At last week's presidential debate, President Obama defended his health care legislation from GOP rival Mitt Romney's threats to repeal the law.
In his pitch, the president pitted individuals against health insurers, arguing that patients and families would lose while health insurance companies would gain if the legislation is excised from the books. On two occasions, he mentioned the rebates insurers have already paid out thanks to a provision in the law, rebates which have totaled over $1 billion.
"The primary beneficiary of that repeal," he said, "are insurance companies that are estimated to gain billions of dollars back when they aren't making seniors any healthier."
But the president's Big Corporations Vs. Little Folks narrative doesn't stand up to much scrutiny. The health insurance rebates, for example, may actually be making health care more expensive overall, and because many of those rebates are sent to employers, many individuals won't see the rebates directly.
Regardless, the $1 billion in rebates customers stand to lose doesn't come close to what the health insurance industry has on the line. According to a Bloomberg Government study from May, insurers stand to lose $1 trillion in revenue if the law is repealed.
As Square One taught us, $1 billion is big, but $1 trillion is bigger.
It's not just health insurers. Most of the health system's biggest and most powerful industries are betting on the law to boost their bottom line. The drug industry cut a deal with the White House to help finance the promotion of the health law. And following the debate, investors in the hospital industry got spooked. Via MarketWatch:
Investors in hospitals started heading for the exits in the wake of President Barack Obama's lackluster debate performance by selling off shares in virtually all companies in the sector early Thursday.
With the prospect that Obama — who spearheaded the health-care overhaul bill that gives aid to hospital balance sheets — could be vulnerable in his re-election bid against Republican Mitt Romney, shares plunged even though the broader market enjoyed substantial gains.
…In a morning note to clients, CRT Capital Group analyst Sheryl Skolnick said: "After an at-best lackluster and at-worst pitiful performance by President Obama in last night's debate, health care investors have to be wondering this morning whether the reform-on play of the last several weeks is the right one going into the Nov. 6 election."
She added: "Investors who are long hospital stocks this morning should be thinking, 'Thanks a lot, Mr. President,' at least in our view."
Part of the reason that President Obama was able to get a major health care overhaul passed was that the law's Democratic authors agreed not to seriously upend the current health system. Instead, the law built on top of the existing system, leaving most of its flaws in place and coaxing current players into supporting the law through horse trading and handouts. In the end, insurers and the rest of the health industry got a bill they felt they could live with, and arranged their business accordingly. As polls repeatedly remind us, on the other hand, you can't say the same about a majority of the country.