Harry Reid Picking Winners In Fiscal Cliff Deal

Tyler Durden's picture

Buried deep in the bowels of the much-heralded last-minute fiscal-cliff deal, that saved us from a fate worse than death and raised taxes on 77% of Americans, was a quiet little provision, inserted at the last minute, that sharply slashed Medicare payments to brain-tumor radiation provider Elekta by 58% while leaving its main competitor Varian's payments unchanged. As the WSJ reports, the provision was put through by none other than Harry Reid - who has a 'deep relationship' with Varian (the winner). Whether crony capitalism is alive-and-well is up for debate - as Varian suggests this 'levels the playing field' but it is the fact that Varian beefed up its outside lobbyists to 18 (from 10) and the provision was not added until the last day suggests this stinks. Once again, it appears, our government is picking winners - and losers (with Elekta as a foreign company unable to participate financially in American elections). As the WSJ notes, the insert looks like the kind of provision helping a specific company or industry that lawmakers have repeatedly vowed to halt. Nonetheless, even in the budget bill tackling the so-called fiscal cliff, lawmakers found time to craft such provisions.

 

Via WSJ,

The New Year's Day legislation that averted tax increases for millions of Americans brought an unwelcome surprise for Elekta AB, a Swedish maker of radiation tools designed to battle brain tumors.

 

A provision, inserted at the last minute, sharply cut Medicare payments for the company's product while leaving unchanged those of its direct competitor, Varian Medical Systems Inc., VAR -0.18% of Palo Alto, Calif.

 

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The insert looks like the kind of provision helping a specific company or industry that lawmakers have repeatedly vowed to halt. Nonetheless, even in the budget bill tackling the so-called fiscal cliff, lawmakers found time to craft such provisions.

 

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Mr. Reid has a deep relationship with Varian. About nine years ago, he secured federal funding for Varian to work with the Harry Reid Center for Environmental Studies at the University of Nevada, Las Vegas, according to Oliver Hemmers, the center's director. The project looked at technologies that could X-ray cargo shipments as part of antiterror efforts.

 

The U.S. Department of Energy later transferred Varian's equipment to UNLV, and Varian has donated further equipment worth at least $1 million, said Dr. Hemmers. Varian and UNLV are now partnering on a multimillion-dollar Accelerator Center for research in the national-security, health and energy sectors that could create thousands of jobs in Nevada and has commercial potential for the company, Dr. Hemmers said.

 

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Varian's political contributions are bipartisan, and overall it isn't a big donor. Elekta, as a non-U.S. company, can't participate financially in American elections.

 

Elekta's technology, known as Gamma Knife, and Varian's linear accelerator, or Linac, procedure are both used to target radiation on cancerous tumors. In 2006, after reviewing overall hospital costs for both systems, CMS said Gamma Knife users would be reimbursed about $7,000, while Linac use would get about half that. One reason for the discrepancy is that the Linac therapy, especially for brain tumors, sometimes required multiple treatments, according to CMS data and several neurosurgeons.

 

Varian began lobbying for the higher reimbursement, but it couldn't convince CMS. In November, the agency reaffirmed the separate rate structure.

 

Varian beefed up its 10 outside lobbyists by a further eight, according to Senate records. Taking advantage of Congress's budget-cutting state of mind, it instead sought to equalize rates. The provision doing so wasn't put in the bill until the last day of 2012, aides say.

 

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