Top lobbyists prep for Supreme Court healthcare decision

By Laurie Bennett
08:48 AM
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Once again, America's Health Insurance Plans (AHIP), the lead trade group for the health insurance industry, is poised for upheaval.

On March 26, the Obama administration's health care reform package goes to the U.S. Supreme Court, which has scheduled an historic three days of arguments. The outcome could have an enormous impact on AHIP and its members.

When the health care debate heated up in 2009, the organization seemed well-positioned to affect the outcome.

[Political Malpractice: They all chant 'ACA repeal' but what could a GOP president actually do?]

With members providing health insurance coverage to more than 200 million Americans, it had an annual budget of more than $185 million. Its lobby expenses for the prior year had exceeded $7.5 million and its campaign spending during the presidential election year topped $600,000.

AHIP and its predecessor, the Health Insurance Association of America, had demonstrated its clout in previous debates, producing the notorious "Harry and Louise" ads that helped beat back so-called Hillarycare or Clintoncare.

This time around, however, its position had apparently shifted. To the surprise of many, the group came out in support of universal coverage and a government-defined minimum benefits package.

In March 2009, AHIP President Karen Ignagni told President Obama: "We hear the American people about what's not working. We've taken that very seriously. You have our commitment to play, to contribute, and to help pass health care reform this year."

Yet as the legislation worked its way through Congress, AHIP began to object to some of the details. A major problem was the so-called "public option," the government-run insurance program that would compete with AHIP members.

Ignagni described the plan as a "road map to bankrupting hospitals."

As the vote approached, the divisions became clearer. One of AHIP's major lobbyists, Steve Champlin of the Duberstein Group, told Republicans that unless they wanted to aid an "enemy who is down," they shouldn't help Democrats pass health care reform.

Altogether, 45 people within the organization and at five outside firms lobbied for AHIP on the House and Senate health care bills. The team included some heavy hitters:

* Karen Ignagni - Often described as one of Washington's most effective lobbyists, Ignagni has years of experience in the health field. She had her start with organized labor, working for the Committee for National Health Insurance, a lobby group affiliated with the United Auto Workers. She worked with the AFL-CIO before joining the Group Health Association. When the trade group for managed-care organizations merged with an organization of commercial insurers to form the Association of American Health Plans, Ignagni was president. When the organization merged with the Health Insurance Association of America in 2003 to form AHIP, she continued as president. Unlike the heads of some large trade groups, Ignagni continues to be a registered lobbyist.

* Kenneth M. Duberstein - Before leading the Duberstein Group, one of five lobby shops representing AHIP during the health care debate, Duberstein was chief of staff in the Reagan White House.

* Marti Thomas - A lobbyist with Duberstein Group since 2009, Thomas is a former assistant Treasury secretary. She also headed federal legislative affairs for Goldman Sachs.

* David Castagnetti - Castagnetti, a partner at Mehlman Vogel Castagnetti, is a former chief of staff for Sen. Max Baucus (D-MT). As chairman of the Senate Finance Committee, Baucus had a major role in steering health care reform through Congress.

* Bruce P. Mehlman - A co-founder of Mehlman Vogel, he is a former assistant secretary of Commerce. Mehlman also served as policy director and general counsel to the House Republican Conference and as general counsel to the National Republican Congressional Committee* Alex Vogel - Another co-founder of Mehlman Vogel, he was chief counsel to former Senate Majority Leader Bill Frist (R-TN).

* Howard Cohen - As former counsel to the Committee on Energy and Commerce, Cohen lobbied for AHIP through his own firm, HC Associates, Inc.

Lobbying was just one front in AHIP's 2009 influence campaign. As in the Clinton health care debate, high-priced public relations efforts were crucial.

AHIP paid Locust Street Group, a firm that specializes in grassroots campaigns, $15.4 million in 2009. Additional millions went to the public affairs firm APCO Worldwide, and to two media consultants - National Media Public Affairs and Purple Strategies.

[Commentary: The blindness and brilliance of Obama’s individual mandate.]

The group also contracted with PricewaterhouseCoopers to study the price impact of health care reform. Not surprisingly, PWC determined that premiums would go up. AHIP released the report on the eve of the Senate Finance Committee vote, sparking such a firestorm that the consultancy issued a follow-up statement backing away from its findings.

As Ezra Klein of the Washington Post summarized it in a blog post: "PWC is saying that AHIP paid it to focus on four parts that AHIP didn't like and ignore everything else in the bill."

The report may actually have hurt the trade group's cause.

Two days later, the Finance Committee approved the America's Healthy Future Act, by a 14-9 vote. Although Democrats declared it a bipartisan victory, Sen. Olympia Snowe of Maine was the only Republican to vote "yes."

The House passed a package the following month, and the Senate approved it on Christmas Eve. Two independents and 58 Democrats voted "yes," and Republicans unanimously voted "no."

The future of health care reform now passes to the Supreme Court, which will hear challenges to the legislation's constitutionality.

AHIP has filed a supporting brief, arguing that if the court finds the universal coverage requirement unconstitutional, other reforms in the act will have to be removed as well.

Because major portions of the law are scheduled to go into effect in 2014, the organization urged the court to decide the case quickly.

"All of this paralyzing uncertainty — among health plans, employers, government regulators and others — underscores the vital need for a prompt and conclusive resolution of the constitutional challenge to the individual mandate," the group argued.

The court's decision, expected by June, will affect millions of Americans and possibly the outcome of the presidential election. It's a polarizing issue that is certain to come up again in a polarized Congress.
AHIP is poised to represent its membership no matter what the outcome is in court or on the campaign trail.
Last year it spent nearly $9.7 million on lobbying, the highest amount since the organization was formed through the 2003 merger. In the insurance sector, only Blue Cross/Blue Shield spent more, according to the Center for Responsive Politics.

It recently hired another outside lobby firm, C2 Group. Three people registered in March as new lobbyists for AHIP: D. Patrick Robertson, former legislative aide to Sen. Jay Rockefeller (D-WV); Thomas Crawford, former deputy to the chief of staff in Rockefeller's office; and Scott Styles, former chief of staff to Pete Sessions (R-TX).

[For more of our primaries coverage, visit Political Malpractice: Healthcare in the 2012 Election.]

Rockefeller, chairman of the Senate Committee on Commerce, Science and Transportation and a member of the Finance Committee, has been an outspoken supporter of the public option.

Sessions is vice chairman of the powerful House Rules Committee. He also heads the National Republican Congressional Committee, which has made Obamacare one of its primary targets.
All but one of the major lobbyists we listed above still represent AHIP.

The lone exception, Howard Cohen, is no longer lobbying. He's chief health counsel to the House Energy and Commerce Committee, the panel with primary oversight on public health issues. A colleague at the committee, senior adviser Julie Goon, is a former lobbyist for AHIP.

Laurie Bennett, a longtime journalist, writes for First Street Research Group and Forbes. She’s a co-founder of Muckety.com. The First Street Research Group reviews, investigates and analyzes the data in First Street on the lobbying industry to publish exclusive reports and analysis on the people and organizations influencing policy in Washington, DC.