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The Money Fighting Health Care Reform

Saul Loeb/AFP/Getty Images
Barack Obama greeting Representative Joe Barton (R-Texas), who last year helped introduce a measure that would give makers of ‘biologic’ drugs a twelve-year monopoly on them, at the Bipartisan Meeting on Health Reform at Blair House, Washington, D.C., Feb

It’s chastening to think back to the predictions being made last summer about health care reform, and the assumptions that were widely shared in Washington at the time (certainly by me). Reform would face challenges, and it would never go as far or be as comprehensive as liberals wanted it to be. But some new law would pass by Thanksgiving or sooner. The stars that had defied alignment since the early attempts to pass national health legislation under Teddy Roosevelt were now fully in place.

Something may yet pass. But the price of reform has escalated considerably since last June. Barack Obama has lost about fifteen points in approval ratings, hovering at or just below 50 percent. In all polls, independent voters are more disapproving of Obama and of the Democrats’ health legislation than not. Citizens quite reasonably asked themselves why Obama and the Democrats have been spending so much time on health care while unemployment soared to 10 percent. Republicans have acquired momentum from the public opposition and now stand to make significant gains in the mid-term elections. The Democrats lost their supposedly “bullet-proof” Senate supermajority and, according to polls, came to look to many average voters as if they couldn’t govern. And even if health reform does pass, its putative benefits—insuring 30 million more people, lowering premiums, controlling costs—won’t go into effect until 2014. And the risk is still substantial that the effort will end in defeat.

What happened? It’s still too early to be sure, but broadly speaking, we can divide the chaotic details of the past several months into two categories: the political and the institutional. Obama and his administration certainly made their share of political errors, many stemming from the President’s having learned the wrong lessons from history, specifically the 1994 defeat of the Clinton effort. Whereas Bill and Hillary Clinton presented a plan to Congress that gave the key legislators comparatively little opportunity to collaborate on health policy or to take credit for it, Obama did the opposite to a fault. He gave the House and Senate too much time and leeway to develop their own plans. The administration finally announced its own reform principles on February 22, long after both houses of Congress had passed different versions of a bill.

There were arguably even bigger miscalculations than that. In my view, attempting comprehensive health care reform during Obama’s first year with a very bad (and weakening) economy was asking a lot of the American people. The 2008 election was a rejection of conservatism, but it was not an embrace of liberalism. Any chance of a new liberal era, I wrote here in 2008, “would depend on what President Obama and the congressional Democrats did with their power.”1 I believed they should first prove themselves competent economic stewards; having gained a solid majority of the public’s trust on that most basic issue (and set themselves in sympathetic contrast to the GOP on it), the Democrats might have then convinced voters to follow them down the path of health care reform and new environmental rules, among other urgent matters.2

In some ways the larger impediments to reform have been institutional. Congress has not passed a piece of major progressive social legislation for many years. One could call the creation of Medicare Part D in 2003 a “landmark” in that it established a new entitlement—prescription drugs—thus expanding Medicare considerably. But it also greatly increased the importance of the private sector in Medicare, with consequences that are still playing out. For example, privately offered fee-for-service plans, so-called Medicare Advantage plans, have expanded rapidly since 2003. And Republicans constructed the bill in such a way that the new coverage wasn’t paid for.

There are a few other serious accomplishments from the 1990s and 1980s—the expansion of the earned income tax credit of 1993, the Americans with Disabilities Act of 1990, the Simpson-Mazzoli immigration act of 1986, and perhaps others. But for the really major changes, which were made over a fairly short period, we have to go back farther: the Clean Air and Clean Water Acts (1970 and 1972, respectively); Medicare and Medicaid (1965); the Voting Rights Act (the same year); the Civil Rights Act of 1964.

One important question raised by watching this process has been: Is Congress capable of passing major, progressive domestic legislation anymore? Even if the answer in this case turns out to be yes by a few votes, by means of the reconciliation process, the question deserves our attention. Liberals are sitting on several important pieces of legislation they’d like to see passed, on the environment, labor, energy, and climate, to name only a few. Can Congress confront these issues?

It’s true that Congress is simply more conservative in general than it once was—it has fewer members inclined to back broad domestic legislation. In addition, however, two crushing institutional obstacles have arisen since the 1960s and the 1970s. One concerns procedural rules, especially the Senate’s cloture rule requiring sixty votes to end debate and bring any matter to the floor for a final vote, avoiding a dreaded filibuster. Demands for cloture votes were rare until the mid-1970s. They increased rapidly over the decades and then doubled after the GOP lost the Senate in 2006. This matter has begun to receive attention in the press (and will be the subject of a future piece here).

The other obstacle has to do with the power of money in politics: through lobbying, advertising, and campaign contributions. This subject is less often discussed. It’s an old story now,3 and people just more or less accept it as the state of things. Political reporters focus on the day-to-day political process. So the money story is usually left to the dwindling investigative staffs of news organizations—and, in our age, to a small number of Web sites that track donations and influence. These sites do an excellent job, but they aren’t well known to the larger public, and lobbies or large donors make the news only when something deeply suspicious occurs—when the press can identify a quid pro quo. And yet, influence only rarely works that way. Politicians and lobbyists both know better than to speak to each other about votes in exchange for financial support. Direct causation between Contribution A and Vote B can almost never be established.

There have, though, been some instances where the influence of powerful corporate lobbies has been clear. They won obvious victories in defeating amendments on the floor or in committee on issues such as drug reimportation from abroad, bringing generic drugs to market more quickly, and closing the so-called Medicare prescription drug “donut hole” (by which Medicare covers prescription costs up to $2,700 and over $6,154 but not in between). As I will discuss later, much of this action reflected a deal the administration made with the powerful pharmaceutical lobby, “Big Pharma,” whose chief concerns include these matters and the issue of allowing Medicare to negotiate drug prices, which the lobby opposes. Since February 22, the administration has backed away from this deal, thus completely closing the donut hole.

Beyond these and a few other cases, the direct effects of the large interests and their money can be difficult to discern. But the dollar figures are staggering. The lobbyists have been at this for a long time, so we must assume that they know what they’re doing, and that they are spending all that money for a reason.

In all, federal lobbyists and their clients spent more than $3.47 billion last year. That is an all-time high, according to the Center for Responsive Politics, whose executive director notes dryly that lobbying is one business that appears to be “recession proof.”4 The center tracks spending by thirteen broad categories of economic activity. The biggest-spending sector was something it calls “miscellaneous business,” including retail and manufacturing, which spent $558 million last year. The health sector finished a close second at $544 million, an increase of about 12 percent over its 2008 total. When looking beyond those sectors to individual industries, the center found that the “pharmaceutical and health products” industry was the largest-spending industry last year, putting $267 million into its lobbying efforts, which stands as the largest amount ever spent by a single industry in one year. Those efforts include payments to individual lobbyists who talk to legislators, send them information, and get in touch with others who may influence them. The center notes that last year’s fourth quarter, from September to December 2009, was the first quarter in history in which all spending for lobbying topped $900 million; it reached $955 million, a 16 percent increase over the fourth quarter of 2008.

Common Cause issued a report last June that got much attention by announcing that health interests were spending $1.4 million a day lobbying Congress.5 But that number surely grew over the course of last year. That fourth quarter, after all, was when both the House and Senate finally passed their bills. The Senate was in session for fifty-five days and the House for forty-one, averaging out to forty- eight working congressional days. The $955 million cited by the Center for Responsive Politics for the fourth quarter of 2009 was for lobbying in all categories, not just health care. It amounts to almost exactly $20 million a day. Clearly a considerable chunk of that was spent lobbying the two houses on the most important legislation before them at the time.

The National Journal, through its Web site Under the Influence, collects similar data. It has tracked the money laid out by the twenty-five highest-spending organizations lobbying about health care, among them major insurance firms, business lobbies, and various medical trade associations. These numbers are therefore smaller but still enormous, amounting to a combined total of over $288 million in 2009. The biggest spender was the US Chamber of Commerce, a leading opponent of reform, which spent $123 million in 2009. Undoubtedly not all of that was on health care, but the Chamber did spend more than half that amount, or a staggering $71 million, in the fourth quarter of 2009 alone. On March 10, the Associated Press reported that the Chamber was coordinating a multimillion-dollar ad campaign by insurance companies to stop health care reform. The Pharmaceutical Research and Manufacturers of America (PhRMA), the most powerful pharmaceutical lobbying organization, spent $26 million. The AARP spent $21 million; the American Medical Assocation, $20 million. Some conspicuous participants in the debate spent lower figures—America’s Health Insurance Plans, or AHIP, the best-known insurers’ lobby, spent $8.85 million last year. (Some individual insurance companies have their own lobbies.) The Blue Cross and Blue Shield Association spent the same amount.

These National Journal figures remind us that not all lobbying is corporate and opposed to reform that will expand coverage. The AARP, for example, has been consistently in favor of such reform, even the proposed cuts to Medicare that the administration wants in order to finance its health program. The group’s support for reform caused tens of thousands of AARP members to quit, CBS reported last summer.6

  1. 1

    See “How Historic a Victory?,” The New York Review, December 18, 2008.

  2. 2

    The arguments for tackling health care immediately were twofold. Substantively, spiraling health care costs are a first-order issue. Politically, strike while the iron is hot—while Obama had the political capital and the Democrats had sixty votes in the Senate.

  3. 3

    One of the first journalistic investigations into all this was by Elizabeth Drew, in her Politics and Money: The New Road to Corruption (Macmillan, 1983).

  4. 4

    See “Federal Lobbying Climbs in 2009 as Lawmakers Execute Aggressive Congressional Agenda,” www.opensecrets.org, February 12, 2010.

  5. 5

    See “Legislating Under the Influence,” www.commoncause.org/healthcare2009.

  6. 6

    See “Thousands Quit AARP Over Health Reform,” www.cbsnews.com, August 17, 2009. The AARP says that it gains “hundreds of thousands” of members every month.

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