By Hazel Bradford; Pensions & Investments ~ Jun 29, 2012

The House and Senate on Friday passed legislation to give corporate pension plans some funding relief while also raising their premiums to the PBGC.

The changes were approved as part of a highway reauthorization bill, which also extends a student loan subsidy, and was approved in the House by a vote of 373 to 52 and in the Senate by a 74-19 vote.

The bill now goes to President Barack Obama, who is expected to sign it.

Instead of using the current method of calculating pension liabilities with two-year corporate bond interest rates, plan executives can now use a 25-year average corporate rate that is within a 10% range. That range will grow 5% per year, which will reduce the amount of relief available to sponsors each year. The new formula would raise the interest rates used to calculate liabilities to 6.7% from the current effective rate of 5.3%.

That new calculation formula is expected to immediately raise the funding levels of corporate defined benefit plans, with the Society of Actuaries estimating that the number of large corporate plans over 80% funded will rise to 91% from the current 62%, but the legislation also calls for disclosure of current calculations and funding levels, in addition to new formulas, adding to the potential for confusion, pension experts say.

The increased federal tax revenue that would come from reduced tax-exempt pension contributions made the changes politically acceptable to both Democrats and Republicans, along with another provision allowing for higher PBGC premiums. The bill calls for increasing flat-rate premiums to $42 per participant next year from $35, and then further hikes in later years. Variable-rate premiums, which would still be calculated by current interest rates, would also increase by a formula based on a plan’s funding level.

The PBGC premium increases made it a mixed victory for pension plan executives. “While we strongly support pension stabilization, we do not believe that Congress should be including an increase in PBGC premiums as a trade-off,” said Scott Macey, president and CEO of the ERISA Industry Committee, in a news release.

— Contact Hazel Bradford at hbradford@pionline.com

By Linda A. Johnson, AP; The Tampa Tribune ~ Jun 29, 2012

TRENTON, N.J. (AP) — The Supreme Court’s decision Thursday to uphold President Barack Obama’s historic health care overhaul is expected to benefit nearly every corner of the health care industry by expanding coverage to millions of Americans. But it’s not a slam dunk.

Hospitals and drugmakers are expected to be flush with new customers because of the law’s requirement that most Americans have insurance by 2014 or pay a fine. Insurers also are expected to experience a boon, but they’ll face a new round of fees and restrictions. It’s unclear if medical device makers will get the same jump in business, and the law calls for them to pay new taxes.

Meanwhile, the overhaul is expected to boost health care stocks both by increasing access to – and use of – health care. On Thursday, shares of hospitals and some insurers rose following the ruling. Shares of the largest U.S. drug companies were mixed, while shares of medical device makers dipped slightly with the broader market.

But the health industry – and company stocks – still face uncertainty, at least until the November’s presidential election. Republicans want to scrap the law. And health care companies oppose some aspects of it.

Some companies and industry trade groups issued statements Thursday that said they plan to work with the White House and Congress to change or eliminate provisions that they consider bad for their businesses, patients or both.

One of them, French drugmaker Sanofi SA, has extensive operations in the U.S. The company, which makes the popular blood thinner Plavix, put out a statement Thursday that said it recognizes “the conversations around the direction of health care in America will continue.”

Here’s the potential impact from Thursday’s ruling on major sectors of the health care industry:

HOSPITALS

Some 30 million or more Americans are expected to get health coverage when the so-called individual mandate that requires nearly everyone to have coverage takes effect.

That should reduce the number of uninsured patients who need urgent care showing up at hospitals. Such charity care has been a drag on hospitals, totaling about $39 billion in 2010. Federal payments to hospitals to offset some charity care costs likely will be reduced as more people are insured.

But hospitals will benefit from those who are newly insured. Those people are expected to seek more tests and nonemergency treatments at hospitals, including for chronic health conditions such as diabetes.

“Hospitals may be the biggest beneficiary because their biggest problem is people without insurance,” said Les Funtleyder, health care fund manager at Poliwogg, a private equity fund for small investors.

But there are downsides for the sector. Roughly half of the patients gaining insurance will be covered by Medicaid, the federal-state program for poor and disabled people. Like Medicare, it reimburses hospitals less than care actually costs – and less than private insurers. In addition, hospitals will get smaller annual increases in Medicare payment rates under the law.

Additionally, the government and private insurers will demand better outcomes, not just more care. In order to achieve that, hospitals will be forced to make improvements. And technology shifts such as adopting electronic health records won’t come cheap.

“There are a lot of variables to be worked out,” said UBS health care services analyst A.J. Rice. But “the net effect should be positive.”

DRUGMAKERS

For drugmakers, the law may be a wash.

The law – which the industry strongly supported – didn’t carry significant reductions in what government programs pay for medicines. That’s a big positive given that drug prices are much higher in the U.S. than other countries.

Biotech and traditional drugmakers likewise already are absorbing the costs of the health care law. Those include industry fees totaling about $85 billion over 10 years. Each company pays according to its market share of government health programs

In addition, drugmakers have to give increasing discounts to seniors on Medicare when they hit the “doughnut hole” coverage gap each year, and must pay much-higher rebates to the government on drugs bought through Medicaid.

Major drugmakers last year each reported higher costs and lower revenues totaling roughly $500 million from the fees, rebates and discounts combined.

All those costs from the overhaul already are reflected in drugmakers’ share prices and financial forecasts, said UBS drug analyst Matthew Roden.

He said the companies likely will get a boost in drug revenue from new patients starting in 2014, but not a huge one. That’s because patients needing the most-expensive drugs, for cancer and rare disorders, aren’t going without now. They generally are getting them through government or industry patient assistance programs.

INSURERS

Insurers will likely add millions of new customers because of the individual mandate. They’ll also benefit from tax credits that will help middle-class people buy individual policies through new insurance exchanges that are like online marketplaces and expansion of the state-federal Medicaid program to cover more poor people.

But health insurers will face restrictions and hefty fees. They’ll pay annual fees starting in 2014, totaling $8 billion that year and rising after that.

The law also restricts how much insurers can vary their pricing based on things like age and health. And it will require them to cover everyone who applies starting in 2014, even those already sick with expensive conditions such as diabetes. Additionally, the law stipulates that insurers spend most of the premiums they collect on care, or pay rebates to customers.

Insurers that rely heavily on providing plans for individuals and small businesses will see their profit margins squeezed the most by the coverage limitations and premium spending rules.

On the other hand, providers of Medicaid coverage will benefit the most because the law preserves that program’s expansion. And analysts say the ruling won’t have much of an impact on companies that have diverse sources of revenue like UnitedHealth Group Inc., the country’s largest insurer.

Citi analyst Carl McDonald said insurers face considerable risks that they will get mostly sick people signing up for coverage in the online health insurance exchanges that begin in a couple years, because the penalty for not signing up is only a $95 tax, at least initially.

Michael McCallister, CEO of Humana Inc., the fifth-largest health insurer, said now that the law has been upheld, he wants to focus on improving it “to provide some relief from the sticker shock that’s going to come with a lot of the things that happen in 2014.”

Those include what he calls unfair taxes on insurance premiums. He also said younger, healthier Americans might be hit with higher premiums because insurers will likely look to make up for the fact that they can no longer charge older, sicker customers more.

MEDICAL DEVICE MAKERS

For medical device makers, the bad news is that they’ll have to start paying a 2.3 percent tax beginning in January on sales of devices such as pacemakers and CT scan machines. But it’s unclear whether increased sales down the road will offset that tax.

Funtleyder, the health care fund manager, doesn’t foresee a big jump in device sales: “People who need a pacemaker already were getting one.”

But Leerink Swann analyst Richard Newitter wrote that he expects more doctor visits and hospital procedures to increase sales of devices.

Either way, one trade group for the industry, the Medical Device Manufacturers Association, said that Congress and the president must repeal the tax, arguing it would make it harder for companies to develop innovative new devices.

“It is clear that this misguided policy has already led to job losses and cuts to research and development,” Mark Leahey, the group’s president, said in a statement.

If the Supreme Court strikes down the health law, 49 million Medicare beneficiaries could lose a variety of benefits that have already kicked in. They include:

• Prescription savings. Beneficiaries get discounts of 50 percent on brand-name drugs when they are in the so-called doughnut hole, or coverage gap where beneficiaries have no insurance help with the cost of their medications. The law phases out the gap by 2020.
• Preventive services. Beneficiaries in the traditional, government-run Medicare program receive preventive services such as mammograms and colonoscopies with no co-payment or deductible.
• Wellness visits. Enrollees can see their doctor once a year to assess their health status and risks for disease, and develop a personalized prevention plan, with no co-payment or deductible.

On average, seniors and disabled people covered by Medicare saved $604 in 2011 on prescription drugs, and more than 26 million saw their doctors for wellness visits or got preventive services. If the court strikes down only the law’s individual mandate, which requires most people to buy insurance, nearly all of the health law’s Medicare changes will remain intact.

The law also extended the life of Medicare’s Hospital Insurance Trust Fund (Part A) to 2024. Otherwise, the trust fund is projected to become insolvent earlier, around 2017, which could pressure lawmakers in Washington to be tough on Medicare when they negotiate a deficit reduction deal after the election.

The law delayed the fund’s insolvency and paid for new benefits by reducing federal spending in other areas of Medicare, increasing the cost of coverage for higher-income beneficiaries and adding what the Obama administration says are efficiencies to the system. After the give and take, Medicare will get about $428 billion less from the federal government between 2010 and 2019. Federal spending on Medicare will still rise, but less quickly.

Republicans argue that these reductions harm seniors by shifting money from Medicare to help expand insurance coverage to the under-65 population.

One of the biggest savings came from reduced payments to hospitals and other medical providers. If the law disappears, higher payments will be restored, but medical providers would also likely have more uninsured patients.

The law reduced payments to Medicare Advantage plans – mostly managed care HMOs and PPOs – that cover about one quarter of beneficiaries. Medicare has been spending more for beneficiaries in these private plans than it has been for those in the traditional program, and the idea was to equalize those payments.

For the longer term, the health law created the Independent Payment Advisory Board to propose spending reductions if Medicare grows too quickly.

If the health law goes, so will the funding and authorization for a handful of Medicare experiments aimed at reducing health care costs by better organizing and improving the quality of care. The law includes a pilot project to bundle payments to medical providers so that a single check would cover an episode of care, such as a hip replacement. Other programs are set to test value-based purchasing for medical providers and accountable care organizations.

Health care experts had hoped that these experiments would both save money in Medicare and encourage similar steps in the private health care delivery system.

By Vipal Monga; The Wall Street Journal ~ Jun 19, 2012

The many big companies looking to gain control over their yawning pension-fund obligations are finding there are no quick fixes.

Earlier this month, General Motors Co. said it would pare its pension obligations for retired white-collar workers by billions of dollars, in part by offering them a lump-sum payout, instead of continuing payments. GM also said it would hand responsibility for the retirees’ pension plan off to Prudential Financial Inc. by buying a group annuity contract; it said that wouldn’t change the plan’s payments.

GM’s approach followed Ford’s announcement this spring that it would reduce the size of its pension plans by offering to pay lump sums to about 98,000 white-collar retirees and former employees.

Those moves may help the auto makers reduce the volatility of their pension obligations, which rise and fall based on factors such as interest rates and the life expectancy of retirees. But few other companies are expected to follow suit, pension experts say, because they would run the risk of having to pay a bigger lump sum now than they would in the future if interest rates were to rise.

If interest rates were higher, says Bob Collie, chief research strategist at Russell Investments, companies would need fewer assets in their pension funds to cover future pension liabilities than they do at the today’s low rates. “If you made a $100 lump-sum payment today, if interest rates went up in a year, you’d only have to pay $90,” he said.

According to the actuarial firm Milliman Inc., the 100 largest corporate pension funds, in terms of assets, had a combined shortfall of $356.96 billion at the end of May, more than double the $163.27 billion deficit recorded a year earlier and the third-largest on record—and that was after contributing $55.09 billion in 2011 to narrow the gap. Last year’s contributions were down 8.7% from $60.33 billion in 2010, but almost five times the $12 billion they contributed in 2000.

Changes in pension laws that took effect this year reduced the cost of making lump-sum payouts, giving companies a reason to explore them. To determine how much to pay out, companies use a so-called discount rate to calculate the present value of their future liabilities. The lower the rate, the bigger the payout required.

Previously, companies had to use rates based on Treasury bonds to calculate lump-sum payouts. Now, they can use corporate bond rates, which are higher, effectively reducing the size of the lump sum.

“A very large portion of our client base is considering the expanded use of lump sums,” says Matt Herrmann, head of the retirement risk-management group at consulting firm Towers Watson. He said companies are trying to determine what the likely acceptance rates would be for any lump-sum offer, whether it makes sense to consider making such offers when interest rates are so low and how to structure the offers administratively.

Market conditions, however, have made lump-sum payouts too costly for most companies, according to John Ehrhardt, a principal at Milliman. Because interest rates are so low, “you’re getting rid of your liabilities when they’re at their all-time high,” he says. Milliman data show average discount rates at the end of May were 4.56%, just off their record low of 4.53%, set last October and November.

“The pace at which companies do this is going to slow down,” says Russell Investments’ Mr. Collie. “Some may decide to hold back.”

Michael Moran, a pension strategist at Goldman Sachs Asset Management, says the lump sum and annuity strategies have been tried before, but the sheer size of GM and Ford’s obligations and the money needed to meet them makes them unique.

“It’s pretty overwhelming,” he says, referring to the size of Ford and GM’s pension obligations relative to their market capitalizations. GM has projected global pension obligations of $134.3 billion, four times its $33.56 billion market capitalization, Milliman says. Ford’s projected $73.98 billion obligation is almost double its $39.46 billion market cap.

Mr. Moran characterized GM’s response as “aggressive,” and says it may be pursued only by companies that have a very large exposure to their pension plans.

Ford said it won’t be able to predict the total cost of its lump sum until it knows how many retirees will accept the offer. GM, through its lump-sum offer and annuity purchase, will be paying roughly $29 billion to remove $26 billion from its balance sheet, or an 11% premium.

Daniel Ammann, GM’s chief financial officer, said in a June 1 conference call with analysts that lessening the risk and volatility in GM’s pensions made the premium worthwhile. “As a result of reducing the volatile and debt-like pension obligation, The company’s overall financial flexibility is enhanced, and we will be less exposed to the funding volatility and calls on cash we’ve experienced in the past, which in turn will improve our flexibility to deploy our cash for alternate uses,” he said.

A spokesman for Ford said the lump-sum strategy was part of its goal of reducing risk in its pension plans, and having them fully funded by mid-decade.

Companies with pension plans have been under extreme pressure since the fourth quarter of 2008, following the bankruptcy of investment bank Lehman Brothers, when the aggregate pension deficit widened to $269 billion by year end from $6.7 billion at the end of September.

Given the currency crisis in Europe and slow growth in the U.S., few expect changes anytime soon in the toxic combination of low interest rates, which increase a company’s pension liabilities, and weak stock-market returns, which hurt the value of pension-fund assets.

Milliman’s Mr. Ehrhardt said that rising interest rates eventually will reduce pension liabilities and an improving stock market could help boost asset values, which raises the possibility of simply doing nothing today. “The other thing is to ride it out,” he said. “Sooner or later, interest rates are going to have to bump back up,” he says.

By Dave Carpenter; Bloomberg Businessweek ~ Jun 15, 2012

CHICAGO (AP) — It’s the financial protection that many will need in retirement but few are willing or able to buy. Long-term care insurance scares off most people because of the cost.

For married couples, an increasingly popular option called “shared care” may make it more feasible by providing expanded coverage for less money than would otherwise be the case.

Under these joint policies, couples purchase a combined pool of benefits that can be used by either or both spouses.

Like most everything in the world of long-term care insurance, it’s complicated. But what’s clear is that fast-rising costs have made shared care a more appealing option. New long-term care insurance policies cost 30 percent to 50 percent more than five years ago, according to the American Association for Long-Term Care Insurance.

“When I explain how it works and what you get, most people like shared care a lot,” says Brian Varian, long-term care insurance consultant for insurance brokerage Marsh Inc. in Woodland Hills, Calif. “It’s very favorable for couples.”

A look at the shared-care option within the broader context of changing long-term care insurance:

Q: What does long-term care insurance cover?

A: It pays for personal care received at home, assisted living facilities, adult day care or nursing homes. Benefits typically kick in when a person needs help performing at least two of the basic activities of daily living, which include bathing, dressing, eating, transferring to and from a bed or chair and using the toilet.

Q: Who needs it?

A: Long-term care insurance is considered essential for those who can afford it but don’t have the resources to pay for years of future care. Health insurance and Medicare do not cover long-term care needs. And the financial burden is heavy for those without coverage. A semi-private room in a nursing room costs an average of $76,285 a year, an assisted living facility runs $40,200 and a year of part-time home care typically ranges from $18,000 to $25,000, according to the insurance association.

Q: What happens if you don’t have it?

A: If your savings can’t cover your expenses, you may have to take your chances with Medicaid, which covers nursing home care for older people with low incomes and limited assets. In most states, Medicaid also pays for some long-term care services at home and in the community. But choices for care through Medicaid will be limited. And qualifying for Medicaid may mean spending down your assets first.

Q: How does shared care work?

A: Instead of purchasing a future pool of benefits for each spouse, the policies are combined into a pool they can each use. So, buying a three-year shared care policy each gives a couple up to six years of benefits; each buying a five-year policy gives them 10.

If one spouse develops a need for extended long-term care, such as from Alzheimer’s or a stroke, he or she could access most or all of the benefits. And if one dies without having used any coverage, the full benefits generally transfer to the surviving spouse.

Q: Does it cost extra?

A: Shared care costs more than separate policies with the same benefit period. But it can allow you to buy a shorter, less expensive policy, knowing that there ultimately is a larger combined pool of benefits to draw from.

For example, two typical three-year policies with the shared care rider will cost roughly 14 percent to 17 percent more than two separate three-year policies, according to Jesse Slome, the insurance association’s executive director. But that could still be more cost-effective in the long run by ensuring that one of them can get as much as six years of coverage if needed — double the length of the policy.

Q: So what’s the typical overall cost?

A: Let’s use as an example a 55-year-old couple in good health who purchase a fairly representative amount of insurance with a current value of about $200,000 — or a $180 per-day benefit for three years each of future coverage including 3 percent compound inflation growth. They would pay an average yearly premium of $1,950 for two standard policies without shared care, according to Slome.

Attaching a shared-care rider would push the cost to $2,260. But it could save them money by ensuring that one can get five or six years of coverage if needed — more than the length of the policy.

Couples over 60 or 65 will pay significantly more.

Q: Who is it best-suited for?

A: Shared care is best for couples who cannot afford lifetime coverage but want to be well-protected in the event of significant long-term care needs.

Eva Ng, 53, and her husband Robert Blanda, 62, of St. Paul, Minn., obtained comprehensive coverage this year that costs them $4,500 annually for the equivalent of 10 years of total combined benefits. They paid extra for shared care as well as indexing it for 5 percent compound inflation growth.

“We liked the idea that you can get double the amount of coverage with shared care,” says Ng. “If anything happens and one of us has to go to a nursing home, that larger amount can cover more assets so we don’t have to give up our home.

Q: Why are we hearing about shared care now?

A: Long-term insurance carriers are promoting it as an affordable alternative to the once-popular lifetime coverage option, which they’re doing away with or making almost prohibitively expensive because of their expenses. When available, lifetime coverage policies cost roughly double the price of three-year policies, according to Claude Thau, a long-term care insurance expert and industry consultant in Overland Park, Kan.

Debra Newman, founder of Newman Long Term Care in Richfield, Minn., says she recommended unlimited coverage to her clients for years because it cost only about 25 percent more than limited-duration policies. Now she urges couples to get shared care instead.

“This gives them a way to hedge their bets in case something catastrophic happens to one of them,” she says.

By David Morgan; Reuters ~ Jun 15, 2012

* Higher upfront costs for beneficiaries to control spending

* New 20 percent charge for Medicare beneficiaries

* Annual out-of-pocket expenses would be capped at $5,000

WASHINGTON, June 15 (Reuters) – A congressional agency on Friday recommended making traditional Medicare beneficiaries pay more money upfront for medical services as a way to insulate the popular government program from ever-rising healthcare costs.

A report by the nonpartisan Medicare Payment Advisory Commission, or Medpac, recommended a new 20 percent charge for the 90 percent of Medicare beneficiaries who buy supplemental insurance to cover medical costs that Medicare Part A and Part B do not cover.

Medpac, which advises Congress about Medicare, also proposed a series of other innovations including a new $5,000 upper limit for annual out-of-pocket expenses to protect senior citizens from the astronomically high cost of catastrophic illnesses.

Medicare, started in 1965, is the U.S. government’s health insurance program for the elderly and disabled. The $549 billion-a-year program and its $429 billion sister program for the poor, Medicaid, are widely seen as major drivers of the U.S. debt and deficit because of a continuous rise in healthcare costs that has been pushing program spending higher for decades.

The main thrust of Friday’s proposals is to make beneficiaries shoulder more costs to control Medicare’s growth, a task that has largely fallen on the shoulders of physicians and other healthcare providers up to now in the form of payment cuts.

“While much of the commission’s work focuses on providers and their payment incentives, how beneficiaries view the Medicare program and how they make decisions about their health care are vital to the program’s success,” Medpac said.

Lawmakers of both parties have voiced support for similar ideas in the past, though none of the recommendations are likely to become law any time soon. But they go to the heart of a hotly contested election-year battle between Republicans and Democrats over how to reform Medicare while keeping the support of senior citizen voters in the November election.

The Medpac report is addressed to Vice President Joe Biden, as president of the Senate, and House Speaker John Boehner. But congressional aides say major healthcare initiatives, particularly involving sensitive issues including Medicare, are unlikely to make much progress until after a new Congress is installed in 2013.

Supplemental insurance plans enable about 90 percent of traditional Medicare beneficiaries to avoid many of the program’s out-of-pocket costs, including a 20 percent cost-sharing requirement for physician care and outpatient services, Medpac said.

As a result, beneficiaries have few financial incentives to avoid the use of costly and unnecessary procedures, and Medpac’s recommendation would seek to lower spending by increasing the upfront costs for seniors and the disabled.

If such a policy were implemented today, it could affect about 33 million people who receive traditional Medicare and have supplemental coverage through a former employer, a so-called medigap insurance plan and other sources.

But the report said the cost of health coverage would not change for beneficiaries in the aggregate, because of the new cap on out-of-pocket expenses and other innovations.

The Medpac report also calls for new $500 deductibles for Part A hospital and Part B physician and outpatient services, replacing a current system that charges higher deductibles for hospital visits and lower costs for doctors and clinics.

The commission also recommended giving U.S. Health and Human Services Secretary Kathleen Sebelius the authority to develop a new fee-for-service design that would incorporate the recommended changes.

GM Does The Unthinkable To Salaried Retirees

“For years I thought that what was good for our country was good for General Motors, and vice versa. The difference did not exist. Our company is too big. It goes with the welfare of the country. Our contribution to the nation is considerable.”

By Peter Baker, New York Times – June 8, 2012

On June 3, 2009, one of the lobbyists e-mailed Nancy-Ann DeParle, the president’s health care adviser. Ms. DeParle reassured the lobbyist. Although Mr. Obama was overseas, she wrote, she and other top officials had “made decision, based on how constructive you guys have been, to oppose importation” on a different proposal.

Just like that, Mr. Obama’s staff signaled a willingness to put aside support for the reimportation of prescription medicines at lower prices and by doing so solidified a compact with an industry the president had vilified on the campaign trail. Central to Mr. Obama’s drive to remake the nation’s health care system was an unlikely collaboration with the pharmaceutical industry that forced unappealing trade-offs.

The e-mail exchange three years ago was among a cache of messages obtained from the industry and released in recent weeks by House Republicans — including a new batch put out Friday detailing the industry’s advertising campaign supporting Mr. Obama’s health care overhaul. The broad contours of his dealings with the industry were known in 2009, but the newly public e-mails open a window into the compromises underlying a health care law now awaiting the judgment of the Supreme Court.

Mr. Obama’s deal-making in 2009 represented a pivotal moment in his young presidency, a juncture where the heady idealism of the campaign trail collided with the messy reality of Washington policy making. A president who had promised to negotiate on C-Span cut a closed-door deal with a powerful lobby, signifying to disillusioned liberal supporters a loss of innocence, or perhaps even the triumph of cynicism.

But the bargain was one that the president deemed necessary to forestall industry opposition that had thwarted efforts to cover the uninsured for generations. Without the deal, in which the industry agreed to provide $80 billion to expand coverage in exchange for protection from policies that would cost more, Mr. Obama calculated he might get nowhere.

“Throughout his campaign, President Obama was clear that he would bring every stakeholder to the table in order to pass health reform, even longtime opponents like the pharmaceutical industry,” Dan Pfeiffer, the White House communications director, said Friday. “He understood correctly that the unwillingness to work with people on both sides of the issue was one of the reasons why it took a century to pass health reform.”

Republicans see the deal as hypocritical. “He said it was going to be the most open and honest and transparent administration ever and lobbyists won’t be drafting the bills,” said Representative Michael C. Burgess of Texas, a Republican on the House Energy and Commerce Committee examining the deal. “Then when it came time, the door closed, the lobbyists came in and the bills were written.”

Some liberals bothered by the deal in 2009 now find the Republican criticism hard to take given the party’s longstanding ties to the industry.

“Republicans trumpeting these e-mails is like a fox complaining someone else raided the chicken coop,” said Robert Reich, who was labor secretary under President Bill Clinton. “Sad to say, it’s called politics in an era when big corporations have an effective veto over major legislation affecting them and when the G.O.P. is usually the beneficiary.”

In a statement, the Pharmaceutical Research and Manufacturers of America, the drug industry lobby known as PhRMA, called its interactions with the White House part of its mission to “ensure patient access” to high-quality medicine: “Before, during and since the health care debate, PhRMA engaged with Congress and the administration to advance these priorities,” the lobby statement said.

If the negotiations resembled deal-making by past presidents, what distinguished them was that Mr. Obama had strongly rejected business as usual. During his campaign, he singled out the power of the pharmaceutical industry and its chief lobbyist, former Representative Billy Tauzin, a Democrat-turned-Republican from Louisiana.

“The pharmaceutical industry wrote into the prescription drug plan that Medicare could not negotiate with drug companies,” Mr. Obama said in a campaign advertisement, referring to 2003 legislation. “And you know what? The chairman of the committee who pushed the law through went to work for the pharmaceutical industry making $2 million a year.”

Mr. Obama continued: “That’s an example of the same old game playing in Washington. You know, I don’t want to learn how to play the game better. I want to put an end to the game playing.”

The e-mails document tumultuous negotiations, at certain times transactional, at others prickly. Each side suspected the other of operating in bad faith. Led by Rahm Emanuel, Mr. Obama’s chief of staff at the time, and Jim Messina, his deputy, the White House appeared deeply involved, and not averse to pressure tactics.

In May, the White House was upset industry had not signed on to a joint statement. One industry official urged colleagues to sign: “Rahm is already furious. The ire will be turned on us.”

By June, tension flared again. “Barack Obama is going to announce in his Saturday radio address support for rebating all of D unless we come to a deal,” wrote Bryant Hall, a PhRMA lobbyist, referring to a Medicare Part D change that would cost the industry.

A public confrontation was averted and an agreement announced, negotiated down to $80 billion from $100 billion. “We got a good deal,” Mr. Hall wrote.

The White House thought it did, too, and defended it against Democrats in Congress. “WH is working on some very explicit language on importation to kill it in health care reform,” Mr. Hall wrote in September.

Mr. Emanuel, now mayor of Chicago; Mr. Messina, now the president’s campaign manager; Ms. DeParle, now deputy White House chief of staff; and Mr. Bryant, now heading his own firm, all declined to comment.

The e-mails released Friday also underscored detailed discussions about an advertising campaign supporting Mr. Obama’s health overhaul. “They plan to hit up the ‘bad guys’ for most of the $,” a union official wrote after an April meeting. “They want us to just put in enough to be able to put our names in it — he is thinking @100K.” In July, Mr. Hall wrote, “Rahm asked for Harry and Louise ads thru third party,” referring to the characters the industry had used to defeat Mr. Clinton’s health care proposal 15 years earlier.

Industry and Democratic officials said advertising was an outgrowth of the deal, not its goal. The industry traditionally advertises for legislation it supports.

In the end, balky House Democrats imposed additional conditions on the industry that pushed the cost above $100 billion, but the more sweeping policies it feared remained out of the legislation. Mr. Obama signed it in March 2010. He had the victory he wanted.