side note: There’s a reason that the health care industry was spending 1.4 million dollars a day (not a typo), on lobbying DC politicians to make sure they got the bill they wanted. And now we see the results of that coordinated effort. At the end of the day…..our politicians do not represent the people of their state or district….they represent the corporation who help them get re-elected. This is biggest downside of our system….campaign financing. We need to rid ourselves of this so these snakes in DC can get back to representing their constituents, not big business……..ya, I know, when pigs fly! (Which makes me think of one of my favorite scenes from The Simpsons:
By Noam N. Levey and Lisa Girion
LA TImes
The final bill may well reflect an industry group’s strategy of shaping universal coverage to benefit companies.
As President Obama’s push for a healthcare overhaul moves toward its final act, the oft-vilified health insurance industry is on the verge of seeing a plan enacted that largely protects its financial interests.
That achievement, should it stand up in the final legislation, would be the capstone of a sophisticated lobbying and strategic campaign that began even before Obama was elected president.
The specifics of the healthcare legislation are still being hashed out on Capitol Hill, and key details will evolve in the days ahead. Even so, there is broad agreement that the final plan will, for the first time, require Americans to buy health coverage, with taxpayer subsidies for millions who cannot afford it.
For the health insurance industry, that means millions of new paying customers. What’s more, there are likely to be no limits on what insurers can charge, while at the same time the plan is expected to limit competition from any new national government insurance plan that lawmakers create.
These anticipated wins — from an initiative that has at times been portrayed as doomsday for health insurers — is the result of a strategy developed by one of Washington’s savviest lobbyists, Karen Ignagni. Under Ignagni’s leadership, the industry group America’s Health Insurance Plans adopted the goal of universal coverage while setting out to shape it in a way that benefited insurers — a crucial move that aligned their interests with those of other groups, including consumers and hospitals.
Insurers poured campaign donations into the coffers of key sympathetic members of the House and Senate, and loaded up on lobbyists. And when Obama and other Democrats began attacking the industry, insurers made a strategic choice not to walk away from the negotiating table.
“While so many in this town have been playing checkers, Karen has been playing chess,” said Mark Merritt, a veteran lobbyist who heads the Pharmaceutical Care Management Assn.
In broad terms, the healthcare legislation is expected to require all Americans to purchase health insurance. Insurance companies, in turn, would be barred from canceling policies of sick people or denying coverage to those with preexisting conditions.
What’s still not clear is whether the legislation would create some form of a “public option,” or government insurance program, which health insurers steadfastly oppose.
In addition to fighting the public option, insurers that offer Medicare health maintenance organizations are battling more than $100 billion in cuts in federal payments to that program. And they are trying to beat back a move by Democrats to go after the industry’s decades-old exemption from antitrust law.
But in Washington, many marvel that lawmakers have not wrung more from an industry that, surveys show, is held in low regard by the public.
“The industry is really in no position to be making demands,” said Celinda Lake, a longtime Democratic pollster.
It’s not by accident.
For much of the last three years, industry leaders have been laying the groundwork for this battle. Amid horror stories about insurers dumping sick patients, denying coverage for medical treatment and cherry-picking customers, Ignagni and a few insurance company executives pushed the idea within America’s Health Insurance Plans that the industry risked political catastrophe if it did not move proactively.
“They knew they had a very big [public relations] problem, and they knew this day was coming,” said Wendell Potter, a Cigna Corp. public relations executive who quit last year. “They knew they had to be perceived as coming to the table with solutions. It was a departure from their previous point of view. But they knew they would be slaughtered if it weren’t.”
The first public sign of the industry’s shifting stance came in November of 2006 when the trade group came out in favor of universal coverage with its reform plan.
That built on the breakthrough idea, propelled early on by Blue Shield of California Chief Executive Bruce Bodaken and Kaiser Permanente CEO George Halvorson, that universal coverage was key to the future of the industry.
It was a 180-degree turn for insurers, who were long content to compete against one another to cover the healthiest consumers and to avoid those with preexisting conditions and high medical costs.
It was also a significant departure for an industry that in the early 1990s orchestrated the defeat of the Clinton administration’s push for broader coverage.
“They decided that they had a responsibility to contribute to the process and to bring real and substantial reforms to the table,” Ignagni explained.
America’s Health Insurance Plans followed up with more overtures, endorsing new rules that would prohibit insurers from denying coverage.
The strategy paid dividends, as insurance executives were invited to the table when senior Democrats began developing healthcare legislation this year. Ignagni and insurance executives became familiar figures in the committee rooms on Capitol Hill, testifying in favor of an overhaul as lawmakers gathered information to write their bills.
Ignagni also went to the White House to consult with senior Obama administration officials. She publicly offered the industry’s help in reining in the nation’s growing healthcare tab, providing the president with a public relations coup this spring when the White House wanted to show momentum behind its healthcare campaign.
“I don’t know of any other industry that has committed to a massive overhaul of the way their market works,” Ignagni said, firmly rejecting allegations that insurers have simply been trying to manipulate the legislative process.
As the legislation developed, industry lobbyists sent congressional offices numerous studies and reports to head off proposals it feared, a tactic often used by industry.
America’s Health Insurance Plans used hospital data from California to warn that hospitals and other providers would suffer under a new government insurance plan.
More recently, insurance companies pushed Democrats to toughen the requirement that all Americans get insurance, going to Capitol Hill with internal industry studies that purported to show that premiums would skyrocket if more people did not get coverage.
The full-court press on Capitol Hill coincided with generous campaign donations to conservative Democrats, who will be key to passing healthcare legislation in the House and Senate later this year, including Senate Finance Chairman Max Baucus (D-Mont.).
Members of the House “Blue Dog” coalition have received nearly $3 million from the health insurance industry since 2006, according to data compiled by the nonprofit Center for Responsive Politics.
In the Senate, Democrats Ben Nelson of Nebraska and Evan Bayh of Indiana — two conservatives who have expressed skepticism about a new government insurance plan — have each received more than $470,000 from the industry since 2006.
As the insurance industry’s initiatives have gained steam, Obama and Democratic congressional leaders have stepped up their counterattacks, a strategy that appears aimed partly at keeping sympathetic lawmakers and constituents on board.
This month, Baucus’ finance committee dealt the industry a blow in the panel’s proposed health bill by weakening the penalties on Americans who fail to buy insurance. The industry insists that if penalties aren’t tough enough, many young and healthy people will forgo coverage — saddling insurers with a disproportionate number of older people who are likely to incur higher medical costs.
“The health plans have never been in as much political peril,” Sheryl Skolnick, a healthcare analyst with Pali Capital Research, said, explaining worries on Wall Street about how the industry will fare.
But even as congressional Democrats lambaste insurers, they are working to address the industry’s concerns.
Senior Democrats are exploring ways to ensure that more people buy coverage.
“We are wrestling with this concept of how we get everybody in,” Baucus said.
That should not come as a surprise, said Families USA Executive Director Ron Pollack, a consumer advocate who has been working closely with congressional Democrats on healthcare legislation.
“You can’t ignore the major interest groups,” he said. “Including the insurance industry.”
noam.levey@latimes.com
lisa.girion@latimes.com
Copyright © 2009, The Los Angeles Times