Budget Bribery and Medical Costs
by Matt Stoller, Wed Apr 25, 2007 at 10:37:25 AM EDT
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.