Bloomberg the Company & Products

Bloomberg Anywhere Login


Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.


Financial Products

Enterprise Products


Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000


Industry Products

Media Services

Follow Us

Republicans Try to Punch Holes in Health Law With CVS Caremark

After the Midterm Election, a Battle Royal
Various groups want to chip away at the health-care overhaul law. Photo Illutration: Bloomberg

Jan. 20 (Bloomberg) -- The economic effect of President Barack Obama’s health-care overhaul remains under debate, with Republicans such as new House Speaker John Boehner calling it a job killer. For lobbyists of the health-care industry and employers, the law amounts to a full-employment act.

Insurers led by UnitedHealth Group Inc. want to charge older patients more than the law allows. Drugstores such as CVS Caremark Corp. seek to roll back a prohibition against using tax-free savings accounts for over-the-counter medicines.

Hospitals, doctors and drugmakers led by New York-based Pfizer Inc. are trying to dismantle a board created to recommend Medicare spending cuts. And a medical-device industry goal is scrapping a new tax levied on their products.

November’s midterm elections gave Republicans control of the House and energized opponents of health-care reform, who see opportunities to punch holes in the Patient Protection and Affordable Care Act -- if not repeal it altogether. The shift in the balance of power has led to “an open lobby both Congress and the administration for some flexibility,” said Dan Mendelson, chief executive officer of Avalere Health LLC, a Washington consulting firm.

The government has granted waivers to more than 220 companies and unions so they can offer fewer health benefits than the law requires. Among those to win reprieves are the United Federation of Teachers and Orlando, Florida-based Darden Restaurants Inc.

Republican Control

Now, businesses are turning to newly empowered congressional Republicans. While outright repeal of the law is a political impossibility for at least the next two years, Republicans can use votes and hearings to apply pressure and “affect the shape of regulations,” Mendelson said.

Businesses are encouraged by signs the administration is willing to delay some requirements of the law to prevent reductions in coverage before new insurance marketplaces, or “exchanges,” open in 2014.

The government will consider requests from state insurance commissioners to temporarily adjust new rules requiring that health plans spend at least 80 percent of premium revenue on health services, said Jessica Santillo, a spokeswoman for the Health and Human Services Department in Washington.

Insurance commissioners in states including Maine and Iowa have said plans may withdraw from their markets if the spending rules aren’t eased.

Higher Drug Costs

“It’s not to the advantage of consumers if insurance markets collapse,” said Timothy Jost, a professor of law at Washington and Lee University in Lexington, Virginia.

Consumer costs for over-the-counter drugs will be as much as 35 percent higher because of the health law, said Scott Melville, president and CEO of the Consumer Healthcare Products Association, which is lobbying the government on behalf of drug stores and other interests.

Another battle may begin over the law’s age-rating requirement, which would prohibit insurers from charging older people more than three times what young adults must pay. The provision doesn’t take effect until 2014, yet the AARP already is preparing to defend it. Insurers led by Minnetonka, Minnesota-based UnitedHealth would like the ratio increased to better reflect the risk of covering an older and sicker population.

“We did hand-to-hand combat with the insurers all the way through health reform on this issue, so it’s no surprise” it would be revived, said John Rother, senior vice president for public policy at AARP.

Reducing Some Premiums

Robert Zirkelbach, a spokesman for America’s Health Insurance Plans, a Washington trade group, said the industry favors a 5-to-1 ratio. That formula would cut premiums for 18- to 24-year-olds by about 31 percent, according to data compiled by Bloomberg based on an analysis of claims and premiums by the consulting firm Oliver Wyman. Americans 60 and older, meanwhile, would have their premiums rise about 15 percent.

Without a change, young people may decide to forgo coverage and pay the government penalty. Zirkelbach said his group is now “educating folks” in Congress to lay groundwork for a change.

The elections may have delivered a receptive audience.

This story is part of a Bloomberg Government special report on regulation. The full report may be found on and in Bloomberg Businessweek.

To contact the reporter on this story: Alex Wayne in Washington at

To contact the editor responsible for this story: Adriel Bettelheim at

Please upgrade your Browser

Your browser is out-of-date. Please download one of these excellent browsers:

Chrome, Firefox, Safari, Opera or Internet Explorer.