The Baucus Caucus: PhRMA, Insurance, Hospitals and Rahm
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We started this whip count effort on June 23 because it became clear that in the course of making their deals with stakeholders, the Baucus Caucus (who were negotiating on behalf of the White House, with the participation of the White House) had very likely already dealt the public plan away.
On May 11, "stakeholders" including the AMA, PhRMA, the hospitals and the device manufacturers delivered proposals to the White House promising to "voluntarily" reduce cost increases over the next 10 years. In an effort to keep them "at the table," Baucus’s Chief of Staff Jon Selib and Finance Committee staffer Russell Sullivan told stakeholders at a May 20 meeting that their participation in the process of crafting a health care bill was contingent on them "holding their fire":
Sources familiar with the lobbyist meeting described it as collegial, but they said Baucus’ aides made clear that any public opposition to the proposed financing of a reform package would be at their clients’ peril. The staffers’ message to K Street was clear: Tell your clients to let the process work and don’t torpedo it with advertisements, press releases and Web sites.
The goal of keeping stakeholders at the table was threefold:
- Keep them from advertising against the White House plan
- Keep them from torpedoing vulnerable Democrats in 2010 so there isn’t a repeat of 1994
- Keep their money out of GOP coffers
You can see the fingerprints in the deals that they made: the $150 million PhRMA was spending on ads for health care reform, the $2.5 million they spent helping vulnerable freshmen, and the total fury that Boehner has unleashed on PhRMA and other stakeholders for making deals with the White House.
People make a mistake when they think the battle for health care reform is about ideology, because it’s not. It’s about who controls K Street and the cash that flows from it, which could fund a 2010 GOP resurgenece — or not.
On June 9, a lobbyist who worked for the insurance companies, hospitals, and other stakeholders said that these groups were "considering joining their Republican allies and mounting a public relations offensive to put the brakes on President Barack Obama’s overhaul plans."
In response, on June 11 Sullivan and Selib fired a warning shot:
“They said, ‘Republicans are having this meeting and you need to let all of your clients know if they have someone there, that will be viewed as a hostile act,’” said a Democratic lobbyist who attended the meeting.
“Going to the Republican meeting will say, ‘I’m interested in working with Republicans to stop health care reform,’” the lobbyist added.
Republican leaders have been meeting with health care stakeholders for months, with those sessions occurring “more frequently than once a month,” according to a senior Senate GOP aide.
On June 17, Roll Call ran an editorial crying foul, called "intimidation":
Now, as the health care debate heats up, lobbyists representing stakeholders in the debate are being frozen out of meetings and — even worse — intimidated from speaking out in their clients’ interest.
Democratic leaders have health care on a fast track to passage in the House and the Senate by August. And, intimidation or no, objections are beginning to be heard to various proposals, notably a Medicare-like “public plan” and taxes on sugar to help pay for health reform.
And that’s right at the time that Kent Conrad unveiled his faux "public plan," the "co-op" plan (June 15). It was the time I started getting really nervous. There could only be one purpose served by such a plan: pull a bait-and-switch on a public plan. Which was why when we started the whip count effort on June 23, our goal was to define a public plan as not a co-op.
In short order, a series of deals were announced by Baucus and the White House. On Monday, July 6, the deal with the hospitals, whereby they’d commit to reduce projected cost increases by $150 billion over the next decade. On Tuesday, July 7, PhRMA’s Billy Tauzin and 5 CEO’s went to the White House to seal their deal with Rahm Emanuel, Jim Messina and Nancy-Ann DeParle, Director of the White House Office of Health Reform. On July 8, Rahm tried to float the idea of triggers — and it went over like a lead balloon. On June 10 Obama spoke to the AMA. There was a huge push to keep these groups happy during this period, and more importantly — keep them from aligning with the Republicans.
And it seems to have worked. John Boehner recently wrote a scathing letter to Billy Tauzin saying that he had "betrayed" the drugmakers by failing to align himself with the Republicans. The GOP needs the money of PhRMA and other disgruntled businesses to fund its 2010 war chest. Just as it was during the bank bailout, the goal of the White House was clear: more important than saving the financial system was keeping the financial institutions happy and stop them from financing Republicans.
Who would think that way? Whose primary objective would be to keep anyone from funding a GOP ascendancy, to sell out health care reform worth billions for a hundred fifty million in pro-reform advertising? Who would think to ask PhRMA to run ads in the districts of vulnerable freshmen, as well as Blue Dog Mike Ross, who is anything BUT vulnerable? Certainly not some policy wonk.
But ask yourself – would consider it a victory to use the "public plan" as little more than a political pawn with which to threaten stakeholders and force them to stay at the table, with no thought as to the emotional and moral consequences suffered by the people who had pinned their hope on having one?
Someone who had worked as the head of the DCCC. Who remembered the 54 seat swing to the GOP in 1994 after the failure to pass health care reform. Someone whose sole goal was a "political victory," so the White House could be 14-0 not "13-1."
Someone like Rahm Emanuel, who works through the Blue Dogs in the House to make the House bill conform to the deals he sets up in the Senate. Rahm wanted a public plan with "triggers" and had been pushing for it since January. Lo and behold, who is insisting that any public plan in the House have triggers — Mike Ross and the Blue Dogs.
The PhRMA deal on July 8 says that there won’t be any drug price controls, and the next day, Blue Dogs Heath Shuler and Debbie Halvorson author a letter demanding — no drug price controls:
Instead, they are asking Waxman, Rangel and Education and Labor Chairman George Miller (D-Calif.) to support the drug industry’s offer to spend $30 billion help cover those costs – a deal that is backed by the White House and the Senate Finance Committee.
The American Hospitals Association deal was signed on July 8. The hosptals want higher medicare reimbursement rates for rural providers. On July 15, the Blue Dogs threaten to block health care reform — if it doesn’t increase reimbursement rates to rural providers.
And suddenly, the hospitals are spending $12 million running positive ads about health care reform with PhRMA and the AMA.
Mike Allen said earlier this week that "this weekend’s comments by White House officials simply acknowledged the long-obvious reality that the idea of a government-run insurance plan was partly a bargaining chip."
If you look at the cat-and-mouse game played between the Democrats and the Republicans, support expressed by the President for a "public plan" meant "don’t you dare." A commitment that the bill will be "bipartisan" (since the GOP would never agree to one) was a signal that there would be no public plan.
The White House never cared about getting Republican votes — it cared about keeping the Republicans from peeling off the dollars of stakeholders like PhRMA. Giving in to "Republican" demands was cover for writing shitty things into the bill that would keep the stakeholders happy. They didn’t need Republican votes, they never did, and they never truly cared. As long as the money stayed out of their campaign coffers, it was all good.
If a public plan gets into a final health care bill, it’s going to be because of public pressure, because people who put Obama in office demand one. Because in the grand scheme of White House priorities, it was something that could acceptably be dealt away in pursuit of a higher political objective by the guy who was calling the plays: Rahm Emanuel.