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Why Americans Pay So Much for Health Care: Friends in High Places (Just Not Your Friends)

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Originally published at Wendell Potter.Com on February 4, 2012.

Insurers and drug companies and their armies of lobbyists get what they pay for on Capitol Hill.

If you wonder why we spend more money on health care than any other country  but have some of the worst health outcomes, you need look no further than the halls of Congress to figure out why that is.

And you need look no further back than the recent "fiscal cliff" drama for compelling proof of how decisions are often made, not based on protecting the public's interest and bringing costs down, but on protecting the profits of pharmaceutical companies, insurance firms and other special interests that grease the palms of our elected officials.

Drug makers have long had cozy relationships and outsized influence on lawmakers in Washington. That's why ObamaCare  barely touches that industry. Big Pharma essentially blackmailed members of Congress and the White House by threatening to bankroll a huge PR and lobbying campaign to kill health care reform if serious consideration was given to allowing Medicare officials to negotiate for lower drug prices.

We hear constantly from lawmakers about how unsustainable the Medicare "entitlement" program is,  yet when they had a chance to make a difference in how much Medicare has to shell out to drug makers, they looked the other way. Taxpayers could save billions of dollars a year if Medicare didn't have to pay so much for drugs, but drug companies have much more clout on Capitol Hill than taxpayers.

So much clout that one big drug company--Amgen--was able to get language quietly inserted in the fiscal cliff bill that will cost the Medicare program millions of dollars.

Buried deep in the legislation is language that delays long-proposed price restraints on a class of drugs used to treat kidney dialysis patients. That paragraph allows Amgen to sell one of its high-priced drugs, Sensipar, with no government controls for two more years--at a cost to the Medicare program of an estimated $500 million.

As reported first in The New York Times, this Congressional gift to Amgen, which employs 74 lobbyists in Washington, came just two weeks after the company pleaded guilty in a federal fraud case. It's likely the public would never have been aware of the company's windfall if its CEO hadn't reported it right away to Wall Street investment analysts, the stakeholders most dear to publicly traded companies like Amgen and the insurance companies I used to work for.

The language apparently was inserted in the fiscal cliff bill by Amgen's friends on the Senate Finance Committee, Democrats as well as Republicans. The company has been very generous with campaign contributions over the years to several committee members, including Orrin Hatch (R-Utah) and committee chair Max Baucus (D-Mont).

Speaking of insurance companies, they, too, made out like bandits in the fiscal cliff bill.

My former colleagues rarely miss an opportunity to talk about the importance of  "choice and competition" to consumers.

"Health plans are committed to working with policymakers to make coverage more affordable, promote choice and competition, and maintain a strong safety net for our nation's most vulnerable populations," Karen Ignagni, president of America's Health Insurance Plans, said in a recent statement. Ignagni went on to make several suggestions about changes policymakers should make to ObamaCare before  important consumer protections kick in on Jan. 1, 2014.

And --surprise--lawmakers took some of Ignagni's suggestions. Language inserted in the fiscal cliff bill at the 11th hour by friends of the industry that will actually reduce "choice and competition" is all the proof we need that the $10.2 million AHIP and 11 big insurers gave to federal politicians between 2010 and 2012 is turning out to be a pretty good investment.

The truth is that the major insurers dominating the so-called marketplace have for years been systematically eliminating their smaller competitors, either by forcing them out of business or by acquiring them. There are far fewer managed care companies today than there were when I first began working for the industry in the 1980s.

In an effort to create more competition, consumer-friendly lawmakers inserted a provision in ObamaCare to make federal dollars available through loans to groups hoping to set up nonprofit co-op health plans in every state.

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for 20 years, Wendell Potter worked as a senior executive at health insurance companies, and saw how they confuse their customers and dump the sick -- all so they can satisfy their Wall Street investors.
Wendell Potter is an Analyst at the Center for Public Integrity; Former insurance company executive; Author of Deadly (more...)

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