Labor's Messy Health Care Bargain

By Harold Meyerson
The Washington Post

The Net roots is up in arms about the Senate's version of health-care reform, with many rooters demanding it be voted down. The liberal establishmentarians lament the compromises they were compelled to accept but support the bill's passage. In between the two, indignant and stuck, is organized labor.

"There's an excise tax on policies, but there's no public option to hold down the cost of those policies," says Leo Gerard, president of the United Steelworkers. "There's no Medicare buy-in, no pay-or-play mandate for employers. There's no Canadian reimportation to hold down drug costs, on the grounds of 'safety.' No one gets sick from Canadian reimported drugs," adds Gerard, who is Canadian. "I know a guy who got sick from a Chinese-made ingredient in an American drug, but there's no restriction on Chinese drug imports."

Gerard is hardly alone in his criticisms. Labor believes, rightly, that the cost controls in the Senate bill come chiefly from insurance policy holders (among them, labor's members), rather than from insurance and drug companies. Both the AFL-CIO and the Service Employees International Union have condemned these provisions, while hailing the bill's epochal creation of affordable health insurance for 30 million Americans. They're careful, too, to exempt President Obama from their criticisms.

"I'm not blaming the president," says Gerard. "He wants to believe people will do the right thing."

The unions have few illusions that the public option will be restored in the House-Senate conference committee, but they are working to promote the chief funding mechanism in the House bill (a tax hike on individuals with incomes over $500,000 and couples with incomes over $1 million) over that in the Senate bill (a tax that, to start, will fall on health insurance policies that cost more than $23,000 for a family of four).

With medical costs unchecked by a public option and drug reimportation, they fear that the value of their members' policies will rise above the threshold by the middle of the next decade.

There's a political problem as well. During the fall of 2008, the unions spent millions persuading older working-class whites to vote their pocketbooks instead of their prejudices in such key swing states as Pennsylvania and Ohio.

Just about the only issue that moved these voters from John McCain's column to Barack Obama's, they discovered, was that McCain supported taxing their members' health insurance and Obama didn't. "We negotiate and fight hard for our health-care benefits," said one widely distributed piece of AFL-CIO literature. "Now, Republican John McCain wants to tax them."

"This was our mantra," says Gerard. "Obama was polling better with our active members than with our retirees, which is very unusual, until we focused on McCain's plan to tax benefits. Our retirees are in expensive plans; that kind of tax would be devastating to them."

Politically, in fact, the tax could set in motion the kind of dynamic that undermined many Great Society anti-poverty programs: taxing the working class to provide benefits to the poor (or, in this case, the uninsured). Richard Nixon and Ronald Reagan smashed the Democrats' New Deal coalition by fanning the racial and class tensions endemic to such programs. Does anyone believe that today's Republicans will think better of mounting such attacks?

In theory, the House-Senate conference committee should be able to split the difference on funding by raising the Senate's threshold on taxing insurance policies and combining it with a scaled-back version of the House's millionaire tax. If the conference does that, raises the subsidies for people buying policies on the exchanges and extends Medicaid to more poor families, liberals and labor will likely have gotten all they can plausibly hope for, given the constraints that the Nelsons, Liebermans and Republicans have imposed on the bill.

Labor is boiling mad about those constraints, but unlike some of the Net-rooters, they can't and won't call down curses on the Senate Democrats -- yet. "We've played an inside game," says one of Gerard's fellow union presidents. "We've delivered our criticisms privately." Labor's leaders still hope a scaled-back version of the Employee Free Choice Act (EFCA) -- the bill that would restore unions' ability to organize private-sector workers -- will pass the Senate next year.

They've seen the White House and congressional Democrats move their way on jobs legislation, and they welcomed last week's unveiling of a $5 billion tax credit to bolster green manufacturing, a long-overdue step toward rebooting manufacturing in America.

But it will take more job creation and the enactment of EFCA to motivate unions to go all out in the 2010 elections. Anything short of that, and their anger will take a toll on the Democrats' electoral prospects.

meyersonh@washpost.com

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Health Interests Spend $600 Million to Sway Congress

by Jonathan D. Salant and Alex Nussbaum
http://news.yahoo.com/s/bloomberg/20091223/pl_bloomberg/aflbcmedobbk

(Bloomberg) -- More than $600 million has been spent so far this year trying to influence U.S. lawmakers working to overhaul the health-care system, reports show.

The health industry spent $396 million through Sept. 30, more than any other industry and up 9 percent over the same period a year ago, according to the Center for Responsive Politics, a Washington-based research group.

Those numbers don’t include spending on lobbying by insurers such as the Blue Cross and Blue Shield Association and its member companies, which spent $16.7 million in the first nine months of 2009, compared with $16.2 million in all of 2008.

“The health-care industry has a full-court press on members of Congress,” said Representative Dennis Kucinich, an Ohio Democrat.

Another $200 million has been spent on television advertising for and against overhauling health care, according to TNS Media Intelligence/Campaign Media Analysis Group, an Arlington, Virginia-based company that tracks political advertising.

The U.S. House passed health-care legislation last month. The Senate has overcome procedural hurdles to pave the way for approval of its version by Dec. 24.

Working With Lawmakers

“The Blue Cross and Blue Shield companies represent 100 million people across the country in every zip code and have 80 years of experience in health care,” said Brett Lieberman, a spokesman for the Blue Cross and Blue Shield Association in Washington. “We’ve been working with members of Congress sharing that experience.”

The Senate health legislation exempts some nonprofit health plans from a $70 billion tax on the insurance industry, including some Blue Cross plans in Alabama, Michigan and Pennsylvania.
Health-industry shares have risen 18 percent this year, as measured by the Standard & Poor’s 500 Health-Care Index. Tenet Healthcare Corp., the Dallas-based hospital chain, led the index with an almost fivefold gain, followed by Intuitive Surgical Inc. of Sunnyvale, California, a maker of robotic surgical systems, which has more than doubled.

The S&P index of six managed-care insurers has risen 34 percent this year. Cigna Corp. of Philadelphia, up 120 percent, and Coventry Health Care Inc. of Bethesda, Maryland, up 69 percent, have led the advance. The index has jumped 12 percent since Dec. 9, when Senate Democrats dropped a proposal for a government-run plan to compete with private insurers.

Drugmaker Gains

Drug companies have gained 16 percent this year, as measured by the by S&P Pharmaceutical Index. New York-based Pfizer Inc., the world’s largest drugmaker, rose 5.5 percent.

The Senate on Dec. 15 rejected an amendment to allow imports of cheaper drugs from Canada, a provision opposed by the pharmaceutical industry. Drugmakers earlier agreed to contribute $80 billion over 10 years in return for blocking other profit- endangering proposals.

Pfizer’s trade group, the Pharmaceutical Research and Manufacturers Association, spent $19.9 million through September. That’s the third-highest amount behind the U.S. Chamber of Commerce and Irving, Texas-based Exxon Mobil Corp., and almost as much as the $20.2 million the group spent in 2008.

Lobbyists

There are 3,300 lobbyists registered to lobby on health care, Senate records show, six for each of the 535 members of the House and Senate. More than 1,400 of those lobbying on health care formerly worked for Congress, the White House or federal agencies, including 55 former lawmakers.

“This is the way the political system works,” said Representative Patrick Kennedy, a Rhode Island Democrat. “People curry favor in all kinds of different ways.”

Many of those lobbyists visited the White House to meet with President Barack Obama and top administration officials, according to visitor logs. Health-care visitors included Karen Ignagni, president of America’s Health Insurance Plans, the trade group for private insurers; Phrma President Billy Tauzin, a former U.S. representative; and Richard Kirsch, national campaign manager of Health Care for America Now, a coalition of labor and advocacy groups such as the AFL-CIO.

To contact the reporters on this story: Jonathan D. Salant in Washington at jsalant@bloomberg.net ; Alex Nussbaum in New York anussbaum1@bloomberg.net .