In January, Congress told the Obama administration to cut more than $500 million per year in federal funding for “excessive” dialysis drug payments. Now over a hundred of the congressmen who voted for the original reductions have reversed themselves, signing a letter to the Medicare administrator asking for the cuts to be reconsidered. The Times reports:
The conflicting message is due in part to the lobbying muscle of an industry dominated by two companies — DaVita Healthcare Partners of Denver and Fresenius, based in Germany — both of which have seen their bottom lines improve since 2011, when the federal government first started making the excessive payments.While most of Washington has been on vacation, industry lobbyists aligned with nonprofit groups that in many cases they helped set up or finance have orchestrated a textbook campaign to protect the payments.
Those who want the cuts argue that the current level of federal funding is unnecessary, while those opposed say people could die if the cuts go into effect. If the supporters of the cuts are right, this reversal is a clear example of regulatory capture. And even if special interests aren’t hijacking federal regulation here, there are plenty of other cases where they undoubtedly are.Regulatory capture is one of the main reasons well-intended government regulation often has terrible unintended consequences. In the case of health care, the relative bargaining position of the consumer is so weak already that ceding more power to special interests seems especially counter-productive.[Photo of stethoscope and money courtesy of Shutterstock.]