Most health industry sectors are winners – some bigger than others -- under sweeping health care legislation that will expand coverage to 32 million uninsured Americans over the next decade, analysts say.
Hospitals, doctors, drug makers and most health insurers will pick up armies of new paying customers. Nursing homes and Medicare's private health plans will face steep government payment cuts, however.
Overall, "the health industry was a growth industry before the bill was approved and it will continue to be a growth industry," said Jonathan Oberlander, a health policy expert at the University of North Carolina-Chapel Hill. "The intention was to spread the pain around and they did that and not one sector was overly targeted."
Indeed, some of the most contentious proposals were eliminated during the legislative process -- including one to create a government-run insurance option and another to allow the government to negotiate with the pharmaceutical industry over prices for drugs for Medicare, the federal health program for the elderly and disabled.
One indication that the insurance industry is likely to do fine under the bill: Insurers' shares have soared by an average of 71% in the past year, as measured by the Standard & Poor's 500 Managed Care Index.
Here's a snapshot of how different industries fared:
"The hospitals are ultimately the winners — one doesn’t increase spending on health care by nearly $1 trillion without some significant part of it flowing to hospitals," said Sheryl Skolnick, a hospital analyst with CRT Capital Group in Stamford, Conn.
-- Worried they might get hit hard by the health legislation, hospitals were the first industry to make a deal with President Barack Obama and the Senate Finance Committee last year. Hospital groups agreed to give up $155 billion in Medicare funding over the next decade. But they are expecting that to make more than that – at least $170 billion - by having to treat fewer uninsured patients.
-- An individual insurance mandate and subsidies for low-income Americans to buy coverage means hospitals will have more paying customers.
-- Hospitals got guarantees that cuts in federal Disproportionate Share payments that they receive for treating the uninsured wouldn't occur until the insurance expansion is in place. And even then, some of the funding will remain to help hospitals treat illegal immigrants and recipients of Medicaid, the state-federal program for the poor.
-- Hospitals are slated to lose $155 billion in federal funding over a decade.
-- A new independent commission would have broad authority over Medicare spending, though most of its powers don't kick in until 2018.
-- The bill sharply expands Medicaid, which will reduce the number of uninsured patients. But Medicaid typically pays less than private insurers or Medicare.
"In the short term, insurers will gain enrollment but the bill may cost them in the long run if health costs don't come under control," said Peter Kongstvedt, a McLean, Va.-based insurance industry consultant.
-- The individual health insurance mandate, along with subsidies for low-income Americans, will bring insurers tens of millions of new customers.
-- The expansion of Medicaid will also provide new customers; many recipients will be covered by private managed care plans.
-- The bill calls for $132 billion in cuts to Medicare Advantage plans, the private health plans that cover one in five seniors.
-- New taxes on the industry total $70 billion over 10 years, beginning in 2014.
-- Insurers are facing a new requirement to spend 85 percent of their premium dollars on health care, potentially leaving less money for administration, marketing and profits.
-- The so-called "Cadillac" tax on high-cost health plans is aimed at insurers, though it won't take effect until 2018.
-- Lawmakers called for relatively low penalties -- just $95 in 2014 – for not buying insurance, which could encourage many healthy people to skip coverage.
"Pharma is one of the big winners," said Nancy Chockley, president of the National Institute for Health Care Management, a nonpartisan health policy research organization funded by Blue Cross and Blue Shield plans and government grants.
-- The drug industry will put up $84.8 billion to help fund the legislation. Part of that goes to making brand-name drugs more affordable for seniors who hit the Medicare coverage gap - the "doughnut hole." But pharmaceutical firms stand to make much more in return. With more Americans insured, more can buy brand-name drugs.
-- Expensive biologic drugs would get 12 years of exclusivity protection from generics. Obama, AARP and the generic drug industry were calling for a 5- or 7-year limit. While biologic drugs are only a small portion of industry sales, they represent the fastest-growing segment of the market.
-- The legislation, despite the pleas of some lawmakers, doesn't make it easier for Americans to buy less expensive drugs from abroad. Nor does it allow the government to negotiate lower drug prices for Medicare.
-- The industry will pay out $84.8 billion in new fees, rebates and discounts over the next decade.
"Primary care doctors got a bump up in funding and overall doctors got a pass," said Gail Wilensky, a senior fellow at Project Hope and former head of the Medicare program.
-- Primary-care doctors and surgeons practicing in areas with a shortage of physicians get a 10 percent bonus payment from Medicare from 2011 to 2015. Medicaid will pay primary care doctors Medicare rates in 2013 and 2014, to coincide with the Medicaid expansion. Medicare typically pays at least 20 percent higher rates than Medicaid.
-- No significant medical liability changes are in any of the overhaul bills, though there is money for states to run pilot programs.
-- The Medicaid expansion, to everyone under 133 percent of the federal poverty level ($29,326 for a family of four) means more patients have insurance, though at the lower Medicaid rates.
-- The current Medicare physician payment formula that each year threatens to slash doctor payments was left untouched. But Congress traditionally steps in to nullify the cuts.
Because most nursing home patients are covered by Medicare or Medicaid, reducing the number of uninsured doesn't really help the facilities. As a result, the industry doesn't see much gain in the overhaul.
-- The bill would establish the Community Living Assistance Services and Supports (CLASS) Act, a national voluntary insurance program that would allow people to finance their long-term care in advance through payroll deductions. It would provide a cash benefit of about $50 a day for long-term care, including nursing homes, in the home and adult day care.
-- Nursing homes would see their Medicare reimbursements cut by about $15 billion over the next decade. While Medicare comprises only about 13 percent of nursing home revenue, the industry relies on the money to offset low Medicaid reimbursement.