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ObamaCare promises to pay for itself. It can't possibly

A good article form Forbes magazine by Brian Wingfield

ObamaCare promises to pay for itself. It can’t possibly–if Democrats come through with all the side deals they’ve made in order to get a reform bill.

The embarrassing quid pro quo the Democrats cut with drugmakers was part of the dealmaking necessary to keep health care reform alive–and only one of many potential side deals if overhaul is going to happen.

Most Republicans don’t want any part of Democrats’ existing health care proposals. A bipartisan Senate plan, still in the works, may not include a public option for medical insurance (especially since the White House has backed off from one), but senators are deadlocked over how to pay for customers who can’t afford health insurance. For now “reform” is synonymous with an unpopular House of Representatives bill that makes the rich fret about possible tax hikes and leaves people who already have medical insurance coverage wondering if their benefits will be cut.

While the President hit the road to drum up public support for his plans, the White House and Capitol Hill Dems have been serving up closed-door promises to keep various interests happy.

“All the key groups have been bought off,” says Robert Laszewski, president of Health Policy & Strategy Associates, an Alexandria, Va. consultancy. Worse, he says, it’s undermining potential cost savings–perhaps preventing a new system that would pay for itself.

Doctors. The White House has no chance of changing the system without physicians on board–and some are very unhappy there are no provisions to cap malpractice suits. Among other things, the American Medical Association is eager to prevent a 21% reduction in Medicare reimbursement rates, currently scheduled to take effect in January. According to the Congressional Budget Office, the cost of changing the Medicare payment system is $245 billion over ten years.

Old people. Although AARP hasn’t endorsed any health care reform proposal, Democrats know they’ll lose this interest group if Medicare benefits are cut. The White House has already pledged to close the “doughnut hole” gap in coverage for prescription drugs. Right now Medicare recipients pay 100% for prescription drugs when their total cost is between $2,700 and $6,154 annually. The President proposes to slash that payment obligation by at least 50% for brand-name drugs to help the middle class, ostensibly using concessions offered by drugmakers. Cost of keeping AARP happy: $30 billion or so over ten years.

Hospitals. In June the American Hospital Association grumbled after President Obama proposed lopping off $220 billion in government payments to hospitals. Less than a month later large hospital groups agreed to accept $155 billion less in Medicare and Medicaid payments over the next decade, but they also don’t have to worry about a reduction in government subsidies for treating the uninsured until 2015. If all Americans get insurance, as the President has proposed, that’s even better news for hospitals. (Conservative Democrats in the House have also won protections for rural hospitals.) The amount the Administration conceded in order to keep hospitals at the table: $65 billion.

Private insurers. They helped kill health care reform in 1994 and now say Democrats are trying to demonize them. But don’t expect the carriers to sever ties with the White House just yet. Lawmakers know that insurers still have the firepower to derail reform. (Industry group America’s Health Insurance Plans and Blue Cross/Blue Shield and its subsidiaries have spent a combined $13.4 million on lobbying this year, according to the Center for Responsive Politics.) Insurers want the government to mandate universal coverage; they just don’t want Uncle Sam to provide it–and they’re betting that the Senate won’t want it, either.

Conservative Democrats. Without the support of conservative “Blue Dog” Democrats, health care reform can’t pass the House of Representatives. In July this group was successful in forcing the White House and Democratic leaders to accept a compromise that, among other things, allows doctors and hospitals to negotiate their own payment rates under a government-run medical insurance plan. It also exempts businesses with annual payrolls of under $500,000 from paying a tax if they don’t offer employees health insurance. To keep Blue Dogs licking their hands instead of biting them, House Democratic leaders agreed to slash the price tag of reform by roughly $100 billion. The potential cost: fewer people covered.

The middle class. President Obama has repeatedly promised no tax hikes on middle-income earners. As such, the idea of eliminating the tax exclusion for employer-provided coverage, which could raise $225 billion annually, is off the table. House Democrats have proposed raising taxes on the more affluent (individuals making $280,000 a year; couples filing jointly, more than $350,000). That would amount to a tax bill of $544 billion over ten years. But if private insurers increase premiums, or if health care reform greatly adds to the deficit, the middle class won’t escape.

Contentious as reform has become, the Administration is pushing hard for passage of a bill. With all the requisite giveaways, what will it look like–and how will we be able to afford it?

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