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First came the drug companies, offering to give up $80 billion. Then hospital chiefs stood at the White House and promised to do their part for President Barack Obama's health overhaul by taking a $155-billion hit. It's not altruism.
The trade groups are hoping that Obama will remember later that they gave him a welcome assist during a rough stretch, when divisions in Congress were slowing health care legislation. They want the chance to help shape a final deal bigger than anything Washington has attempted in years.
"We believe that having been first at the table, having been very generous and very supportive all the way through and continuing to work for a good health care reform bill, that we're entitled to every consideration in the process and we're going to be asking for it every way down the line," said Billy Tauzin, the former Louisiana congressman who heads the drug industry lobby, Pharmaceutical Research and Manufacturers of America.
One of the provider groups' main goals is largely unspoken. They're trying stave off a much bigger hit if the government sets up a public health insurance plan that pays them according to the relatively stingy fee schedule of Medicare, the government health program for seniors.
House Democrats are proposing to do exactly that.
The industry groups are working with an intermediary who sympathizes with their concerns. Senate Finance Committee Chairman Max Baucus, D-Mont., helped broker the deals with the drug companies and hospitals. He's also trying to fashion a public insurance plan that would pay doctors and hospitals richer fees that are closer to what private insurers pays.
To understand why the public plan issue is so important to providers, take a look at the hospitals.
For the hospitals to give up $155 billion over 10 years in expected payments from Medicare and Medicaid is a real sacrifice. But if a Medicare-like public plan goes into effect, independent estimates indicate that hospitals could lose $31 billion a year when it's fully phased in. That could eclipse the $155 billion in cuts in short order.
Hospitals say Medicare doesn't pay them enough to cover costs as it is now. So having tens of millions more patients covered by a Medicare-like plan would blow a hole in their budgets.
Provider groups "are willing to spend hundreds of billions to make sure a public plan doesn't happen," said Robert Laszewski, a former insurance company executive who's now a consultant to industry. "If they get no public plan and have to make a $500 billion contribution, it's 'Holy mackerel, let's break out the champagne!'"
The industry groups say that getting everybody insured would help all of society -- including their businesses. But they don't claim to have checked their self-interest at the White House gate.
"There is no question that when you engage in the process, as we have, there's an opportunity to help shape it," said Rick Pollack, executive vice president for advocacy at the American Hospital Association.
But he acknowledged that a Medicare-like public plan, open to all businesses and individuals as House Democrats envision, would be a "real problem," adding: "We have real concerns about Medicare rates."
The Obama administration is sending mixed signals about a public plan. The president has offered a ringing endorsement that's heartening to liberals. But top aides have repeatedly hinted the administration would go a long way to compromise. If the industry groups and Baucus can deliver a deal that gets enough votes to pass the Senate, advocates of a public plan that looks like Medicare would be outmaneuvered.
Other provider groups, including insurance companies and doctors, are also in talks about delivering savings.
There's no guarantee the strategy will succeed.
One problem is money. Obama needs $1 trillion or more over 10 years to pay for a health overhaul, and the industry deals so far have only produced $235 billion.
Another problem is that some major players were left out of the negotiations. Rep. Henry Waxman, D-Calif., has already served notice that he doesn't like the drug industry deal and he isn't bound by it. Waxman is one of three committee chairmen in charge of the House legislation.
In the end, the industry groups don't have much to lose by coming forward now with their pledges.
While Obama's popularity would certainly suffer if the health overhaul unravels, the provider groups wouldn't have to pay up. Their pledges of savings are contingent on a health care bill making it through Congress and to the president's desk.
