a fortnight, it wouldn't leave the public any hotter under the collar about healthcare than they are now.

Plus - those directly responsible for introducing UHC (the pols) are gunshy on a galactic scale: from FDR's social security bill, through Wagner-Murray-Dingell, the Nixon plan and Hillarycare, large-scale health reform has been an unhappy experience for pols concerned.

(And Medicare was going nowhere before Oswald took aim.)

The healthcare racket will continue largely unmolested, I'm afraid.

by skeptic06 2007-04-25 11:22AM | 0 recs
Dear Skeptic

Defeatism is defeating.

Besides, nurses have to fight for reform since they watch their patients suffer every day--so we have to join them!

be well

by California Nurses Shum 2007-04-25 11:45AM | 0 recs
And what's realism?

I'd love to believe that the planet-sized weight of evidence against the current healthcare 'system' would bear on the political process so as to process a decent, efficient, cost-controlled alternative, without insurance company parasites and providers left to chisel unmolested.

What I have yet to see is evidence of corresponding weight - or any weight at all - that this is likely to happen in the foreseeable future.

by skeptic06 2007-04-25 12:15PM | 0 recs
Re: Ghastly - but can it get salience?

The healthcare racket will continue largely unmolested, I'm afraid.

Can you stop mixing your excellent and useful opinions with unsupportable assertions about the impossibility of any progress whatsoever?  I'm looking for strategic help and criticism, not people to say that progress cannot happen.

by Matt Stoller 2007-04-25 11:47AM | 0 recs
Re: Ghastly - but can it get salience?

You yourself adduce yet further evidence of the institutional corruption with which the current system is riven.

An intertwined system of interests which, if they couldn't leech on the nation's revenues, would, many of them, shrivel up and die.

And a good many of the nation's legislators are willing to trade these immense benefits for the messes of pottage that you mention. Chickenfeed compared to what the businesses concerned get out of it.

I point to the history of health care reform in the US, which, over 70 years, has been almost uniformly unsuccessful - the big success, Medicare, is the exception that proves the rule.

That works two ways: it proves how difficult reform is (and was, even when the AMA was the only bad guy); and it explains, in part, the extreme reluctance of pols to take on the challenge.

And all of that comes before any serious vote-counting.

(I note that HR 676, the single-payer bill Conyers reintroduced this Congress, has accumulated 67 cosponsors, leaving 2/3rds of House Dems unwilling to make a show of support even for a bill they know they won't have to follow through with.)

Now, the recent trustees report said (from memory) that Medicare is due to go bust in 2019. The way the gouging is going, I suspect the date will creep forward over the next few years.

The best hope for radical reform is that, especially given the current rate of medical inflation, the cost will break the Medicare bank.

All that is based on the evidence that I have.

I'd love to be shown evidence that proves me to be wrong.

But - not every problem has a solution. And my best judgement is that, in the short and medium term, healthcare reform is one of those problems.

by skeptic06 2007-04-25 12:36PM | 0 recs
Re: Ghastly - but can it get salience?

The best hope for radical reform is that, especially given the current rate of medical inflation, the cost will break the Medicare bank.

I agree with this, but this is also different from what you wrote before.

by Matt Stoller 2007-04-25 01:02PM | 0 recs
Re: Ghastly - but can it get salience?

This is progress - and I'm not being sarcastic here. (Well, not too much, anyway...)

If advocates of radical health reform - obviously not pols who have to get reelected, and must self-censor accordingly - were prepared to agree that they're relying on Medicare going bust (or something of like magnitude) for radical reform to stand a decent chance of getting enacted, I'd be happy to agree.

Of course - I say, of course, but it's only just occurred to me - as healthcare inflation pushes the current system towards the cliff, the interests that will suffer from radical reform, notably the health insurers who (Deo volente) will be annihilated in the process, will exert themselves ever more strenuously to stop it falling over the edge.

All sorts of jiggery-pokery, Enron accounting and chicanery will be employed.

And pols who fear the loss of the gravy train more sharply than the revenge of voters who finally realize the extent of the fubar will prefer to put off the evil day as long as they can.

I read a fair bit about healthcare reform in the lefty sphere; almost none of it is concerned with dealing with - or even acknowledging - these types of structural barriers to such reform.

The way to start to tackle these barriers is to discuss them.

My problem with foreseeable future probably arises from the fact that I don't foresee that discussion happening any time soon.

But - I'm eager to be proved wrong on that count!

by skeptic06 2007-04-25 01:53PM | 0 recs
Re: Budget Bribery and Medical Costs

Gee, no kidding.

Maybe the Democrats should
a) push for campaign finance reform to get this money out of general elections.
b) change the rules on their internal primary contests to use Clean Elections rules.

Instead, all I see is Dems with their hand in the cookie jar saying ...."me, me, me ... it my turn now, give me the money".

by COBear 2007-04-25 02:22PM | 0 recs
Re: Budget Bribery and Medical Costs

I think this is a perfect case study of how the Democrats will rule Congress for the next two years. Will they just pick up where the Republicans left off in carrying the water for this industry, or will they stand up to them and say no more business as usual?

Bush's war of terror has put Congress in a budget crunch; will the Dems waste valuable funding on giving a rate increase to an industry that's already making sizable profits?

by riseupeconomics 2007-04-25 04:15PM | 0 recs
Re: Budget Bribery and Medical Costs

What's Conrad getting out of this, a campaign contribution aside? I thought he was one of the more populist Democratic senators?

by Englishlefty 2007-04-25 06:13PM | 0 recs
Re: Budget Bribery and Medical Costs

Matt your post motivated me to join MyDD and post a response in a diary.
http://www.mydd.com/story/2007/4/26/1743 34/764

I welcome the discussion about the provision of dialysis in the US. In your post I think you're missing important elements of the story. I hope by starting my own diary a discussion will develop.

by billp830 2007-04-26 01:48PM | 0 recs


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