A Closer Look at Those Industry Deals | Michael F. Cannon | Cato Institute: Commentary

A Closer Look at Those Industry Deals | Michael F. Cannon | Cato Institute: Commentary: "Yet the PhRMA agreement would not save taxpayers $80 billion. It would cost them $80 billion, and then some.

Under the agreement, the full price of each drug would continue to count toward seniors' catastrophic deductible. As a result, even more seniors would exceed that deductible, after which taxpayers would pay 95 percent of their drug costs. Obama also agreed to oppose stricter price controls for government purchases. PhRMA members agreed to cut their prices for seniors only because Obama agreed that taxpayers would buy more drugs at higher prices.

Think about it: Would drug companies enter this agreement unless they knew they would be net winners? Lobbyists never advocate less revenue for their members.

An agreement reached with Wal-Mart was also deceptively self-serving. Two weeks ago, the nation's largest private employer pledged to support a key Obama priority: a mandate requiring all employers to offer health benefits. An administration official called Wal-Mart's support for an employer mandate "significant."

Yet Wal-Mart's announcement was less Nixon going to China than, say, Stalin going to China. As one Wal-Mart lobbyist candidly explained to me, the company supports an employer mandate because it would primarily harm Wal-Mart's competitors. (The 315,000 jobs an employer mandate would destroy? Collateral damage.) Wal-Mart's competitors are not amused."

"Finally, last week Vice President Joe Biden announced that three hospital groups agreed to support $155 billion in cuts in federal payments to hospitals."

"The Obama administration essentially issued those groups an insurance policy. To guarantee that the groups would get at least $155 billion back from the government in the form of newly insured customers, the administration agreed that the new subsidies would start flowing immediately, while the pay cuts would take effect over time. That means the pay cuts may never take effect at all: physicians have been blocking their own scheduled pay cuts for nearly a decade.

The administration further bribed the hospital groups with unspecified protections from competing physician-owned hospitals as well as protections for the same inefficient hospitals Obama has criticized."

"Each agreement was negotiated behind closed doors, away from public scrutiny. All are contingent on the favored groups getting something they want, and all "savings" could be undone by future lobbying. To paraphrase George Bailey, the industry isn't selling — the industry is buying."