Obamacare and Its Cronies

by Andrew Stiles
“Collaboration” between insurers and the administration, or revolving-door economics?

Despite the myriad problems with Obamacare’s rollout, health-insurance companies are not tempering their support for the controversial law. The industry is even gearing up for an expensive “PR blitz” to enroll people in the exchanges, which should come as no surprise.

In the words of former Senate majority leader Tom Daschle, insurance companies are “not necessarily unbiased. They have a lot of skin in the game.” Indeed, one of the more peculiar aspects of the Obamacare debate has been the mainstream media’s apparent bemusement at the insurance industry’s support for a law that not only forces people to buy its products (which are necessarily more expensive under the law) but also offers direct taxpayer subsidies to help cover the cost, to the tune of nearly $500 billion over the next ten years.

It was hardly a shock when, in 2011, the industry’s largest lobbying group, America’s Health Insurance Plans, argued in an amicus brief to the Supreme Court that, in the event that the individual mandate to purchase insurance was struck down, Obamacare should be scrapped entirely.

At the moment, insurance companies (and the Obama administration) are primarily focused on getting young, healthy individuals to sign up, and shell out, for plans offered on the exchanges. The companies may not appreciate the administration’s habit of blaming them for every setback, but they are so invested in Obamacare’s success at this point that they have few options other than to be team players.

“Their interests are aligned with our interests in terms of wanting to enroll targeted populations,” a senior White House official told Politico last month. “It is not that we will agree with everything now either, but I would say for some time now there has been a collaboration because of that mutual interest.”

Obamacare is certainly a shining example of the president’s signature brand of crony capitalism and revolving-door economics. Just ask Tom Daschle. He was Obama’s first choice to run the Health and Human Services Department (HHS), but tax problems forced him to withdraw his nomination and he became a lobbyist “senior policy adviser” in the government-affairs office of mega-law firm DLA Piper, where he played an influential role in pushing Obamacare past the legislative finish line.

Just as industry lobbyists like Daschle were instrumental in the drafting of the law, K Street continues to play a major role in Obamacare’s implementation, and is raking in cash in the process. The health-care industry spent almost $250 million on lobbying in the first six months of 2013 alone. Meanwhile, the infamous revolving door between government and the special-interest groups that candidate Obama so reviled spins on and on, which is great news for the corporations and industry groups that can afford to exploit it.

The Hill counted more than 30 former administration officials, congressmen, and staffers who joined high-powered lobbying firms after helping to craft the controversial health-care law in 2010. Their clients include large corporations such as Delta Air Lines and UPS, both of which have expressed significant concern about the impact of Obamacare. Health-care-industry giants such as UnitedHealth Group and Blue Cross Blue Shield have also hired former Obamacare architects to help them navigate the law’s implementation.

For example, Yvette Fontenot, an alumnus of the Senate Finance Committee and HHS, was recently hired by Avenue Solutions, a boutique lobbying firm ($3 million in annual revenue) whose clients include Blue Cross, Express Scripts, and Health Care Service Corporation, the largest customer-owned health-insurance provider in the country.

Former representative Earl Pomeroy’s vote for Obamacare likely cost him his seat in the 2010 midterms, but the nine-term North Dakota congressman and member of the House Ways and Means committee managed to land on his feet almost immediately. Alston & Bird hired Pomeroy and his chief of staff in January 2011 and hailed the arrival of the two “health care notables” in a press release, which also cited Pomeroy’s “influence over key policy decisions on tax, trade, Social Security and Medicare issues.” He is currently helping health-insurance providers navigate the law’s tower of red tape.

The revolving door swings both ways, of course, and the administration has tapped a number of former lobbyists to assist in the implementation of Obamacare. In July, the White House hired health-care lobbyist and Clinton-administration alumnus Chris Jennings as a “health policy coordinator and strategist.” Jennings’s former clients include AARP, SEIU, and a number of drug and hospital associations. White House chief of staff and (former lobbyist) Denis McDonough hailed him as “an invaluable addition.”

William Schultz, a veteran of the House Commerce Committee and the Food and Drug Administration, lobbied for a number of drug companies before being named general counsel at HHS. One of his former clients, Barr Pharmaceuticals, makes the morning-after pill and stands to benefit from the law’s contraception-coverage mandate, which Schultz is now tasked with defending in court.

The Washington Examiner’s Tim Carney has identified several other potential conflicts of interest for Schultz, highlighting the “insidious corporatism” underlying the administration’s contraceptive mandate, the fate of which will now be decided by the Supreme Court. Pharmaceutical giants such as Pfizer and Merck lobbied heavily in favor of expanded coverage for “preventative services” and stand to make millions from what is effectively a huge subsidy to purchase their products.  

The health-care industry, which lobbied heavily to persuade states to expand Medicaid and set up their own exchanges under Obamacare, was successful even in deep-red states such as Idaho, where the legislature voted to set up a state exchange in March. (The state was unable to meet the October 1 deadline, however, and is using the federal exchange for now.) State lawmakers there received considerable contributions from big-name insurance companies, pharmaceutical firms, and other industry groups, all of which stand to benefit from a state-run exchange, which would generate an influx of federal subsidies and stricter rules to limit competition.

Insurers and their allies, such as Enroll America, the White House–backed non-profit for which HHS Secretary Kathellen Sebelius may have illegally sought donations from industry officials, stand ready to do their part to support Obamacare. Of course, they’ll likely prefer to wait until the exchange website is actually fixed, not simply deemed so by the White House and Paul Krugman.

— Andrew Stiles is a political reporter for National Review Online.

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