Ama Makes A Deal: Will It Pay Off?

The American Medical Association, traditionally a solid foe of the creeping force of governmental intervention in health care today has come out in favor of the newly released Democratic health care plan. Their blessing is of enormous political value to Democratic lawmakers and may go a long way in wooing moderates and liberal Republicans.

While it may seem a savvy political move intended to secure a better deal with the controlling majority, a` la Walmart's endorsement of the plan, it will not be long before the AMA begins to reconsider and sees the writing on the wall.

The language of the bill, and any additions to be inserted during the mark-up period, makes it abundantly clear that doctors will not benefit from the newly proposed arrangement. What is much more likely is that, in the weeks to come, left-leaning Democrats will propose some kind of executive body to study and recommend appropriate payments for various services and, of course, which procedures will be approved and which will not. This kind of centrally-planned health care board was discussed frequently during last years Primary season, endorsed openly by the Obama camp.

The pharmaceutical industry fell into a similar trap. As today's Wall Street Journal makes clear, with the assurances of a chief lobbyist, the drug lobby announced, just a few weeks ago, that it would provide $80 billion over the next decade to defray drug costs for seniors and to finance the Obama plan. The ultimate motivation for this move was not a benevolent concern for the safe passage of the Obama health package, but rather an effort to forestall the price controls and drug reimportation provisions that were being discussed. The consequences of these policies are to eat away at company margins and profits, a percentage of which is reinvested into research and development to discover the next generation of drugs.

Of course, the Democrats released their plan days ago and, wouldn't you know it, right there in black and white are price controls and reimportation allowances. To add insult to injury, Senate Democrats are also considering new taxes on health insurance and pharmaceutical companies. This will cost the industry a cool $100 million.

It seems here that the gamble of cooperation did not work out.

The American Medical Association will likely experience a similar fate.