Health Reform's Winners And Losers

WASHINGTON -- The biggest health care overhaul in nearly half a century is about to become reality.

The House of Representatives passed health care reform legislation Sunday night by a vote of 219-212, effectively ending a year's worth of political horse trading and lobbying. The bill now goes to President Barack Obama for his certain approval. After the vote, House Democrats broke out into a chorus of "Yes we can, yes we can," the signature slogan of Obama's presidential campaign. But the real workings of reform are only now beginning as industry stakeholders, the public and the courts prepare to deal with the fine print of how the legislation will be implemented.

The overhaul gives an additional 32 million Americans access to basic health insurance by 2019, according to the Congressional Budget Office. The biggest change in the American health system since Medicare was enacted in 1965, the reforms are expected to cost $938 billion during the next decade. It is going to be paid for by cuts in Medicare, new taxes on investment income and fees on various industry participants--which certainly will be passed along to the general public. But while government subsidies for people who cannot afford insurance and insurance exchanges to help people get insurance won't be operational before 2014, the increased costs will begin next year.

Big changes are coming for small business. Companies with more than 200 workers will be required to automatically enroll their employees in whatever insurance plan they offer. Companies with at least 50 workers are subject to fines if their workers end up receiving government subsidized coverage. The bill also contains tax breaks for small firms that provide employees with health insurance.

The legislation may be going to Obama for signing, but the action isn't over in Congress. Following the passage of the bill, the House passed a so-called "reconciliation bill" to make adjustments to the Senate-defined package. However, the Senate has yet to take up the reconciliation bill. Senate Democrats have assured their counterparts in the House that they have enough votes to pass the reconciliation bill next week. It will only need a simple majority vote. The president would then sign the alterations into law. Assuming the reconciliation process is completed, here's a look at which groups are the biggest winners and losers in health reform:

WINNERS

The Uninsured

According to the Congressional Budget Office, 94% of all non-elderly Americans will have access to health insurance by 2016, vs. 83% now. Health insurers won't be able to deny coverage based on pre-existing conditions. People who elect not to get insurance will have to pay a penalty of $695 per year or 2.5% of income (phased in before 2016). But state-based exchanges will be set up to make shopping for an insurance plan easier. Generous subsidies will be available to families that make up to $88,000 in household income.

Private Insurers

America's Health Insurance Plans, an industry group for private insurers, has complained that health care reform leaves 23 million Americans uninsured, imposes drastic cuts in Medicare Advantage and levies a $70 billion tax hike (over 10 years) on the industry. While HMOs whine a lot, they actually came out OK. Their biggest nightmare was long ago removed from the legislation: a government-run plan to compete with private companies. Better yet, health insurers get 32 million new taxpayer-subsidized customers. In essence, it's a big Cash for Clunkers program for HMOs.

Among the HMOs, the biggest winners are Cigna ( CI - news - people ), Aetna ( AET - news - people ) and UnitedHealthcare ( UNH - news - people ) because they are concentrated in big employer markets that will be largely unaffected by the bill. The bill is more likely to have a negative impact on WellPoint ( WLP - news - people ) and Humana ( HUM - news - people ). WellPoint could lose shelf space in the individual market it now dominates in many states. Humana has a big Medicare Advantage business and will get hammered by the reimbursement cuts.

Drug and Biotech Companies

Drug companies like Merck ( MRK - news - people ), Pfizer ( PFE - news - people ) and Amgen ( AMGN - news - people ) are among the biggest industry winners in the legislation. They suddenly will have tens of millions more insured customers who can afford their expensive medicines. The pharmaceutical industry's trade group was a big supporter of the legislation, and any threats to the industry were stripped out early or never included. There's no real plan for comparing treatments to one another, one approach that could lower costs, or for giving the government power to bargain for lower prices. The bill also gives drug makers extra layers of monopoly protection for protein-based biotech drugs, one of the industry's hottest areas.