Holding Patients Hostage:
The Unhealthy Alliance Between
HMOs & Senate Leaders
Public Citizen's Congress Watch
Loren Berger
Steve Weissman
Michael Surrusco
Acknowledgments
The principal
authors of "Holding Patients Hostage: The Unhealthy
Alliance Between
HMOs & Senate Republican Leaders" were
investigative
reporter Loren Berger and Steve Weissman, Legislative
Representative
at Public Citizen's Congress Watch. Michael Surrusco,
Senior Researcher
at Congress Watch, provided extensive analysis of
campaign contributions.
Frank Clemente, Congress Watch Director,
provided significant
conceptual and editorial advice. Researcher Eric
Baker and Legislative
Assistant Roxanne Gillespie also provided
important assistance
to this report.
Financial Support
Public Citizen
wishes to acknowledge the generous financial support of
the Schumann
Foundation, which enabled us to hire the investigative
reporter to
undertake this project, and the Joyce Foundation, which
supported the
numerous Public Citizen staff who contributed to this report
and coordinated
media activities upon release of the report.
Executive Summary
This timely new
Public Citizen investigative report documents how
campaign cash
-- particularly unlimited soft money contributions -- has
cemented an
alliance between pro-managed care interests and Senate
leaders that
has thwarted strong new patients' rights protections
supported by
the majority of Americans. Drawing upon interviews with
key lobbyists,
Capitol Hill staff and written sources, the report details the
intimate working
relationships between two top pro-managed care trade
associations
that are major campaign contributors to the Republican Party
-- the Blue
Cross and Blue Shield Association and the National
Federation of
Independent Business.
The report reveals
the extraordinary range of pressures Senate Majority
Leader Trent
Lott (R-Miss.) and Assistant Majority Leader Don Nickles
(R-Ok.) have
deployed to keep reluctant Republican senators in line. And
based on a new
Public Citizen analysis of political contributions data, the
report lays
bare the financial ties that bind the "iron triangle" of
pro-managed
care contributors, their lobbyists and Senate Republican
leaders that
has worked in concert against strong patients' rights
legislation.
Senators Lott
and Nickles represent the last bastion of HMO resistance
to public regulation
of the managed care industry, which most Americans
blame for decreasing
the quality of health care. In 1998, Lott and Nickles
prevented the
Senate from even considering the patients' bill of rights. In
1999 they steered
a relatively weak patients' rights bill through the Senate
by a narrow
margin. Only two months later, the House of Representatives
-- including
a third of the Republicans who defied their leaders --
decisively passed
strong legislation. Today, Senator Nickles chairs the
climactic House-Senate
Conference on the patients' rights bills. He often
makes pessimistic
statements on the outlook (he recently told
Congressional
Quarterly magazine, "It's not a high probability to even
have a successful
conference."(1)) while his pro-managed care allies fight
to kill any
legislation.
Among the report's highlights:
Members of the pro-managed care Health Benefits Coalition
(HBC) has given more than $14 million in campaign contributions
to the Republican Party and its candidates since 1995 (79% of the
total), according to new data analyzed by Public Citizen. Nearly
40% consisted of soft money donations to the Republican Party.
Senate Republican leaders Lott and Nickles have established
intimate "iron triangle" working relationships with two leading HBC
donors/lobbyists: the Blue Cross and Blue Shield Association and
the National Federation of Independent Business (NFIB).
The "Blues," which comprise the nation's largest provider of
managed care services, have dispatched Brenda Becker, their
national PAC coordinator and a key lobbyist, to serve as one of a
small number of co-chairs for major Republican Party fundraising
events. She has responsibility for soliciting millions of dollars from
the health care industry and other businesses. Becker has
co-chaired the annual GOP House-Senate fundraising dinner for
the last several years. She co-chaired the Republican National
Committee's Majority Fund in 1997 and again this year. And she
has personally orchestrated "Leadership PAC" fundraisers for Lott
and Nickles as well as golf tourney fundraisers, including an
upcoming Nickles-sponsored event at the Republican National
Convention in July. (See Appendix A for a complete list of
Becker's fundraising activities.)
NFIB, which chairs the HBC, has emerged in recent years as a
pro-Republican electoral force and top strategic partner of the
Republican congressional leadership. NFIB-related lobbyists have
worked on an almost daily basis with Nickles and his staff in
developing a legislative strategy to blunt a strong patients' rights bill.
According to interviews with congressional staff and lobbyists,
Senators Nickles and Lott have employed a variety of strong
pressures, including social ostracism, on Republican senators to
create near-unanimous Republican support for a weak patients'
rights bill. Nickles and Lott also pressured four
independent-minded senators into abandoning efforts at bipartisan
compromise.
According to various sources, including a leaked Health Insurance
Association of America document (see Appendix B), the
Republican leaders came down hard on Senator Jim Jeffords
(R-Vt.), Chairman of the Senate Health, Labor and Pensions
Committee, for working with ranking Democratic Senator Ted
Kennedy (D-Mass.) to produce a bipartisan bill.
Senator John Chafee's (R-R.I.) efforts to carve out an independent
position with Sen. Bob Graham (D-Fla.) were met, according to
his former aides and others, with exclusion from various Senate
Policy committee briefings on patients' rights issues and severe
ostracism by senior GOP Senators.
Senators John McCain (R-Ariz.) and Peter Fitzgerald (R-Ill.) did
not appear at a press conference to deliver their scheduled
endorsement of a last minute Chafee-Graham compromise bill
because the leadership warned them off, as a former Republican
aide revealed and Sen. Nickles did not deny.
The HBC and other managed care interests have given nearly $21
million in campaign contributions since 1995. As the patients' bill of
rights debate took off in 1997-98, contributions from the HBC
jumped 18% over 1995-96 -- despite the general decrease in
campaign contributions from the presidential to the congressional
election cycle. Republicans have reaped the overwhelming share of
HBC contributions in recent years. From 1997 through 1999,
Republicans harvested $8.9 million -- 81% of total pro-managed
care contributions.
Unlimited soft money donations to Republican Party committees,
especially congressional ones, have become increasingly important.
HBC soft money to Republicans jumped from $1.8 million in
1995-96 (a presidential and congressional election cycle) to $2.6
million in 1997-98 (a congressional election cycle) -- an increase of
50%. The share of soft money going to Republican congressional
committees rose from 45% to 61% as debate over patients' rights
heated up. (See Appendix C for a chronology of legislative
activities and large soft money contributions.)
The report concludes
that the strong body of evidence linking
pro-managed
care industry campaign contributions with Senators Lott
and Nickles'
strenuous efforts to defeat popular patients' rights legislation
highlights the
need for campaign finance reform. The McCain-Feingold bill
would ban unlimited
corporate, union and individual "soft money"
contributions
to political parties, such as the $5.3 million given by HBC
members to Republican
Party committees since 1995. Senators Lott and
Nickles are
major impediments to such reform, just as they are the chief
impediments
to a pro-consumer patients' bill of rights.
A series of Tables
and Appendices presents data on managed care
interests' political
contributions and fundraising activities, and key
congressional
developments on patients' rights legislation.
Introduction: Patients and Politicians
"We have
a political problem because we have an image problem. In
polls we're right down there with tobacco companies."
Ben Singer, Vice-President
of Public Relations,
Pacificare Health
Systems, the nation's 5th largest HMO(2)
One of the major
political issues in the 2000 election is that of assuring
patients' rights
to adequate medical care from their Health Maintenance
Organizations
(HMOs) and other managed care companies. This report
documents how
escalating campaign contributions -- particularly soft
money -- have
cemented a political alliance between Senate Republican
leaders and
the managed care industry and its business allies that has
stalled popular
patients' bill of rights legislation for more than two years. It
details the
critical roles played by Senate Majority Leader Lott and
Assistant Majority
Leader Nickles in blocking strong patients' rights
legislation.
In October 1998,
the Republican leaders succeeded in preventing a full
Senate vote
on a pro-consumer patients' bill of rights. In July 1999, Lott
and Nickles
withstood public pressure for a strong bill, mobilizing all but
two Republican
senators to pass a weaker measure by a narrow 53-47
margin. Less
than two months later, the House of Representatives,
including 68
Republicans, defied its Republican leadership and passed a
strong patients'
rights bill 275-191. As Chairman of the ongoing
House-Senate
Conference on patients' rights legislation, Nickles will have
a major influence
over the outcome of the Conference.
Over the last
decade "managed care" (health insurance and service
delivery mechanisms
that limit consumer choice to keep costs down,
including HMOs,
point of service plans and preferred provider
organizations)
has transformed the private insurance market. By 1996
about 73% of
Americans who had employer-sponsored health insurance
were enrolled
in managed care plans as opposed to previously dominant
fee-for-service
plans, which maximized consumer choice.(3) But the
consequences
of managed care have triggered broad public resentment.
"Americans continue
to express generally negative views about managed
care," Kaiser
Family Foundation analysts observed in February 2000,
reviewing surveys
it had conducted with the Harvard School of Public
Health since
September 1997. Over this period, majorities consistently
complained that
HMOs and other managed care plans decreased the
quality of health
care for the sick, made it harder for them to see
specialists,
and decreased the time doctors spent with patients. The public
(Republicans,
Democrats and Independents alike) overwhelmingly
supported comprehensive
consumer protection legislation, including the
right to sue
health plans for malpractice. Even though support for specific
protections
dropped by about 20 percentage points when estimated
annual costs
of $200 per family were mentioned, "a plurality or majority
still favor[ed]
each of the protections."(4)
And the cost
of protection became less of a caveat over time. In
December 1999,
53% of respondents said that even with the additional
premiums, they
favored a strong patients' bill of rights, including the right
to sue health
plans. Only 31% disagreed. Despite a major public relations
campaign by
the managed care industry in 1998-99, 48% of those
questioned thought
legislation was needed more urgently than when the
debate first
began and another 40% thought it was about as urgent
now.(5)
Reacting to increased
public dissatisfaction with managed care, the issue
of patient protection
legislation began to pick up steam in 1996 when
Congress passed
a law requiring minimum hospital stays for new mothers
and their babies.
That same year, bipartisan bills were introduced to ban
"gag clauses"
in managed care contracts that limited what physicians could
discuss with
patients.(6)
In February 1997,
Sen. Ted Kennedy (D-Mass.) and Rep. John Dingell
(D-Mich.) introduced
the "Patient's Bill of Rights Act." Two months later,
Rep. Charles
Norwood (R-Ga.) and Sen. Alphonse D'Amato (R-N.Y.)
introduced the
Patient Access to Quality Care Act (PARCA), which
notably included
the right to sue employer-sponsored managed care plans
in state courts
for denial of necessary care. Under the reigning
interpretation
of the Employee Retirement Income Security Act (ERISA)
governing such
employer plans, state tort sanctions for injuries, including
compensatory
and punitive damages, were pre-empted by federal law,
which lacks
such strong remedies.
During the last
two years, Congress has intensely debated two different
approaches to
regulating managed care. One, represented by the
House-passed
Norwood-Dingell bill (H.R. 2723, the "Bipartisan
Consensus Managed
Care Improvement Act of 1999"), would extend a
broad range
of substantive protections to approximately 161 million
people covered
by ERISA private employer, state and local government,
and individual
managed care and fee-for-service plans. Included are such
rights as access
to the nearest emergency room, clinical trials,
out-of-network
providers and off-list prescription drugs. In addition,
women and children
would be guaranteed access to obstetricians,
gynecologists
and pediatricians directly rather than through gatekeepers.
"Gag rules"
preventing providers from discussing expensive treatments
with patients
would be prohibited. The bill would also provide for
independent,
external review of claims of denial of medically necessary
benefits. Finally,
Norwood-Dingell would change the law to allow the 123
million people
under ERISA to sue for damages in state courts for denial
of care. Major
organized groups supporting the Norwood-Dingell bill
include the
American Medical Association (AMA) and many other health
professions'
groups, disease groups, the AFL-CIO, consumer groups,
and the Association
of Trial Lawyers of America.
The Senate-passed
Republican alternative (S. 1344, the "Patients' Bill of
Rights Plus
Act") would extend many similar, though sometimes narrower,
benefit protections
-- but only to 48 million people. This is the minority of
ERISA-covered
workers who are in employer "self-insured" plans, which
are exempted
even from the irregular patchwork of state laws mandating
benefits on
health plans. Exceptionally, one provision of the bill would
allow overnight
stays after breast cancer surgery and another would
prohibit genetic
discrimination in enrollment and premiums; both would
apply to the
broad insured population of 161 million. The Republican bill
also contains
an external review procedure for the 123 million people
under ERISA,
but the health plan selects its own reviewer and the
reviewer could
only decide whether the plan followed its own definition of
medically necessary
care. Most important, there would continue to be no
right under
ERISA to sue for full damages in state courts. Key groups
behind the GOP's
legislation include managed care and health insurance
companies and
business trade associations.
Several factors
help explain why, after three years of debate, Congress in
general and
the Senate in particular have still not responded to popular
demands for
patient protections. The dislike of government regulation runs
strong among
Republicans and especially among their legislative leaders.
Sen. Nickles,
for example, acknowledges that consumers are
experiencing
problems with managed care, but has argued that the
marketplace
should solve them. "I'm not sure you need a legislative
solution," he
observed.(7) "I'm a strong proponent and a believer in the
free-enterprise
system. I've been in it all my life and I love it."(8) Nor can
one neglect
the enormous sums that the main pro-managed care coalition
has spent on
lobbying -- $148 million in 1997-98 alone -- in the period
when it opposed
strong patients' rights legislation.(9) In addition, the
coalition and
its members have spent tens of millions of dollars on issue
and image-burnishing
ads, much of it in an effort to provide "political
cover" for sympathetic
Republican legislators.(10)
Still, as this
report makes clear, there is a strong body of evidence that
large, pro-managed
care campaign contributions to the Republican Party,
amplified by
unusually close collaboration between key donors and the
Senate Republican
leadership, have played a critical role in the stalling of
managed care
reform.
Special Relationships:
The Blue Cross and Blue Shield Association,
National
Federation of Independent Business, and
Senators Lott and Nickles
As congressional
debate intensified in early 1997 over proposed federal
patient protection
legislation, leading representatives of the managed care
industry and
business began meeting regularly to coordinate their
efforts.(11)
In January 1998, 31 managed care and business groups
formed the Health
Benefits Coalition. The HBC announced "a campaign
against excessive
and costly government mandates on employers and
health plans,"
warning that "prescriptive federal legislation in this area will
backfire --
increasing health care costs and driving up the number of
uninsured Americans."(12)
Among its members were such high-powered
corporations
and trade associations as: Aetna-U.S. Healthcare, American
Association
of Health Plans, Blue Cross and Blue Shield Association, The
Business Roundtable,
CIGNA, Health Insurance Association of America,
Humana, National
Association of Manufacturers, National Federation of
Independent
Business, Prudential and the U.S. Chamber of Commerce.
Table 1 shows
HBC contributions to Republican candidates and
committees.
Two of the top three HBC contributors during the patients'
rights fight,
which broke out in 1997-99 were the Blue Cross and Blue
Shield Association
and the NFIB, which chairs the HBC. Together, as
Table 1 shows,
they provided about a third of total HBC contributions to
Republicans
-- $2.9 million out of $8.9 million.
Both associations
have extremely close relationships with Senators Lott
and Nickles,
which enabled them to further enhance their influence and
that of other
HBC donors in the patients' rights fight. In the case of the
NFIB, the relationships
were founded on the broad political role it played
in the Republican
Party; regarding the Blue Cross and Blue Shield
Association,
the relationship was based on its general role in fundraising
for the Republican
Party, and more specifically for Lott and Nickles. The
NFIB used its
political influence to enter into a strategic alliance with Lott
and Nickles
on managed care; the Blue Cross and Blue Shield
Association
used its fundraising power to get Lott and Nickles energized
on behalf of
its economic interests.
Table 1:
HBC Member Contributions to Republicans (1997-1999)
Affiliate
1997-1998
1999
1997-1999
Total
Aetna
Inc
$206,760
$77,700
$284,460
American
Assn of Health Plans
$99,891
$32,750
$132,641
American
Automobile
Manufacturers
Assn
$69,300
$250
$69,550
American
Insurance Assn
$375,509
$139,965
$515,474
Associated
Builders &
Contractors
$1,057,984
$278,250
$1,336,234
Blue Cross/Blue
Shield
$1,070,714
$472,667
$1,543,381
Chamber
of Commerce of the
US
$56, 250
$92,697
$148,947
CIGNA
Corp
$583,985
$194,725
$778,710
Food Distributors
International
$204,450
$55,450
$259,900
Food Marketing
Institute
$532,727
$208,557
$741,284
Health
Insurance Assn of
America
$157,524
$54,911
$212,435
Healthcare
Leadership Council
$69,427
$3,600
$73,027
Humana
Inc
$110,850
$10,000
$120,850
International
Mass Retail Assn
$18,460
$2,500
$20,960
National
Assn of Health
Underwriters
$20,164
$3,500
$23,664
National
Assn of
Manufacturers
$23,500
$7,000
$30,500
National
Fedn of Independent
Business
$1,146,336
$163,292
$1,309,628
New York
Life Insurance
$369,899
$131,350
$501,249
Premier
$2,250
$0
$2,250
Prudential
Insurance
$290,625
$120,300
$410,925
Society
for Human Resource
Management
$6,265
$5,330
$11,595
United
HealthCare Corp
$305,300
$49,050
$354,350
Totals
$6,778,170
$2,103,844
$8,882,014
Source: Center
for Responsive Politics data (www.opensecrets.org)
analyzed by
Public Citizen. The data in Table 1 and successive tables
reflects all
data available electronically from the Center for
Responsive Politics
as of February 1, 2000. Since some 1999 reports
were not yet
available, data for 1999 is incomplete.
Blue Cross and Blue Shield Association
The Blue Cross
and Blue Shield Association is the trade group for
independent
Blue Cross and Blue Shield member plans with combined
annual revenues
of at least $80 billion. The plans comprise the nation's
largest provider
of managed care services. Overall, the Blues service 75
million health
care customers. More than 52 million people -- roughly one
in six Americans
-- are enrolled in a Blue Cross and Blue Shield managed
care plan.(13)
Less of a soul
mate to the Senate Republican leaders than the NFIB, the
Blues are still
extremely close to them due to their special role as a general
fundraising
powerhouse for party committees as well as for Lott and
Nickles themselves.
And they clearly perceived this role as benefitting
their anti-regulatory
interests.
To begin with,
since 1995 the Blues have provided $2.5 million of the
$14.2 million
Republicans have received from HBC members (see Table
2 and Table
4 on p. 15). In addition, a particularly high percentage of the
Blues' total
campaign contributions -- about 50% -- came in the form of
soft money to
Republican Party committees (see Table 3). (Soft money is
the unlimited
contributions to political parties from corporations, unions
and individuals.)
Moreover, the Association's soft money donations rose
20% from the
1996 cycle to the 1998 one at a time when total soft
money donations
from all sources to the political parties declined 16%.(14)
Senators Lott
and Nickles are heavily involved in raising and benefitting
from party soft
money (see pp. 19-20 below).
Table 2: Blue Cross & Blue Shield Contributions (1995-1999)
Year
Republicans
Democrats
Total
1995-1996
$939,158 (65%)
$505,089 (35%)
$1,444,447
1997-1998
$1,070,714 (67%)
$528,626 (33%)
$1,599,590
1999
$472,667 (70%)
$197,721 (29%)
$670,888
Total
$2,482,539 (67%)
$1,231,436 (33%)
$3,714,925
Source: Center
for Responsive Politics data (www.opensecrets.org)
analyzed by
Public Citizen.
Table 3: Blue Cross & Blue Shield Soft Money Contributions
(1995-1999)
Year
Republicans
Democrats
Total
1995-1996
$438,908 (76%)
$139,635 (24%)
$578,543
1997-1998
$524,625 (76%)
$163,375 (24%)
$688,000
1999
$248,445 (74%)
$87,750 (26%)
$336,195
Total
$1,211,978 (76%)
$390,760 (24%)
$1,602,738
Source: Center
for Responsive Politics data (www.opensecrets.org)
analyzed by
Public Citizen.
Soft money donations
were often made at strategic times. For example,
on February
27, 1998 -- a month after the formation of the HBC, two
weeks after
Senator Nickles had composed his health care task force,
and four months
after Senator Lott's appeal to managed care interests to
"Get off your
wallets" -- the Association gave $100,000 in soft money to
the Republican
Senate/House Dinner Trust, while three affiliates gave an
additional $20,000
to the RNC.(15) Brenda Becker, vice president of
congressional
communications and PAC coordinator for the Blues, was
forthright in
explaining a few months later what the Association expected
from its Republican
recipients, "We are giving more to Republicans
because they've
been carrying our water on a lot of issues and they are
also in the
majority."(16)
Very importantly,
as part of her work for the Blue Cross and Blue Shield
Association,
Becker has raised substantial sums for the Republican Party
for years from
the health care sector, as well as from other industries in
which she has
connections. She is one of a small select group of
Washington insiders
who routinely serve as co-chairs for major
Republican fundraising
events.(17) "I pick up the phone and call people
and make them
aware of a fundraising event, and hopefully, they will
attend," Becker
said. "Do I call health care companies? Absolutely. But,
we also have
a broad group of people who we know and who we have
relationships
with."(18)
Again, Becker
is candid about how her fundraising redounds to the
political benefit
of her Association. "Basically it helps us stand out as a
player and demonstrates
our support of friends and people who
believe in the
mechanisms of the market place," she said (emphasis
added).(19)
Becker further
noted that she has co-chaired the annual GOP
House-Senate
dinner, the party's largest annual fundraising event "for the
past four to
six years." As Washington co-chair of the June 1998 dinner
with Richard
Creighton of the American Portland Cement Alliance,
Becker's job
was to corral money from health care groups, insurers and
health care
providers. She helped to collect over $10 million in a single
evening.(20)
She was also Washington co-chair, with Creighton, of the
June 1999 dinner,
which raised $9 million.(21)
In 1997, she
served as co-chair of the Republican National Committee's
Majority Fund.
The fund boasts almost 100 PACs, many of which
contribute $15,000
a year in hard and soft money. She took on the
assignment again
for the year 2000 with co-chairs Richard Creighton and
former Indiana
senator Dan Coats.(22)
At this year's
Republican National Convention, to be held in Philadelphia
on July 31 to
August 3, Blue Cross and Blue Shield is expected to be on
hand to assist
Nickles, an avid golfer, in holding a golf tourney for GOP
party contributors.
"The conventions are like the Super Bowl of
fundraising,"
said Robert A. Rusbuldt, the chief Republican lobbyist with
the Independent
Insurance Agents of America. "It's an opportunity for
members and
party committees to engage in fundraising on a massive
scale."(23)
Furthermore,
Becker has also provided direct fundraising assistance to
Senators Lott
and Nickles during this critical period for the managed care
forces. In the
winter of 1998, she helped organize a large golf fundraiser
for Nickles'
Leadership PAC at the Doral Hotel in Miami.(24) On April
21, 1998, she
orchestrated a fundraiser for Lott's PAC at the Washington
Hyatt Regency.
The event, which was to celebrate Lott's 25th year in
Congress, raised
more than $1 million. While the dinner was organized by
several dozen
lobbyists, Becker and Dirk Van Dongen, president of the
National Association
of Wholesalers-Distributors, led that team.(25) In
addition, on
October 6, 1999, Becker co-hosted, along with Dirk Van
Dongen and Michael
Boland, a former Lott aide now with Boland and
Madigan, a dinner
party for Lott that brought in roughly $800,000 to be
divided between
the senator's campaign coffers and his Leadership
PAC.(26)
Blue Cross and
Blue Shield also forayed into fundraising for House GOP
leaders, who
were attempting to beat back managed care bills among
their own members.
In September 1998, Becker was among a select
group of Washington
lobbyists tapped by the National Republican
Congressional
Committee to help raise $37 million for various
issue-advertising
campaigns to aid House members and GOP challengers.
On Sept. 15,
1998, NRCC Chairman John Linder (R-Ga.) and House
Majority Leader
Richard K. Armey (R-Texas) met with ten or so
lobbyists and
asked them to persuade their clients to attend a series of
nationwide fundraisers.
In addition to Becker, Gary J. Andres of the
Dutko Group;
Nicholas E. Calio of O'Brien Calio; Bruce A. Gates of
Washington Counsel;
Edward W. Gillespie of Policy Impact
Communications;
Timothy P. McKone of Davis, Manafort & Friedman;
and Daniel P.
Meyer of the Duberstein Group were among those who
met with Armey
and Linder.(27)
On February 23,
1999, Becker was the scheduled co-host of a
$2,000-a-plate
dinner for House Speaker J. Dennis Hastert (R-Ill.).(28)
On October 5,
1999 -- two days before the House's scheduled debate
on the leading
pro-consumer managed care bill sponsored by Rep.
Charles Norwood
and Rep. John Dingell -- Becker feted another
exclusive $1,000-a-plate
fundraising breakfast for House Speaker
Hastert. Other
hosts of the affair were CIGNA Corp. lobbyist Art Lifson,
Aetna lobbyist
Jonathan Topodas, Thomas Scully, president of the
Federation of
American Health Systems and health care superlobbyist
Deborah Steelman,
whose client list includes Aetna, drug companies and
managed care
providers.(29)
For a timeline
of significant fundraising activities by Becker and the Blue
Cross and Blue
Shield Association see the chronology in Appendix A.
National Federation of Independent Business
Over the last
several years, the NFIB has developed an extremely close
working relationship
with the congressional Republican leadership. A
critical event
was its ability to mobilize many of its more than 600,000
small business
owner/members against the Clinton health care plan in
1993-94 and
to help GOP leaders articulate an effective political
message. "The
success of the NFIB in the Clinton Health Care battle
translated into
clear access to the Republican leadership in both houses of
Congress as
well as significant input into the policy agenda of the
Republican Party,"
concludes one scholar.(30) Thus the NFIB is a key
participant
in the Thursday Group, a regular meeting of pro-GOP interest
groups convened
by the heads of the Senate Republican Policy
Committee and
House Republican Conference. Not only does the NFIB
put its financial
muscle into Republican candidates (only 5% of funds went
to Democrats
in the 1996 election), it extensively mobilizes its members to
support its
selections and has contributed to pro-Republican election time
TV and radio
"issue ads."(31)
"The number one
interest that rings the bell of the GOP leadership is the
NFIB. The Republican
Party looks at small business as being its core
constituency,"
commented Thomas Scully, president of the Federation of
American Health
Systems and a former White House aide to President
Bush. "If the
NFIB had said, 'We don't care about this issue [of patients'
rights],' the
GOP leadership would have been far less aggressive in their
positions."(32)
In the fall of
1997, the NFIB's connection with GOP Senate leaders
began to pay
off for the managed care interests that it led as chair of the
Health Benefits
Coalition. As previously mentioned, the principal managed
care and business
groups had been meeting regularly since about the
beginning of
the year. Significantly, they had dubbed themselves "the
NFIB coalition"
according to a October 22, 1997 memo from a Health
Insurance Association
of America (HIAA) lobbyist to her supervisor that
was leaked to
the press (see memo in Appendix B).(33)
According to
the memo, Lott's aide, Keith Hennessey, had told the
coalition that
Lott was "very concerned" about "the issue of mandates,
incremental
reform, etc.;" thus Hennessey would be "working with House
and Senate leadership
to coordinate the advocacy effort." To the
coalition, Lott
conveyed an appeal for financial support, "Senator Lott
also said that
Senate Republicans need a lot of help from their friends on
the outside.
'Get off your butts, get off your wallets.'" Hennessey
specifically
mentioned the need for "employer/insurer grassroots"
lobbying. Extensive
advertising campaigns ensued.(34)
Increased contributions
were also forthcoming. As we shall see in more
detail later
(p. 15), HBC contributions to Republicans jumped from $5.3
million in the
1996 election cycle (a presidential and congressional election
year when contributions
run higher) to $6.8 million in the 1998 cycle (a
congressional
election when contributions typically decrease).
According to
the HIAA memo, NFIB lobbyist Mark Isakowitz
subsequently
informed the group that he had been summoned to the Hill
by staffers
for Lott, Nickles, House Speaker Newt Gingrich (R-Ga.) and
House Majority
Leader Armey. Isakowitz was directed to get the NFIB
coalition to
brief Republican health legislative assistants, implement a
"heavy" grassroots
lobbying effort against the bill during Congress' winter
recess, meet
with groups of senators to report on what each organization
was doing to
fight these bills, and write "the definite piece of paper
trashing all
these [patient protection] bills." Isakowitz's "overall
impression"
was that "the Leadership was looking to signs of serious
commitment on
our part before they go out on a limb."(35)
This was just
the beginning of the NFIB-Lott-Nickles relationship on
managed care.
In January 1998, the NFIB formalized its role in the
coalition against
managed care regulation. Its Senior Vice-President of
Federal Public
Policy, Dan Danner, moved into the position of chairman
of the newly-created
Health Benefits Coalition.
The next month,
Senator Lott selected Senator Nickles to head a Senate
Republican health
care task force. Its mission was to study the impact of a
variety of regulatory
proposals involving managed care. As a former
small-businessman
with deep roots in Oklahoma's oil patch, Nickles'
philosophy particularly
resonated with that of the NFIB. At various crucial
junctures during
the managed care reform debate, press releases on his
Senate web site
show, Nickles conducted press conferences with the
NFIB at his
side to argue against new managed care standards.
Directing the
HBC lobby, the NFIB became intimately involved with
Nickles on behalf
of managed care interests. Veteran NFIB heavy-hitter
Isakowitz strategized
frequently with Nickles and his staff during the
health care
debate. "He talks to Nickles staff every day," said a source
close to Isakowitz.
"Mark is very smart and hard-working. The
Republican leadership
knows him well and has a lot of trust in him."(36)
Isakowitz had
played a key role in helping derail President Clinton's health
care proposal
in 1993. After four years at the NFIB, he left in November
1997 to become
a name partner in his own lobbying firm. In 1998, he
was hired as
an outside consultant by the Health Benefits Coalition, which
the NFIB chairs.
For the HBC, Isakowitz's assignment was to continue to
work on the
campaign against managed care reform. Isakowitz "was very
involved" in
that lobbying campaign, said Dan Danner. "He served as a
communication
hub."(37)
As another example
of the close relationship between NFIB and Nickles'
office, Nickles'
legislative director Diane Moery had previously worked at
the NFIB as
a lobbyist in 1995. She left Nickles' office in February 2000
to work with
Isakowitz in his lobbying firm.(38)
The Leaders Pressure Their Party
"What's impressive to me is that we're sticking together."
Senator Bill
Frist (R-Tenn.) quoted during climactic July 1999 Senate
votes on Republican
patients' rights proposals(39)
Nothing indicates
the influence of the increasingly generous pro-managed
care donors
and their special intermediaries on Senators Lott and Nickles
more than Nickles'
strenuous efforts -- against popular opinion -- to
mobilize needed
support from hesitant Republican colleagues.
A leading political
scientist has written, "Party campaign efforts on behalf
of individual
candidates and election-agenda setting efforts encourage
legislators
to vote for bills that are at the core of their party's agenda when
Congress is
in session."(40) Congressional party leaders/fundraisers
possess important
levers of influence for mobilizing reluctant followers
behind a donor-influenced
agenda. They may invoke the "carrot" of
needed campaign
assistance. Or they may rely on the "stick" of their
control of daily
legislative business and their ability to shape the party's
core agenda.
Here is how the process unfolded in the Senate during the
patients' rights
battle.
Nickles Steers the GOP Health Care Task Force
Following his
appointment by Lott in February 1998 to chair the Senate
GOP health care
task force, Nickles proceeded to work closely with
business, HMO
and insurance lobbyists to block a variety of managed
care reform
bills, according to lobbyists and Republican and Democratic
aides. Press
statements issued by Nickles' office announced that the
mandate of the
task force, at "the very minimum" was to "ensure that
Congress, in
its haste to do good, does not cause an increase in the costs
of health insurance"
and to "protect consumer quality by ensuring that the
best possible
caretakers are monitoring the quality of (Americans') health
care,"(41) among
other issues.
Over the next
few months Nickles, along with other task force members
-- including
Republican Sens. John Chafee of Rhode Island, Susan Collins
of Maine, Bill
Frist of Tennessee, Chuck Hagel of Nebraska, Bill Roth of
Delaware and
Rick Santorum of Pennsylvania -- held a series of
non-public meetings
and conferences at which "leading health care
experts" were
"interviewed." The process was all part of an endeavor to
"take a hard,
honest look at issues of health care quality," various press
releases from
Nickles' office stated.(42)
But to a great
extent, the task force relied heavily on information supplied
by those groups
opposed to most -- if not all -- measures being proposed
by health care
reformers, according to interviews with several sources.
"There were
many meetings of Senate GOP heath care task force staff at
which corporate
(insurance and business) types were handpicked to
provide briefings,"
said a former Republican Senate aide involved in the
task force.
"They were spoon-fed by the industry the entire time. No
question about
it. The task force did not spend any time with patient or
consumer groups."(43)
While the American
Medical Association made one presentation to the
task force,
its requests for additional participation were refused. Said Jim
Smith, a Washington
lobbyist with the AMA, "It's safe to say task force
members were
pretty one-sided about who they consulted with. We
petitioned Sen.
Nickles again and again and again to meet with us to share
our concerns
about crafting a patients' bill of rights. They (Nickles' staff)
just never found
a way to put the two of us together despite our many
requests to
do so."(44)
By contrast,
Dan Danner, head of the Health Benefits Coalition, said his
group, in addition
to efforts by individual members, provided numerous
briefings, fact
sheets, surveys and studies to the GOP health care task
force.(45) Over
the next several months, Nickles emerged from his work
on the task
force from time to time to hold press conferences with
representatives
of the NFIB, the U.S. Chamber of Commerce and the
Small Business
Survival Committee to warn of the ill-effects that managed
care reform
would have on the ability of employers to provide health
insurance.
On July 15, 1998,
Nickles and other members of the Senate Republican
health care
task force unveiled their own bill. This was essentially the
relatively weak
patients' rights bill that the Senate would pass a year later
with "tacit
support from the business community and insurers."(46)
Although the
HBC said it was "deeply disappointed" that the proposal
"included government
mandates which will only increase health care
costs," it consoled
itself that "it avoids the many excesses of
Kennedy-Dingell
[the Democratic alternative], which could create a
monstrous new
bureaucracy in Washington and a new pot of gold for trial
lawyers. Our
coalition will vigorously oppose any efforts to expand
liability to
health plans and employers."(47)
Nickles' current
senior policy advisor, Stacy Hughes the senator's point
person on patients'
rights did not return phone calls to comment on the
activities of
the task force, as well as to answer additional questions about
Nickles' positions
on managed care reform.
Shutting Down Senator Jim Jeffords
In late 1997,
Senator Jim Jeffords (R-Vt.), chair of the Senate Health,
Education, Labor
and Pensions (HELP) Committee, set to work on a bill
that would impose
federal standards on managed care plans. From
August to September
1997, according to a Senate aide, Jeffords teamed
with Senator
Edward Kennedy, the ranking Democratic minority member
of the HELP
committee, to put together a bipartisan bill. In October,
Jeffords unveiled
a draft of the "Quality Bill," which would require health
plans to open
up access to specialty care by providing out-of-network
referrals at
no additional cost; not discriminate based on a person's health
status; apply
the "prudent layperson" standard in covering emergency
room care; set
up an external quality assurance program; ban gag clauses
on doctors,
freeing them up to discuss treatment options with their
patients; and
allow women direct access to OB/GYNs.(48)
As a House member
from 1975 to 1988, Jeffords had been well known
as an independent
voice. He has maintained this reputation in the Senate
with a moderate
stance on such matters as the environment, education,
civil rights
and gay and lesbian issues. He was the only Republican to
cosponsor the
Clinton administration's sweeping health care initiative in
1993. During
the course of his 1997 work on the draft of the "Quality
Bill," Jeffords
stressed that "managed care regulation will be an
unavoidable
and necessary issue for Congress to address during the next
legislative
session."(49)
But as Jeffords'
seniority has increased in the Senate, particularly with his
1997 move into
the chair of the HELP committee, the "Republican
leadership has
tried to keep him on a tight leash," said a former aide to the
senator. "There
has been more pressure on him to conform."(50)
"A day came when
Jeffords said publicly that we would have a (bipartisan
managed care)
bill introduced and out of committee by October 1997.
The leadership
came down on him like a ton of bricks," said a
well-informed
Democratic Senate aide.(51) "As soon as he conveyed the
seriousness
of his intents, the leadership shut the process down. Literally,
things came
to a halt. This was the pivotal point at which it became clear
that Senator
Jeffords was in hock to the leadership." According to this
aide, Jeffords'
staffers were so intimidated by the leadership's mandate to
shut down bipartisan
negotiations, they stopped virtually all discussions
with Kennedy's
staff.
In the opinion
of a former Republican Senate aide deeply involved in
health issues,
Jeffords was compelled to participate in the GOP
leadership's
health care agenda because "he's boxed in by conservatives
on his committee."(52)
Both staffers'
perspectives receive support from the leaked October 1997
internal HIAA
memo which highlighted Senator Lott's role. In her
summary of the
"NFIB coalition" meeting with an aide to Lott, the HIAA
staffer wrote:
"Lott told Senator Jeffords that he could not introduce his
'Quality Bill'
this session and was advised to work less with Sen. Kennedy
and more with
his fellow Republicans on the Senate Labor Committee.
Sen. Lott has
also spoken with all Republicans on the Senate Labor
Committee and
told them to get involved and express their concerns [to
Jeffords]."(53)
On March 18,
1999, by a party-line vote of 10 to 8, the Senate HELP
committee approved
the bill written by the GOP health care task force
and sent it
to the Senate floor. During the 13-hour markup of the GOP
version, all
18 amendments offered by committee Democrats were
defeated by
party line votes. At various points throughout the process,
Lott and Nickles
and their staffs undertook the unusual action of standing
in the back
of the room to enforce the party vote, several sources said.(54)
"The leadership
staff, primarily Nickles people, also staffed other GOP
members by answering
their questions, talking to the press, etc.," various
sources at the
markup said. "During markup, Stacy Hughes (Nickles'
senior policy
advisor), held court."(55)
Ostracizing Senator John Chafee
The most visceral
enmity within GOP leadership ranks was targeted at
Sen. John Chafee,
a moderate from Rhode Island. In 1994, Chafee led a
bipartisan "mainstream
coalition" which attempted to pass incremental
health reform
measures after the demise of Clinton's plan to achieve
comprehensive
overhaul of the industry. Again, in November 1997,
Chafee formed
a bipartisan Congressional Task Force on Health Care
Quality with
Sen. Joseph Lieberman (D-Conn.) and Reps. Nancy
Johnson (R-Conn.)
and Benjamin Cardin (D-Md.). Its mandate was to
study the various
proposed requirements on managed care plans.
Chafee said he
informed Senate Majority Leader Lott that he was
organizing the
task force. "I don't find myself in conflict with the leaders. I
don't think
anyone objects to our trying to educate ourselves."(56) But,
that move and
others to come resulted in Chafee's ostracism by senior
party ranks,
leading to intensely bitter relations that prevailed throughout
the patients'
rights debate and up until the time Senator Chafee died in
October 1999.
Chafee was marked
by the GOP leadership to be "suspect from the get
go," declared
a former aide to the senator. When Nickles appointed
Chafee to his
newly-formed GOP health care task force in February
1998, it was
an attempt to co-opt him, according to the aide. "I'm not
sure how anxious
they (GOP leadership) were to have his participation."
(57) After all,
Chafee had already committed himself to a bipartisan
approach through
the congressional task force.
In July 1998,
right after the Nickles task force brought forth a Republican
bill, Chafee
and Sen. Bob Graham (D-Fla.) introduced a bill intended to
be a compromise
between the Democratic and Republican Senate
proposals. The
Chafee-Graham plan -- the "Promoting Responsible
Managed Care
Act" -- included many of the key benefit protections in
Democratic plans
and would have allowed patients to sue insurers and
HMOs for economic
damages, but not for pain and suffering or punitive
damages.
As GOP leaders
began to move their bill towards the Senate floor in the
spring of 1999,
Chafee's health care legislative assistant Lisa Layman
attended a patient
rights' briefing session called by Chris Jennings, special
assistant to
the White House on health policy. Also, on hand were various
Democratic staff
assistants and representatives of the AMA. Layman was
the only Republican
representative at the meeting. "Chafee and his staff
paid a price
for it," said a Rhode Island managed care reform lobbyist
who knew Chafee
well and attended the meeting. "Nickles' staff became
very demeaning"
to the senator and his legislative aides.(58)
Subsequently,
another former aide related, Chafee and his staff faced
continued alienation
from GOP leaders. At meetings, conferences and
floor debates,
they received constant off-the-cuff remarks from other
members and
staff for not being "team players" supporting the leadership's
agenda. When
the Senate Republican Policy Committee conducted
various briefings
on the patients' bill of rights, Chafee was intentionally
excluded from
the sessions.(59)
"When Senator
Chafee had a difference of opinion with his colleagues, he
embraced them
still and tried his best not to alienate them. I felt [GOP
leadership and
their supporters] were constantly demeaning his position.
And I think
it was uncomfortable for him," this aide added.(60)
Chafee himself
shared these feelings with the aforementioned Rhode
Island lobbyist.
This was the first time ever in the lobbyist's history of
dealings with
the Senator on a myriad of issues that he had been made
privy to such
inside admissions. "The Senator, in a passing reference,
verbally expressed
his disgust to me. He was grossly offended by the
treatment of
the Senate GOP leadership given his 20 years of tenure in the
Senate."(61)
Added a former
Chafee staffer: "No one can appreciate the extent to
which pressure
can be brought on by peers. It's a lonely, isolating feeling;
a very alienating
experience."(62) The lesson was presumably not lost on
other Republicans
weighing their patients' rights positions.
Corralling Senators John McCain and Peter Fitzgerald
As the Senate
floor debate drew to a close with a prospective narrow
victory for
the Republican bill, Senators Chafee and Graham tried to
broker a last-minute
bipartisan compromise. They offered a version of
their previous
bill allowing patients to sue managed care plans for
non-economic
and punitive damages, but capping those damages at three
times the economic
damages or $250,000, whichever was greater. With
half a dozen
Democrats on board, Chafee sought to gather Republican
support for
the plan and obtained Sen. Arlen Specter's (R-Penn.)
cosponsorship.
On July 15, 1999, a press release at the Chafee-Graham
news conference
stated that Sens. John McCain (R-Ariz.) and Peter
Fitzgerald (R-Ill.)
also would appear to back the compromise.(63)
However, McCain
and Fitzgerald were not at the news conference. "The
night before
the press conference to unveil the agreement, McCain and
Fitzgerald were
pulled back by Republican leadership and were told
'Don't go to
that thing. It wouldn't be good for you,'" said a former
Republican Senate
aide.(64)
Those two Republican
senators' support of the potential bipartisan
compromise could
have helped to "generate momentum for real change,"
Mike Dorning,
a Washington bureau reporter for the Chicago Tribune,
wrote on July
18, 1999. "[Chafee and Graham] thought they had fellow
GOP Sens. Fitzgerald
and John McCain of Arizona on board. Senate
Whip Don Nickles
acknowledges Fitzgerald and McCain were talked to
when it looked
like they would join the compromise. And when asked
about those
discussions, Nickles gave only a cryptic smile."(65)
Fitzgerald claimed
he ultimately decided not to join in the compromise
because it failed
to include two health care tax breaks he favors: the
expansion of
the tax-free medical savings account pilot program and
immediate full
deductibility for health insurance premiums paid by
self-employed
people.(66)
"More than that the public may never know," Dorning wrote.
The Chafee-Graham
proposal went on to fail when the senators were
unable to secure
the 51 votes needed to force a vote on the measure.
On July 18th,
by a vote of 53 to 47, Republicans passed their own less
consumer friendly
version of the patients' bill of rights (S. 1344). Sens.
Chafee and Fitzgerald
were the only Republicans to break ranks to
oppose the measure.
In explaining his vote, Fitzgerald cited his agreement
with the Democratic
push to repeal the federal law that gives immunity
from lawsuits
to managed care organizations. That position, Fitzgerald
explained, was
consistent with his belief in laissez-faire principles.
"HMOs' care
could be improved if HMOs were not shielded from the
consequences
of any negligent behavior. A more free-market way to
address this
would be to have a downside for any rogue behavior,"
Fitzgerald said
after the vote.(67)
However, the
Chicago Tribune's Dorning wrote that Fitzgerald's
willingness
to break with party leaders "leaves unclear how much courage
he puts behind
those convictions" given he did not support the earlier
Chafee-Graham
proposal "that might have really unsettled the strategy of
the GOP."(68)
Just before the
final vote, Senator Frist remarked, "What's impressive to
me is that we're
sticking together."(69)
Contributions from Managed Care Interests
"We are giving
more to Republicans because they've been carrying
our water on
a lot of issues and they are also in the majority."
Brenda Becker,
Vice President of Congressional Communications and
PAC Director,
Blue Cross and Blue Shield Association(70)
The Contributions
Why have Senators
Lott and Nickles worked so closely and continuously
with the HBC
and its key NFIB and Blue Cross and Blue Shield
Association
operatives in behalf of its pro-managed care legislative
agenda? Why
have they been so active in pressuring their reluctant
Republican colleagues
to toe the party line? A close look at the political
contributions
of pro-managed care interests and the roles of Senators Lott
and Nickles
in collecting them provide major ingredients of a likely
explanation.
As congressional
debate over patients' rights heated up beginning in 1997,
the members
of the HBC rapidly increased their campaign contributions.
Table 4 shows
that total HBC contributions from 1995-99 amounted to
$18 million.
Contributions rose from $7.1 million in the 1996 two-year
election cycle
(a presidential election cycle when total contributions are
generally higher)
to $8.3 million in the 1998 cycle (an off-year election
cycle when contributions
generally decrease), an increase of 18%.
Significantly,
all of the new money moved into the Republican column as
contributions
to Democrats actually decreased by nearly $200,000
between the
two election cycles. Another $2.7 million for the 1999-2000
cycle had been
collected by the end of 1999, with the bulk expected in
2000. While
the GOP harvested 75% of contributions ($5.3 million) in
the 1996 cycle,
it got 81% ($6.8 million) in the 1998 cycle, and 79%
($2.1 million)
in 1999.
Table 4: Health Benefits Coalition Contributions (1995-1999)
Year
Republicans
Democrats
Total
1995-1996
$5,337,508 (75%)
$1,755,268 (25%)
$7,092,776
1997-1998
$6,778,170 (81%)
$1,562,346 (19%)
$8,340,516
1999
$2,103,844 (79%)
$545,048 (21%)
$2,648,892
Total
$14,219,522 (79%)
$3,862,662 (21%)
$18,082,184
Source: Center
for Responsive Politics data (www.opensecrets.org)
analyzed by
Public Citizen.
Especially important
was the rising tide of HBC soft money given to the
Republican Party.
Table 5 shows that total soft money contributions from
1995 to 1999
amounted to $6.7 million. They rose from $2.5 million in
the 1996 cycle
to $3.1 million in the 1998 cycle, a jump of 25%. This
was remarkable
considering that overall soft money to political parties
decreased 16%
between the presidential/congressional elections of 1996
and the purely
congressional year of 1998.(71) In 1999 the HBC injected
another $1.1
million in soft money. Significantly, the Republican Party's
share of HBC
soft money rose from 70% ($1.8 million) in the 1996 cycle
to 84% ($2.6
million) in the 1998 cycle, before dipping slightly to 82%
($876,000) in
1999. Party soft money comprised 39% of HBC
contributions
to Republicans in the 1998 cycle and 42% in 1999
compared with
only 33% in the 1996 cycle.
Table 5: Health Benefits Coalition Soft Money Contributions
(1995-1999)
Year
Republicans
Democrats
Total
1995-1996
$1,764,665 (70%)
$739,450 (30%)
$2,504,115
1997-1998
$2,630,671 (84%)
$494,649 (16%)
$3,125,320
1999
$876,724 (82%)
$198,250 (18%)
$1,074,974
Total
$5,272,060 (79%)
$1,432,349 (21%)
$6,704,409
Source: Center
for Responsive Politics data (www.opensecrets.org)
analyzed by
Public Citizen.
Moreover, as
the legislative battle picked up, the Republican Party's
congressional
fundraising committees, as opposed to the Republican
National Committee
(RNC), reaped an increasing share of the rising HBC
soft money.
As Table 6 shows, the National Republican Senatorial
Committee (NRSC),
the Republican House-Senate Dinner Committee,
and the National
Republican Congressional Committee's (NRCC)
combined share
of soft money rose from 45% in the 1996 cycle to 61%
in the 1998
one and 56% in 1999.
Table 6: HBC Contributions to National Republican Party
Committees (1995-1999)
Year
NRSC
Republican
H/S Dinner
Committee
NRCC
RNC
Total
1995-1996
$138,600
(8%)
$311,000
(18%)
$342,115
(19%)
$972,950
(55%)
$1,764,665
1997-1998
$358,415
(14%)
$594,000
(23%)
$646,404
(25%)
$1,031,852
(39%)
$2,630,671
1999
$128,330
(15%)
$137,000
(16%)
$221,399
(25%)
$389,995
(44%)
$876,724
Total
$625,345
(12%)
$1,042,000
(20%)
$1,209,918
(23%)
$2,394,797
(45%)
$5,272,060
Source: Center
for Responsive Politics data (www.opensecrets.org)
analyzed by
Public Citizen.
Lastly, while
the HBC's contributions represent the financial weight of the
best organized
and most pro-active managed care interests in American
politics, other
actors should not be neglected. Tables 7 and 8 present
comparative
information on the much smaller contributions of non-HBC
managed care
companies.
Table 7: Non-HBC Managed Care Contributions (1995-1999)
Year
Republicans
Democrats
Total
1995-1996
$628,603 (44%)
$802,209 (56%)
$1,430,812
1997-1998
$707,527 (65%)
$383,805 (35%)
$1,091,332
1999
$227,719 (74%)
$78,005 (26%)
$305,724
Total
$1,563,849 (55%)
$1,264,019 (45%)
$2,827,868
Source: Center
for Responsive Politics data (www.opensecrets.org)
analyzed by
Public Citizen.
Table 8: Non-HBC Managed Care Soft Money Contributions
(1995-1999)
Year
Republicans
Democrats
Total
1995-1996
$193,301 (39%)
$306,400 (61%)
$499,701
1997-1998
$349,850 (86%)
$57,750 (14%)
$407,600
1999
$126,050 (82%)
$27,000 (18%)
$153,050
Total
$669,201 (63%)
$391,150 (37%)
$1,060,351
Source: Center
for Responsive Politics data (www.opensecrets.org)
analyzed by
Public Citizen.
In addition,
an unknown number of members of The Business Roundtable
and other employer
associations who were not individually represented in
the HBC have
lobbied on patients' bill of rights legislation, among other
issues. A selective
look at federal lobby disclosure forms of just the top
20 1997-98 campaign
contributors from the 175-member Business
Roundtable(72)
shows that 11 of them lobbied on patients' rights issues in
1998. From 1997-99,
these 11 companies contributed $20.4 million
overall, of
which $14.1 million went to Republicans including $4.9 million
in soft money.
Top Collectors:
Senators Lott and Nickles
"Senator Lott
also said that Senate Republicans need a lot of help
from their friends
on the outside. 'Get off your butts, get off your
wallets.'"
Health Insurance
Association of America Memo(73)
As the top Senate
Republican leaders since June 1996, Senators Lott and
Nickles have
been deeply involved in -- and benefitted from --
Republican Party
fundraising from pro-managed care interests. Both were
already members
of the leadership at the beginning of the 1996 election
cycle, Lott
as Assistant Majority Leader and Nickles as Director of the
Republican Policy
Committee.
Lott and Nickles
have been leading soft money fundraisers for the NRSC
and the Republican
House-Senate Dinner Committee, which directly aim
to swell the
number of Republicans under their leadership. As Table 6
shows, since
1995 HBC companies have contributed a total of $1.1
million in soft
money to benefit Senate candidates: $625,345 directly to
the NRSC and
$521,000 to the Republican House-Senate Dinner
Committee (50%
of the $1 million in Dinner proceeds went to the
NRSC).
Furthermore,
as top elected Republican leaders, the two senators are
active in other
Republican Party committee fundraising, which has brought
an additional
$4.1 million since 1995 to the RNC, NRCC and House
component of
the Dinner Committee. They participate in such RNC
donor programs
as Team 100 and the Republican Eagles, featuring
meetings with
party leaders, and conduct joint fundraising with the NRCC
and Dinner Committee.(74)
Senators Lott
and Nickles, and their Senate Republican colleagues,
benefit significantly
from HBC soft money directed to the RNC and
NRCC as well
as the NRSC. For example, in 1996 direct and
coordinated
contributions from the RNC accounted for 12% of all large
donations to
Senate Republican incumbents. All three committees furnish
a wide range
of indirect assistance to Senate candidates, from televised
generic party
"issue ads" to discounted polling to voter registration and
mobilization.(75)
Appendix C portrays
the pressure of HBC contributions on Senator
Lott's and Senator
Nickles' political behavior by presenting a timeline of
major HBC soft
money contributions to Republicans and key
congressional
developments on patients' rights legislation.
Lastly, the two
top Senate leaders have also benefitted from HBC hard
money donated
directly to their personal campaign committees and
"Leadership
PACs." As Table 9 shows, Sen. Lott has received $134,000
since 1995 for
his campaign and Leadership PAC while Sen. Nickles
took in $118,959
in contributions to his campaign and Leadership PAC.
Table 9: HBC Contributions to Senators Lott and Nickles
(including Leadership PACs) (1995-1999)
Year
Total
Sen. Lott
Sen. Nickles
1995-1996
$39,545
$15,500
$24,045
1997-1998
$140,914
$70,500
$70,414
1999
$72,500
$48,000
$24,500
Total
$252,959
$134,000
$118,959
Source: Center
for Responsive Politics data (www.opensecrets.org)
analyzed by
Public Citizen.
Conclusion
What campaign
contributions -- particularly soft money -- appear to have
wrought on the
burning issue of patients' rights to decent health care
highlights the
political imperative of campaign finance reform. Without
such reform,
the needs of the average American are often ignored by their
elected leaders
-- Democrats as well as Republicans. Enactment of the
McCain-Feingold
bill, which centers on a ban on soft money to political
parties, would
constitute a major step forward. The bill has majority
support in both
the House and Senate including a quarter of House
Republicans
and nearly a fifth of Senate Republicans. Yet it has been
blocked since
1997 by a filibuster led by Senator Lott and Senator Mitch
McConnell (R-Ky.),
who currently chairs the NRSC.
During this year's
presidential primaries, more Americans than ever
before, from
both parties, used their votes to express support for
campaign finance
reform. Their voices need to be heard even more loudly
during the remainder
of this election year.
Notes
(Methodological
Note: A portion of this report is based on interviews
conducted by
investigative reporter Loren Berger. In some cases, sources
are attributed;
in others the sources have insisted upon anonymity. In all
instances, the
general nature of the source is indicated.)
1. Congressional Quarterly, March 11, 2000, p. 510.
2. Quoted in
Jeffrey H. Birnbaum, "Capitol Clout: A Buyer's Guide,"
Fortune, October
26, 1998, p. 177.
3. Kaiser Family
Foundation, Trends and Indicators in the Changing
Health Care
Marketplace: Chartbook, August 1998, p.18.
4. "Kaiser Public
Opinion Update February 2000," available at
www.kff.org./library.
On broad support across political parties for
consumer protection
legislation, see for example, Kaiser Family
Foundation,
Press Release, "New Survey Finds the Public More Worried
About Managed
Care and More Supportive of Patient Protection
Legislation,
but Criticisms Still Register," September 17, 1998, available
from above website.
5. Kaiser Family
Foundation/Harvard School of Public Health, National
Survey on Health
Care and the 2000 Elections, January 19, 2000, p.15;
"Kaiser Public
Opinion Update February 2000."
6. Julie Rovner,
"Congress Takes the Long Road on Managed Care
Reform," National
Journal's Congress Daily AM, March 1, 2000, p. 13.
7. Mary Agnes
Carey, "For Some Hard-to-Pass Bills, Smaller Can Be
Better," Congressional
Quarterly, March 28, 1998, p. 823.
8. Peter H. Stone,
"Playing Second Fiddle," National Journal, July 11,
1998, p. 1614.
9. Public Citizen
analysis of data from the Center for Responsive Politics
available from
www.opensecrets.org.
10. See for example,
Ben White, "Business Ad an Early Gift for GOP
Senators," The
Washington Post, December 8, 1999, p. A6; Alison
Mitchell, "Senate
Takes Up Patients' Rights," New York Times, July 13,
1999, pp. A1,
A14; and Karen Forestel, "Health Care Forces Fight to
Frame the Debate,"
Congressional Quarterly, April 3, 1999, pp.
799-801.
11. Mary Jane
Fisher, "Battle Lines Drawn in Managed Care War,"
National Underwriter:
Property and Casualty/Risk and Benefits
Management Division,
November 24, 1997, p. 31.
12. The Health
Benefits Coalition, "Memorandum to Members of the
U.S. House and
Senate," January 27, 1998.
13. "Blue Cross and Blue Shield System Fact Sheet"
14. Public Citizen
analysis of Federal Election Commission data. 1996
cycle soft money
totaled $262 million while 1998 cycle soft money
totaled $220
million.
15. Public Citizen
compilation and analysis of data from the Center for
Responsive Politics.
16. Quoted in
Alissa J. Rubin, "Health Care Firms Boost Political Giving,"
Los Angeles
Times, October 30, 1998, p. 13.
17. Telephone
Interview, Brenda Becker (Blue Cross and Blue Shield
Association),
March 15, 2000.
18. Ibid.
19. Ibid.
20. Ibid.; Jill
Abramson, "Well-Fed Loath to Upset A Capitol Money
Trough," New
York Times, June 15, 1998, p. A-1.
21. Susan B.
Glasser and Ben White, "Feeding the Political Money
Machine," Washington
Post, June 26, 1999, p. A-1; Interview,
Spokesman Republican
House-Senate Dinner Committee, March 28,
2000.
22. Telephone Interview, Brenda Becker, March 15, 2000.
23. Peter H.
Stone, "And Don't Forget Your Golf Clubs," National
Journal, December
4, 1999, p. 3486.
24. Peter H.
Stone, "Playing Second Fiddle," National Journal, July 11,
1998, p. 1615.
25. Robert Dreyfuss,
"Mississippi Waltz; Trent Lott, Money
Conservative."
American Prospect, March-April 1999, p. 32.
26. Peter H.
Stone, "Counting on K Street, The National Journal,
October 16,
1999, p. 2988.
27. Marilyn Werber
Serafini, Peter H. Stone, W. John Moore, "From the
K Street Corridor,"
National Journal, September 26, 1998, p. 2266.
28. Peter H.
Stone, "From the K Street Corridor," National Journal,
February 20,
1999, p. 488.
29. "Hastert
Breakfast Timing Raised Ruckus as Vote on Bill Loomed,"
Modern Health
Care, October 11, 1999, p. 56.
30. Ronald Shaiko
and Marc A. Wallace, "From Wall Street to Main
Street: The
National Federation of Independent Business and the New
Republican Majority,"
in Robert Biersack, Paul S. Hernnson, and Clyde
Wilcox, eds.,
After the Revolution (Boston: Allyn and Bacon, 1999), p.
19.
31. Shaiko and Wallace, "From Wall Street to Main Street," pp. 18-35.
32. Telephone interview, Thomas Scully, March 2, 2000.
33. "Government
Run Healthcare," from Melody Harned to Michael
Fortier, October
22, 1997, internal memo published in "Memo of the
Month," Washington
Monthly, December 1997.
34. See n. 10.
35. See n. 33.
36. Telephone interview (name withheld), March 17, 2000.
37. Telephone
interview, Dan Danner (Health Benefits Coalition), March
3, 2000.
38. "Hill People," The National Journal, February 19, 2000, p. 554.
39. Julie Rovner
and Matthew Morrisey, National Journal's Congress
Daily, July
15, 1999.
40. Paul S. Herrnson,
Congressional Elections: Campaigning at Home
and in Washington
(Washington, D.C.: Congressional Quarterly Press,
1998), pp. 83-84,
225.
41. "Nickles
Announces Formation of Senate Task Force on Health
Care," February
14, 1998.
42. Ibid; Sen.
Don Nickles, Press Release: "Health Care Quality,"
February 12,
1998; "Plan Would Result in Loss of Health Insurance
Coverage, Nickles
says," March 31, 1998. "Nickles, Business Leaders
Say Kennedy
Plan Would Force Business Owners, Employers into
Uninsured Ranks,"
July 22, 1998.
43. Telephone interview, (name withheld), February 25, 2000.
44. Telephone interview, Jim Smith (AMA), March 2, 2000.
45. Telephone
interview, Dan Danner (Health Benefits Coalition), March
3, 2000.
46. Alissa J.
Rubin, "Senate OKs GOP Health Care Bill Amid Veto
Threat," Los
Angeles Times, July 16, 1999, p. 3.
47. The Health
Benefits Coalition for Affordable Choice and Quality,
Press Release,
"Employers Draw Line in the Sand -- Health Liability
Must Not Pass,"
July 23, 1998.
48. Interview
(name withheld) Washington, D.C., February 4, 2000;
"Health Care
Quality: Jeffords Drafts Compromise," American Health
Line, October
8, 1997; and Jeffords" Quality Bill to Set Guidelines for
Health Plans,
Protection for Docs," Washington Health Week, October
13, 1997
49. Melissa Robinson,
"Panel to Study Quality of Care," The
Chattanooga
Times, November 25, 1997, p. A4.
50. Telephone interview (name withheld), February 1, 2000.
51. Interview (name withheld), Washington, D.C., February 4, 2000.
52. Telephone interview (name withheld), February 25, 2000.
53. See n. 33.
54. Interviews
(names withheld), Washington, D.C., January 28, 2000,
February 3 and
4, 2000.
55. Interviews
(names withheld), Washington, D.C., January 28 and
February 4,
2000.
56. Robinson, "Panel to Study Quality of Care."
57. Telephone interview (name withheld), February 25, 2000.
58. Telephone interview (name withheld), January 27, 2000.
59. Telephone interview (name withheld), March 15, 2000.
60. Ibid.
61. Telephone interview (name withheld), January 27, 2000.
62. Telephone interview (name withheld), February 25, 2000.
63. Matthew Morrissey,
National Journal's Congress Daily, July 15,
1999.
64. Telephone interview (name withheld), February 25, 2000.
65. Mike Dorning,
"Fitzgerald Only a Little Rebellious on HMOs,"
Chicago Tribune,
July 18, 1999.
66. Ibid.
67. Ibid.
68. Ibid.
69. See n. 39.
70. See n. 16.
71. See n. 14.
72. On the top
20 contributors, see Public Disclosure Inc., "Hard and
Soft Money --
the Business Roundtable," available at www.tray.com.
Public Citizen
reviewed 1998 lobby disclosure forms filed at the
Secretary of
the Senate to determine which companies lobbied on the
bills.
73. See n. 33.
74. 74. U.S.
Senate, Committee on Governmental Affairs, Final Report
of the Investigation
of Illegal and Improper Activities in Connection with
1996 Federal
Elections: Minority Views (1999), Chapter 28, pp. 1-9;
Jeffrey H. Birnbaum,
"Capitol Clout: A Buyer's Guide," Fortune, October
26, 1998, pp.
178-79; Tim Poor, "Golf Tournament Nets $62,000 in
Contributions
for Bond's Senate Race." St. Louis Post-Dispatch, July 24,
1998, p.11;
Letter from Senators Mitch McConnell and Jon Kyl to
members of the
Republican Council of the National Senatorial
Committee, September
23, 1997.
75. 75. Paul
Herrnson, Congressional Elections: Campaigning at Home
and in Washington
(Washington, D.C.: Congressional Quarterly Press,
1998), pp. 73-102,
154; Anthony Corrado, "The Politics of Cohesion,"
in John C. Green
and Daniel M. Shea, The State of the Parties: The
Changing Role
of Contemporary American Parties, Second Edition
(Lanham, Md.:
Rowan and
Littlefield Publishers, 1996), pp. 63-83.
Appendix A: Key
Fundraising Activities of the Blue
Cross and Blue Shield Association (1997-2000)
The Blue Cross
and Blue Shield Association is the trade group for
independent
Blue Cross and Blue Shield member plans with combined
annual revenues
of at least $80 billion. The plans comprise the nation's
largest provider
of managed care services. Overall, the Blues service 75
million health
care customers. More than 52 million people -- roughly one
in six Americans
-- are enrolled in a Blue Cross and Blue Shield managed
care plan.
Since 1995 the
Blues have provided $2.5 million of the $14.2 million
Republicans
have received from Health Benefits Coalition members. In
addition, a
particularly high percentage of the Blues' total campaign
contributions
-- about 50% -- came in the form of soft money to the
party. (Soft
money is the unlimited contributions to political parties from
corporations,
unions and individuals.) Moreover, their soft money
donations rose
20% from the 1996 cycle to the 1998 one at a time when
total soft money
donations from all sources to the political parties declined
16%.
Senators Lott
and Nickles are heavily involved in raising and benefitting
from party soft
money given by the Blue Cross and Blue Shield
Association.
Their personal campaigns and leadership PACs also get
major assistance
from Brenda Becker, vice president of congressional
communications
and PAC coordinator, for the Association. Below is a list
of significant
fundraising activities conducted in recent years by Becker to
benefit Republican
congressional leaders who have done their best to
block a pro-consumer
patients' bill of rights:
1997 Becker served
as co-chair of the Republican National Committee's
Majority Fund
(comprised of almost 100 PACs many of which contribute
$15,000 annually).
1998 (winter)
Becker helped organize a large golf fundraiser for Senate
Assistant Majority
Leader Nickles' Leadership PAC at the Doral Hotel in
Miami.
April 21, 1998
Becker orchestrated a fundraiser for Senate Majority
Leader Lott's
Leadership PAC at the Washington Hyatt Regency to
celebrate Lott's
25th year in Congress. The event raised more than $1
million.
June 1998 Becker
served as Washington co-chair of the GOP
House-Senate
dinner, the party's biggest fundraiser of the year, at which
she helped to
raise $11 million in a single evening.
September 15,
1998 Becker was among a select group of Washington
lobbyists tapped
by the National Republican Congressional Committee to
help raise $37
million for various issue-advertising campaigns to aid
House members
and GOP challengers in the fall elections.
February 23,
1999 Becker co-hosted a $2,000-a-plate dinner for House
Speaker J. Dennis
Hastert (R-Ill.).
June 1999 Becker
was Washington co-chair of the GOP House-Senate
dinner fundraiser,
which collects $9 million from benefactors.
October 5, 1999
Becker co-hosted an exclusive $1,000-a-plate
fundraising
breakfast for House Speaker J. Dennis Hastert (R-Ill.).
October 6, 1999
Becker co-hosted a dinner party for Lott raising roughly
$800,000 to
be divided between the senator's campaign coffers and his
Leadership PAC.
2000 Becker serving
as one of three co-chairs for the Republican
National Committee's
Majority Fund.
June 2000 Becker
serving as Washington co-chair of the GOP
House-Senate
dinner.
July 31-August
3, 2000 Blue Cross and Blue Shield Association
expected to
assist Senator Nickles in hosting golf tournament for GOP
party contributors
at Republican National Convention.
Appendix B:
Health Insurance Association of America
MEMO
DATE: October 22, 1997
TO: Michael Fortier
FROM: Melody Harned
SUBJECT: Government Run Healthcare
______________________________________________________________________________
The message we
are getting from House and Senate Leadership is that we
are in a war
and need to start fighting like we're in a war.
Republican Leadership
is now engaged on this issue and is issuing strong
directives to
all players in the insurance and employer community to get
activated. Earlier
this week, I met with Keith Hennessey (Sen. Lott) along
with the NFIB
coalition. Hennessey will be working with House and
Senate leadership
to coordinate the advocacy effort. Senator Lott is well
aware of the
issue of mandates, incremental health care reform, etc., and
is very concerned.
Lott told Senator Jeffords that he could not introduce
his "Quality
Bill" this session and was advised to work less with Sen.
Kennedy and
more with his fellow Republicans on the Senate Labor
Committee. Sen.
Lott has also spoken with all Republicans on the Senate
Labor Committee
and told them to get involved and express their
concerns. Sen.
Lott also said that Senate Republicans need a lot of help
from their friends
on the outside, "Get off your butts, get off your wallets."
Keith Hennessey
believes that it is critical that employer/insurer grassroots
occur during
recess (Nov & Dec) so that Members are prepared when
they come back
to town in January.
At the NFIB Coalition
meeting today, Mark Isokowitz (NFIB) informed
the group that
he had been summoned to the Hill by Missy Jenkins (Rep.
Gingrich), Dean
Clancy (Rep. Armey), Stacey Hughes (Sen. Nickles) and
Keith Hennessey
(Sen. Lott). Staff gave him four directives to take back
to the coalition:
1.) Hold a briefing for Republican health LAs in 2 weeks;
2.) Implement
heavy grassroots during recess; 3.) Meet with groups of
Senators (e.g.,
Sen. Coverdell health care coalition) to report on what
each organization
is doing to fight these bills; and 4.) Write the definitive
piece of paper
trashing all these bills. Mark Isokowitz's overall impression
from the meeting
was that the Leadership was looking for signs of serious
commitment on
our part before they go out on a limb.
(Note: This memo
is a reproduction of the actual HIAA memo for
purposes of
electronic communication.)
555 13th Street NW Washington, D.C. 20004-1109 202/824-1600
Appendix C:
Congressional Action on Patients' Rights
Legislation, and Noteworthy Managed Care
Industry Soft Money Contributions to Republican
Party Committees
(February 1997 - January 2000)
February
13, 1997
Sen. Ted
Kennedy (D-Mass.) and
Rep. John
Dingell (D-Mich.)
introduce
first major patients' rights
bills.
2/7/97 $40,000 CIGNA to
RNC
3/31/97 $25,000 CIGNA to
RNC
April
23, 1997
Rep. Charles
Norwood (R-Ga.)
introduces
"Patient Access to
Quality
Care Act" (PARCA), H.R.
2400,
which includes the right to sue
HMOs in
state court. It ultimately
garners
234 cosponsors.
5/23/97 $50,000 New York
Life Insurance to Republican
House-Senate Dinner
Committee
6/16/97 $45,000 Prudential
Insurance to Republican
House-Senate Dinner
Committee
October
22, 1997
Health
Insurance Association of
America
memo describes
collaboration
of managed care
interests
with Sen. Lott.
10/17/97 $35,000 American
Insurance Association to
RNC
11/10/97 $25,000 United
HealthCare Corporation to
NRSC
January
1998
Health
Benefits Coalition founded,
composed
of HMOs, insurance and
business
groups opposed to strong
patients'
bill of rights legislation.
1/6/98 $25,000 Prudential
Insurance to NRCC
February
12, 1998
Sen. Lott's
designee as Chairman,
Sen. Nickles,
announces formation
of Republican
health care task
force.
2/27/98 $100,000 Blue Cross
& Blue Shield to Republican
House-Senate Dinner
Committee; plus $20,000
from three BCBS affiliates to
RNC
3/26/98 $75,000 Insurance
Company of North American
(CIGNA) to RNC
3/31/98 $25,000 CIGNA to
RNC
5/7/98 $20,000 New York
Life Insurance Co. to NRSC
5/14/98 $25,000 New York
Life Insurance to RNC
July 1998
49 Senate
Republicans sponsor
their
own "Patients' Bill of Rights
Act",
S. 2330.
July 24,
1998
House
passes the Republican-
sponsored
"Patient Protection Act",
H.R. 4250,
by a vote of 216-210.
8/31/98 $25,000 United
HealthCare Corp. to NRSC
October
9, 1998
Senate
votes 50-47 (including 50 of
55 Republicans)
not to bring up the
House-passed
patients' rights bill for
debate
and votes.
10/20-11/3/98 $125,000
United HealthCare Corp. to
RNC
10/22/98 $50,000 Humana
Hospitals Inc. (Through
Founder and CEO, David
Jones) to NRSC
10/30/98 $50,000 CIGNA to
NRSC
12/15/98 $25,000 Aetna to
NRSC
2/10/99 $40,000 American
Insurance Association to
RNC
March
18, 1999
Senate
Health, Education, Labor
and Pensions
Committee passes
GOP patients'
rights bill by a vote of
10-8 (10
of 10 Republicans).
3/22-6/4/99 $68,000 Blue
Cross & Blue Shield to
Republican House-Senate
Dinner Committee (including
multiple BCBS state
association donations)
3/23/99 $30,000 Blue Cross
& Blue Shield to NRSC
3/29/99 $40,000 Blue Cross
& Blue Shield to NRCC
5/5/99 $25,000 Aetna to
RNC
5/6/99 $25,000 Prudential
Insurance to NRCC
5/28/99 $25,250 Prudential
Insurance Co. of America to
NRSC
July 15,
1999
Senate
votes 53-47 (53 of 55
Republicans)
for amended GOP
"Patients'
Bill of Rights Plus Act," S.
1344,
that denies patients the right
to sue
their HMO in state court.
October
7, 1999
House
of Representatives passes
"Bipartisan
Consensus Patients'
Rights
Bill," H.R. 2723, by a vote of
275-151.
October
15, 1999
Senate
members of Conference
Committee
on patients' rights are
appointed
10/5/99 $25,000 Food
Distributors International to
NRSC
10/13/99 $25,000 Blue Cross
& Blue Shield to NRSC
10/26/99 $25,000 United
HealthCare Corp. to RNC
November
3, 1999
House
members of Conference
Committee
on patients' rights
legislation
are appointed.
11/2/99 $25,000 United
HealthCare Corp. to NRSC
11/5/99 $25,000 to NRCC
11/17/99 $50,000 CIGNA to
NRSC
12/16/99 $20,000 Aetna to
RNC
12/17/99 $25,000 Aetna to
RNC
12/17/99 $100,000 Aetna to
NRSC
1/11/00 $25,000 Aetna to
NRSC