Health Insurers, Drugmakers Oppose Repeal of Obama Healthcare Overhaul

By Susan Heavey
November 12, 2010

Copyright Reuters

Repeal reform? No thanks, say health insurers, drugmakers and others looking for a clearer picture of the U.S. healthcare market after the bruising passage of the controversial overhaul law.

Company executives at the Reuters Health Summit this week said the law is far from perfect and said they will push for more steps to tackle stagnant health information technology and skyrocketing costs.

But after two years of debate over the issue, they need to move forward with clear steps on how to realign their businesses.

The new healthcare law created “a stable, predictable environment, however painful it has been in the short term,” GlaxoSmithKline Plc’s Chief Strategy Officer David Redfern said at the summit in New York.

“When you are running a business, the hardest thing is changing policy and a changing environment because it is very difficult to plan, predict and ultimately invest in that sort of scenario,” he said, echoing other speakers.

The industry’s assessment comes a week after U.S. elections saw gains among Republicans, who take over part of Congress in January after campaigning with a promise to repeal the healthcare overhaul passed by Democrats in March.

Few executives and industry experts anticipate any substantial changes to the overhaul despite the heated debate.

Uncertainly has plagued the sector since President Barack Obama won the 2008 election and pledged to revamp the nation’s $2.6 trillion healthcare system and help the uninsured.

The resulting law enacts major changes on insurers, from consumer protections and more company taxes to new spending rules. It also requires people to buy health policies or face fines starting in 2014, among other provisions.

Health officials must still hammer out how to implement the law and finalize hundreds of new rules and regulations. Many such details are key, as the sector looks to adjust its business for 2011 and beyond.

Republicans have vowed to repeal the law, though some have said they more realistically will have to target either specific parts of the measure or its funding.

“Anti-reform made good talking points before the election,” said the Department of Health and Human Services’ Liz Fowler, adding that people “will find more to like than to dislike” in the law once it is more in place.

“The (healthcare) system is broken now …,” said Fowler, the policy deputy director at HHS’ newly formed consumer and insurance office. “We may tweak (the law), but overall it is a very positive direction forward.”


Even insurers, which were vilified by Democrats in passing the reforms, said they don’t want a repeal, even as they push for clarity on forthcoming rules and seek additional changes.

Cigna Corp. CEO David Cordani and Aetna Inc. President Mark Bertoliniboth urged the nation to move forward on the overhaul.

So far, insurers are awaiting rules that limit how much they can allocate toward medical care versus administrative costs and profits. The rules take effect in January, weeks before any shift in Congress.

Republicans, who won control of the U.S. House of Representatives, will likely hold hearings and launch probes although Democrats in the Senate, and Obama can block attempted changes to the law.

Kris Jenner, portfolio manager at T. Rowe Price Healthcare Sciences Fund, said having Republicans in greater power should reduce pressure on industry.

“That level … negative rhetoric is likely to be scaled back. And from a stock level, that is a positive,” he said.

Since the start of 2009, the Morgan Stanley Health Care Payor index has risen 75 percent, outperforming a roughly 35 percent rise for the broader Standard & Poor’s 500 index.

“There should be less bark, if you will, out of Congress,” Jenner said.


Unlike insurers, drugmakers have escaped largely unscathed under the law, although there is still incentive to shape it.

“There are a couple things we don’t like about it,” said AstraZeneca Plc CEO David Brennan. “But in the end … no law is going to be perfect.”

Pharmaceutical companies cut a deal with Democrats to offer some discounts and pay billions in taxes to help fund the overhaul.

That means largely the status quo for sales, but a major chance to help mold other, seemingly more obscure parts of the law that may boost the industry as scrutiny over healthcare spending increases over time, said IMS Health’s Murray Aitken.

He urged drugmakers to try to influence the law as it is implemented over the next few years. “Don’t stand by and wait for this,” said Aitken, a senior vice president for the drug industry tracking company.

Drugmakers, such as Pfizer Inc. and Merck & Co. Inc., should target the Medicare advisory board aimed at cost-cutting and another comparative effectiveness group that will compare medications with each other as well as with other treatments.

All could eventually shape doctors’ use of pharmaceuticals, Aitken said, even though most increased use will be generic.

(Reporting by Susan Heavey; additional reporting by Lewis Krauskopf; editing by Gerald E. McCormick)