Plan B for Business Groups: Go Negative

Big business could bail on alliance with President Obama

The town hall brawls over health care reform are already driving down public support for the effort – but that’s not the worst of the danger to the White House.

They could also give cover to some big business players, who’ve shied away from challenging the White House, to turn their guns on the reform agenda and kill it — just like they did more than a decade ago.

And if you read between the lines of the industry’s messages, it’s pretty clear they are keeping that option on the table despite a public alliance with President Barack Obama.

Some drug and insurance companies, along with business groups, are working furiously behind the scenes to shape reform in their image – but failing that, they’re preparing a Plan B that includes going negative.

Already there are signs of strain.

The U.S. Chamber of Commerce on Wednesday launched a multimillion-dollar ad buy criticizing Democratic reform plans for raising taxes and expanding government control over health care. But the Chamber stopped short of outright opposition – instead urging viewers to tell lawmakers to slow down and do health reform right.

The increasingly aggressive tone is not good news for Obama. The president has worked hard to keep industry groups at the negotiating table, even cutting side deals with the drug and hospital industries to keep reform on track. By keeping deep-pocketed interest groups close, Obama is trying to avoid a well-funded opposition campaign.

But the strategy comes with risks – especially if any of the groups should bolt.

“When you bring these groups into the tent and make them partners in the endeavor and they pull away, it’s hard to trash them once they walk away if they’ve been part of your justification for what it is you’re doing,” said Democratic lobbyist Andy Rosenberg.

Yet as the Chamber ads show, both sides recognize a certain mutually assured destruction is at play. The White House doesn’t want to test the ability of special interests to kill reform, so it has worked hard to keep them happy. Likewise, business groups know if they walk away, they lose the power to shape legislation that could completely remake their industries.

The White House insists it’s not worried the groups will walk.

“You never know how long everyone will stay at the table together, but what you’re seeing now is expressions of true concern about the status quo and a true desire for reform across industries,” said White House Office of Health Reform spokeswoman Linda Douglass.

But one look at the drug industry group PhRMA shows how tenuous support can be.

It has spent more than a year promoting reform, teaming up with a nationally respected consumer health group for a multi-million ad campaign spotlighting the urgent need for action.

Yet the group is adopting a take-no-prisoners approach to the House bill unveiled last month, including putting a negative ad in the can.

“We’ll fight the speaker all the way on that,” said a senior industry lobbyist, referring to House Speaker Nancy Pelosi. “We’re going to stop that bill. If they don’t like it, we don’t care. And no one should be surprised by it.”

The drug makers have several gripes with the bill, notably a provision that reinstates government discounts on drugs purchased by seniors who qualify for both Medicare and Medicaid.

Democrats say the provision will save the government tens of billions of dollars. But the industry points to a Congressional Budget Office report that says the savings could hit seniors in the form of higher premiums – which is the topic of the negative ad, the lobbyist said. 

Drug-makers also are frustrated that Pelosi and House leaders won’t honor their deal with the White House to contribute $80 billion toward reform – in exchange for an assurance they won’t be asked for more, including in the form of drug discounts.

“We know we have a deal so we’re not worried about that. If the speaker says they don’t support the deal, then we don’t support them, period,” the industry lobbyist said.

The insurance industry is in a much more delicate political situation.

With bipartisan support for some types of insurance reform, the industry can’t risk losing its seat at the negotiating table by aggressively opposing a public plan option, which it claims will kill their industry.

But it may have gotten lucky. Opposition to a public plan is mounting from business, hospitals and other groups. So, insurers are able to support the fight without being at its vanguard.

“All the American people know about this bill is that it costs a lot of money and there’s a new government plan,” said a health industry official. “We can’t live with a public plan, but are we going to have to? [The public plan] is kind of dying under its own weight.”

Insurers have plenty of other issues to worry about.

The industry’s lobbying hard to protect its private Medicare Advantage programs from $150 billion in cuts while pushing for a mandate that everyone carry insurance. It’s also working to ensure that any insurance “exchanges” designed to help consumers buy insurance also work for insurers.

That doesn’t mean, though, that they’re not prepared to go to war, if it comes to that.

“The industry hopes that it doesn’t have to go negative. The industry is for health care reform, but it’s for health care reform done in a smart, effective, sustainable way,” said an insurance industry lobbyist.

The Chamber has taken a slightly different tack by being up-front about what would trigger a full-scale assault – including a public plan, or a mandate that companies provide insurance to workers or pay a fee to the government.

They are the first group to run ads against the public plan – with their chief lobbyist, Bruce Josten, calling it in a letter to top senators “a step in the wrong direction. . . . We do not believe that the government plan will be a fair competitor.”

A business industry insider said the “objective is to crush the bad bills and support the good bills.”

Still, business is trying to stay nimble and avoid getting boxed into a corner. The chamber has leveled some of the toughest criticism so far, but it’s also not turning up the heat too high.

“Nobody wants to rain on the parade and say here’s the bright line and if you do this we will oppose the bill. And they don’t want to be viewed as predictable,” the insider said. “The last thing we would want to do is to go nuclear because then we just kill our chances of getting anything done.”

A veteran Republican lobbyist suggests that groups hang on as long as possible. The real deal making, he said, doesn’t happen until a House-Senate conference committee hashes out a final bill. And that’s when groups will have the most leverage.

“It’s tough to hold your fire until that point, it’s really hard, but the smart ones who do realize they get quite a bit of what they want if they play it smart,” the lobbyist said.

And if you still can’t get what you want? The lobbyist recommends, “Unleash whatever your ads are to try to kill the bill.”

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