Health-care overhaul bringing changes to businesses

March 23, 2010 at 12:00a.m.

Pain and Gain

Associated Press

WASHINGTON

When historians write the book on how President Barack Obama’s health-care overhaul became law, they’ll need to leave space for some unlikely advocates: lobbyists for the drug, insurance and hospital industries.

Last summer, executives from those groups visited the White House and pledged to do their part to help pay for the health bill. By signing on to the effort early and agreeing to absorb some of the costs, they were able to help shape its final form.

Only time will tell how smart that trade-off was for the industries, but a quick look at the bill passed by the House late Sunday shows it was far from their worst-case scenario:

HEALTH INSURERS

No sector had more to gain or lose than the health-insurance industry, which pulled in more than $275 billion last year.

The insurance industry changed from its early support last fall after it decided the Democrats’ plan wouldn’t bring enough healthy new patients into the system to balance increased medical costs. But analysts say insurers’ rhetoric doesn’t match their actions.

“It doesn’t look like they’re in the fight of their lives,” said Les Funtleyder, an analyst with financial firm Miller Tabak.

And stocks of insurance companies are way up over the past year — even beyond the gains in the broader market.

PHARMACEUTICALS

Thanks to drugmakers’ early support and willingness to pay an estimated $90 billion in new taxes and fees, most analysts think the industry walks away with a good deal.

Drug prescriptions are expected to rise as more people get preventive care and insurance helps them pay for medicine.

On top of that, seniors are expected to use more medicine because the bill closes a gap in Medicare coverage.

HOSPITALS

Of all U.S. health-care businesses, most experts say, hospitals stand to benefit the most from the health bill.

Increased insurance coverage will go a long way toward easing hospitals’ financial pain from the recession, which has left them with more nonpaying patients.

With the expansion of Medicaid and a mandate to buy coverage, hospitals will erase most of their bad debt within five years, Mendelson said.

Like the drug industry, hospital executives cut a deal with the White House early on, volunteering to take a $155 billion hit in reduced Medicare reimbursements.

MEDICAL DEVICES

If hospitals are the big winners of health reform, most analysts agree that makers of medical devices — everything from artificial hearts to hospital beds — appear to be the losers.

Companies such as Medtronic Inc. and Boston Scientific Corp. will face $20 billion in new taxes over the next 10 years, with little certainty they can make it up in new sales.