July 14, 2017 / 5:48 PM / 10 days ago

Sidelined healthcare lobby stymies Republican healthcare effort

The entrance to the newly constructed Kaiser Permanente San Diego Medical Center hospital is shown in San Diego, California, U.S., April 17, 2017.Mike Blake

WASHINGTON (Reuters) - Senate Republicans pushing to overhaul Obamacare largely ignored key players in the debate over insuring the poor: the health insurers and hospitals charged with carrying out the law if it gets approved.

Instead, conservative groups such as Heritage Action for America won the ears of Senate Republicans when it came to changing the Medicaid insurance program for the poor and disabled. The snub is fueling health industry opposition to the new plans for Medicaid, and threatens to further frustrate the months-long effort to dismantle Obamacare.

The latest version of the Senate bill, released on Thursday, left the Medicaid overhaul largely unchanged from the radical makeover in the bill from the U.S. House of Representatives. A nonpartisan government agency has estimated an earlier version of the bill would trim nearly $800 billion in federal spending for Medicaid over 10 years.

While insurers successfully influenced the legislation when it comes to individual insurance markets, the fact that they and hospital groups largely struck out on Medicaid is important because the new provisions shift more costs back to the states and hospitals.

These groups, along with insurers, will be charged with enforcing the new law, so Republicans need their buy-in, health policy experts say.

"A health policy means nothing if it can't be implemented and doesn't work," said Andy Slavitt, former administrator under President Barack Obama of the Centers for Medicare and Medicaid Services, which oversaw Obamacare.

Conservative Sway

The Republican bill ends Obamacare's Medicaid expansion and slashes traditional Medicaid funding, with cuts that deepen beginning in 2025. The U.S. House of Representatives passed its own version of the legislation in May.

"A lot of conservatives, Heritage Action included, desperately wanted to hold the line to make sure the Medicaid portion wasn't watered down in the Senate," said Dan Holler, vice president of Heritage Action for America, a conservative advocacy group. "It was something we made known to folks up in the Senate."

When Democrats and the White House enacted Obamacare seven years ago, support from healthcare companies helped propel the legislation through Congress. The administration actively courted the health industry, lobbyists and former Obama administration officials said, viewing their support as critical to winning votes.

While health insurer and hospital lobbyists said in recent weeks that they have been able to regularly meet with Republican lawmakers, they said their input on the bill's Medicaid changes was largely ignored.

A representative for Senate Majority Leader Mitch McConnell was not immediately available for comment.

In 2017, the top hospital, doctor and insurer trade groups reported spending a total of more than $13 million on lobbying the federal government through the first quarter of 2017, according to a congressional lobbying database.

One hospital industry lobbyist said there has been no attempt by Republican leadership to have a serious discussion with industry lobbyists or leaders about how to change the bill to win their support.

Individual Insurance Changes

That has not been the case with the portion of the bill that addresses the individual insurance market. Insurers, including some of the biggest providers of Obamacare individual plans, Anthem Inc (ANTM.N) and Molina Healthcare (MOH.N), have been asking for changes to specific policies.

For instance, the Senate bill repeals the penalty associated with the individual mandate, the requirement that all people purchase insurance or pay a government fee. In its place, insurers received one of their biggest demands: a provision in the bill that provides incentives for Americans to have continuous insurance coverage and allows insurers to charge them more if they let their policies lapse.

If that back and forth between industry and lawmakers on the individual insurance side ends up winning new conservative votes, lawmakers may be ready to turn the next round of healthcare bill negotiations to Medicaid, said Elizabeth Carpenter, senior vice president at Avalere Health, a consultant group to hospitals and insurers

"The rubber meets the road on the Medicaid provision," Carpenter said.

Reporting By Yasmeen Abutaleb; Additional reporting by Grant Smith in New York; Editing by Caroline Humer

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