Healthcare Reform Gains Momentum Ahead of August Recess, with Device Sector Impact Still Uncertain
BY LAUREN UZDIENSKI, JULY 30, 2009
Senate Majority Leader Harry Reid of Nevada confirmed last week that a vote on healthcare reform legislation would be delayed until after the chamber's August recess, a move that was generally anticipated but still effectively derails President Obama's promise to pass a comprehensive bill in the early fall. However, the Senate Finance Committee is said to be making progress on bipartisan deal, though many questions about the cost of universal healthcare coverage remain unanswered.
More progress has been made in the House, however, where the House Energy and Commerce Committee is reportedly close to a vote on a draft of a bill. Among the details that brought the bill together are exemptions for more small businesses from a requirement to provide insurance to employees and an agreement that payments to providers under a new public health plan will not be tied to Medicare. This contrasts with the latest version of the Senate bill, which would create a network of nonprofit cooperatives that would compete with private insurers rather than implementing a public health plan. If the bill is successful in committee, the entire chamber will vote in September, and the House and Senate versions of the legislation will eventually be reconciled.
The Congressional Budget Office determined that the House draft will cost about $900 billion over ten years, to be paid in part by having states partly fund the expansion of Medicare and higher premiums for low-income people. Additional savings may come from industry. The medical device industry, like the pharmaceutical and hospital industries, may be called upon to contribute to the cost-cutting effort. Pharma and hospitals have already pledged to save $80 billion and $155 billion, respectively, over ten years, and medical devices are expected to follow suit to the tune of $15 to $25 billion over 10 years. Some analysts project this figure could be as high as $50 to $60 billion. While the details are unknown, it follows that the device industry will have to work with hospitals while they attempt to meet their savings goals, which raises concerns over pricing.
AdvaMed hasn't directly addressed the speculation about a potential deal between the government and the medical device industry, though Medtronic and J&J have already voiced their commitment to curbing costs.
Overall, the ten-year price tag for healthcare reform is expected to approach $1 trillion, though the House draft legislation has been estimated to cost closer to $900 billion. Even if the device industry agrees to save $60 billion over ten years, which is at the highest end of the estimated range, devices would be footing only a fraction of the bill - so it's unlikely that device savings will be a key priority for administration.
