(Report) Lobbying Drives Healthcare Costs, Not Care Or Outcomes

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The health care industry spends more on lobbying than any other industry.

Yale researchers probing the impact of politics on health care spending found that a particular pork barrel project - a provision that directs funds to specific members' districts in an effort to win legislative votes - resulted in a dramatic increase in spending by health care facilities rewarded by the provision. It did not lead to an improvement in health outcomes though.

[Researchers] studied the passage of the 2003 Medicare Modernization Act of 2003, which created prescription drug coverage for seniors. In order to win votes for the controversial law, a small provision was added to the legislation – Section 508 – which raised Medicare payments for approximately 100 hospitals.

After determining the hospitals affected by the waiver, researchers documented how each one used the extra money:

They found that hospitals responded to the payment increase by treating more patients, hiring more staff, investing in new technology and raising CEO pay.... They did not observe any significant improvements in quality. Ultimately, hospitals that received a Section 508 waiver raised their spending by over $1 billion from 2005 to 2010.

The waiver was slated to expire in 2007, and researchers found that hospitals spent millions lobbying for its extension.

Moreover, after examining data on political campaign contributions, the authors found that before the payment increase was extended, members of Congress that had a hospital with a 508 waiver in their district saw a 65 percent increase in donations from individuals working in the health care industry.

Researchers noted that:

while increasing health care spending may create jobs in the short term and even raise political donations, these policies need to be funded.