IBJNews

Baucus health reform bill would stick Indiana companies with fees

Back to TopCommentsE-mailPrintBookmark and Share
On The Beat Industry News In Brief

The health reform bill sponsored by U.S. Sen. Max Baucus, D-Mont., would help pay for expanded health insurance coverage by levying fees of $13 billion a year on the health care industry.

The fees would deliver a hefty bill to just about all of Indiana’s major health care companies. But how they’re reacting to the fees is all over the map.

Here’s a breakdown of what some Indiana companies could pay, derived from each company’s share of the U.S. market. The market totals were calculated by U.S. News & World Report, using data from New York-based research firm Capital IQ:

• WellPoint Inc., $1.1 billion per year

• Eli Lilly and Co., $88 million

• Zimmer Holdings Inc., $88 million

• Biomet Inc., $61 million

The companies crying the loudest are medical-device makers, such as the orthopedics companies in Warsaw.

“We expect that this particular fee would wipe out about 20 percent of all the profitability in the medical-device industry,” Biomet CEO Jeffrey Binder told the “Nightly Business Report” Sept. 16. “And there’s absolutely no way that that will not affect employment.” Because of that potential impact, Indiana’s two senators, Evan Bayh and Richard Lugar, have objected to the fees. Also, Indiana Gov. Mitch Daniels joined four other governors in writing a letter to Baucus, slamming his proposed fees as a job killer.

“Many of these are high-paying, basic science and engineering jobs that must be preserved and increased for a sector that provides an important economic engine for our country and states,” they wrote.

In the Warsaw area, the orthopedics industry pulls in $11 billion a year and employs 6,000 people. Indiana is also home to other medical companies, such as Bloomington-based Cook Inc., which does not disclose its revenue. Also, the state has been trying to nurture medical-device startups, such as Indianapolis-based Nico Corp.

Even though WellPoint would have a whopping bill, the Indianapolis-based health insurer and its peers haven’t opposed the fees too stridently. That’s because the Baucus bill would also give $452 billion over a decade in subsidies to help Americans buy health insurance.

If WellPoint gets the same share of the new customers as it currently holds—16 percent—it would mean more than $7 billion a year in new revenue. Paying $1 billion to get $7 billion in return is a slam-dunk for any investor.

Lilly isn’t squawking too much, either. Sure, it doesn’t watch $88 million fly out the door lightly, but more people with health insurance also means more people able to buy its prescription drugs.

Besides, Lilly is getting its top legislative goal, which is 12 years of exclusivity before biotech drugs face generic competitors. Legislation in both the House and Senate includes the provision.

ADVERTISEMENT

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
ADVERTISEMENT

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
 
Subscribe to IBJ
  1. Looking at the two companies - in spite of their relative size to one another -- Ricker's image is (by all accounts) pretty solid and reputable. Their locations are clean, employees are friendly and the products they offer are reasonably priced. By contrast, BP locations are all over the place and their reputation is poor, especially when you consider this is the same "company" whose disastrous oil spill and their response was nothing short of irresponsible should tell you a lot. The fact you also have people who are experienced in franchising saying their system/strategy is flawed is a good indication that another "spill" has occurred and it's the AM-PM/Ricker's customers/company that are having to deal with it.

  2. Daniel Lilly - Glad to hear about your points and miles. Enjoy Wisconsin and Illinois. You don't care one whit about financial discipline, which is why you will blast the "GOP". Classic liberalism.

  3. Isn't the real reason the terrain? The planners under-estimated the undulating terrain, sink holes, karst features, etc. This portion of the route was flawed from the beginning.

  4. You thought no Indy was bad, how's no fans working out for you? THe IRl No direct competition and still no fans. Hey George Family, spend another billion dollars, that will fix it.

  5. I live downtown Indy and had to be in downtown Chicago for a meeting. In other words, I am the target demographic for this train. It leaves at 6:00-- early but doable. Then I saw it takes 5+ hours. No way. I drove. I'm sure I paid 3 to 5 times as much once you factor in gas, parking, and tolls, but it was reimbursed so not a factor for me. Any business traveler is going to take the option that gets there quickly and reliably... and leisure travelers are going to take the option that has a good schedule and promotional prices (i.e., Megabus). Indy to Chicago is the right distance (too short to fly but takes several hours to drive) that this train could be extremely successful even without subsidies, if they could figure out how to have several frequencies (at least 3x/day) and make the trip in a reasonable amount of time. For those who have never lived on the east coast-- Amtrak is the #1 choice for NY-DC and NY-Boston. They have the Acela service, it runs almost every hour, and it takes you from downtown to downtown. It beats driving and flying hands down. It is too bad that we cannot build something like this in the midwest, at least to connect the bigger cities.

ADVERTISEMENT