by Steven Brill
But none of those cost savers had made it into the House bill, and the CBO had noticed.
Worse, the CBO did not score savings that might come from broad-brush reforms where specific metrics could not be predicted. It was one thing to predict that X number of people would have to pay this or that tax, or that a government agency could save X dollars if it moved to cut this or that category of costs. It was quite another to guess at what some broad change in policy might save or cost. Thus, all of the provisions in the bill encouraging bundled care in place of fee-for-service billing—and even giving the HHS secretary the right to require certain bundling programs for Medicare services after they had been successfully tested—had not been scored as savings.
Rahm Emanuel, Orszag, Valerie Jarrett, and Summers quickly convened a meeting with Treasury officials to deal with the CBO crisis. According to notes kept by one member of the staff, they all agreed that what would “score,” and score big, would be a tax on the health insurance provided by employers to their workers. But Gene Sperling, a counselor to Treasury secretary Tim Geithner, objected that the tax would be “horrible,” because it would “go after teachers, firemen, and other unions.”
The press quickly picked up on the CBO report that the House version of reform would cost over a trillion dollars and be only partially offset by new taxes and unspecified cost savings. This was not the “budget neutrality”—the principle that offsets would cover all the costs—that Obama had repeatedly promised. That news piled on to pundit coverage of Baucus’s stalled progress, which came on top of all the coverage speculating about backroom deals being negotiated with the drug companies and other industry sectors.
POSITIONING OBAMA BETWEEN HEALTHCARE’S TWO “EVIL PLAYERS”
It added up to bad news from the White House polling operation. David Simas—the Axelrod aide now directing healthcare polling and messaging full-time—reported that approval ratings for reform were quickly dropping into negative territory.
Two economics aides—Summers deputy Jason Furman and Treasury’s Gene Sperling—began working on a slimmed-down, fallback reform plan.
But Obama was still fixated on the big plan. “Why can’t I explain that this is about costs and not just coverage?” Obama complained to his senior staff on July 28, 2009, during another meeting about bending the cost curve. “I’m a good communicator and did a prime-time news conference and still couldn’t get through.”
The reason, as one healthcare staff person put it in a journal entry, was that Obama was being pulled in two different directions: “Obama wants to cut costs, but really can’t say it,” because Simas’s polling was telling him that the message had to be something else.
A fastidious dresser who had a habit of licking his fingers and then polishing his shoes with them, Simas, then thirty-nine, liked to boil his data down into stories that smacked of deep insights. The story here, he explained at a July 23 meeting, was not about costs, but about what he called the two “evil” players in healthcare: “insurance companies” and “government bureaucrats” whom the public fears want to stop them from getting the care they need. The “proven message” Simas told the healthcare team (both the policy and economic groups) at the meeting, could be summarized in a simple diagram he put on a whiteboard: On the far left side of a line were the insurance companies, whom he labeled “evil.” On the far right side were the bureaucrats, whom he also labeled “evil.” In the middle was Obama, who had to be portrayed as protecting the people from the two evils. Get that message across, Simas assured the group, and “we gain twenty points.” On the other hand, if Obama is seen as one of the bureaucrats trying to cut costs, they would lose.
WORDS THAT WORK: “GOVERNMENT TAKEOVER”
Frank Luntz—the pollster who had convened the group of prominent Republicans the night of Obama’s inauguration—had a different take on the same idea. While running a focus group in St. Louis following the January dinner, he heard an offhand comment from one of the participants that immediately energized him. “We don’t want a government takeover of our healthcare,” a woman in the group had said quietly, almost to herself.
“Government takeover.” That was it. Luntz had made his reputation for being the master of, as he liked to put it, “words that work.” He had coined “death tax” as a way for Republicans to describe taxes on wealthy people’s estates. Now he had a new winner.
“Government takeover” would become the prime phrase he featured in a “words that work” memo he distributed to Republicans to use in fighting healthcare reform. Other phrases touted in his memo included “protect the sacred doctor-patient relationship” and “We will oppose any politician-run system that denies you the treatments you need when you need them.”
Simas was right. Bureaucrats were regarded as evil. But if Luntz had his way, Obama was going to become the “evil” bureaucrat in chief. This label would stick, despite the fact that, from the Democrats’ perspective, Obama’s plan was the opposite of a government “takeover” of healthcare. Rather, it was all about the government, through premium subsidies, giving everyone money to buy healthcare from the same private insurers who would pay the same high prices to the same private drug companies, doctors, device makers, and “nonprofit” but profitable hospitals to provide it.
TARGETING THE NEW ENEMY
On July 29, 2009, Simas’s messaging was ready for Obama to roll out at a “town hall” organized by the AARP, the powerful membership organization for people fifty years and older that was a key reform supporter.
The event was viewed in healthcare circles as likely to be pivotal in Obama’s effort to reverse all the negative summer momentum, so much so that Karen Ignagni and her colleagues at the health insurance lobby she ran turned on a television to watch it live.
They did not like what they heard. Suddenly, the president was talking about “health insurance reform,” not healthcare reform.
“The idea behind reform,” Obama declared, “is: Number one, we reform the insurance companies so they can’t take advantage of you. Number two, that we provide you a place to go to purchase insurance that is secure, that isn’t full of fine print.” A public option would be included in the exchanges to compete with the private insurers, Obama added, taking a position that had not been hashed out in any of his White House meetings.
When it came to cutting costs, that, too, was going to come by taming the insurers. The high profits they make from administering certain Medicare programs would be cut, Obama explained, before retelling the incorrect story of his mother having been threatened with a denial of coverage because her insurer had decided her cancer was a preexisting condition. “That happens all across the country,” he added. “We are going to put a stop to that.” However, he promised, “If you have insurance that you like, then you will be able to keep that insurance.”
Ignagni was upset although not surprised. “In politics, when things get tough, the best thing to do is to find a good enemy,” she told her staff. “For the White House, that’s now us.”
“They definitely reorganized and seized on what they considered to be the most vulnerable player as their target,” recalled Stephen Hemsley, the president and CEO of UnitedHealth Group, the country’s largest health insurer. “If you look at our profit margins,” he added, “it didn’t make sense. We’re the only industry in the healthcare sector that wants to advance their goals of cutting costs by making the system more transparent and efficient. But we are a good target.”
Speaker Nancy Pelosi picked up on the message the next day, calling the insurance industry the “villains” in the fight for reform.
True, the insurers had not yet signed on the way Tauzin’s pharmaceutical executives and the hospitals had, but they had squarely backed the basics of the Romneycare three-legged stool sooner and more vocally than any of the other industry players. How could they be expected to go further yet? All the core variables were still unresolved: how much more they could charge older people than younger consum
ers, how high the penalties would be for those who did not obey the mandate, what coverage would be required in the plans sold on the exchanges, or what preventive care would be required to be covered with no deductibles and no sharing of costs by the patients.
Nonetheless, the irony was that Ignagni’s industry had the most to gain from the reform taking shape. They stood to get all those new customers that would now come into an individual market that was otherwise dying. Plus they would get the safety net being offered for their larger employer-based business by the requirement that employers would have to keep buying (or start buying) insurance for their workers.
They also had the most to lose if reform collapsed, for surely Obama would seek as a politically popular fallback a prohibition against excluding people with preexisting conditions that did not include the mandate that would come with broader reform.
That logic was so compelling that it seemed that the insurers might not have minded playing the role of the enemy, if that was what it took to get reform done. Or at least they didn’t mind being dubbed the enemy until they could bargain for and get comfortable with all the unresolved variables they were worried about.
Meantime, the five big for-profit insurers—Aetna, Cigna, Humana, United, and WellPoint—hedged their bets. Following Obama’s pivot to “insurance reform,” they quietly agreed to contribute a total of $86 million to a U.S. Chamber of Commerce political action committee that would fund anti-reform ads if that became necessary. According to Princeton historian Paul Starr’s book, Remedy and Reaction, the companies gave the money to Ignagni’s AHIP, but she gave it to the Chamber because she did not want AHIP to run the fund and do the attack ads directly.
With the Chamber of Commerce involved, the healthcare industry now had a hat trick. A Politico survey of Washington, D.C., insiders asking who had the most effective lobbyists would later report that the top three lobbying teams were housed at PhRMA, at America’s Health Insurance Plans, and at the Chamber of Commerce.
A RETAIL SALE AT THE SENATE
Following the launch of Obama’s new insurance reform campaign everyone at the White House was digging in for a final push. They were monitoring what was going on in the Senate, where, for example, they learned one afternoon that furious lobbying from the soda industry and retailers had convinced Baucus to take the soft drink tax off the table.
It seemed like every day some senator or another added something new to Baucus’s working draft or took something out. Evan Bayh, the Indiana Democrat, wanted the medical device tax reduced; some of the device companies were headquartered in his state. Democrat Ben Nelson of Nebraska wanted to make sure that the states, or at least his state, paid no share of the cost of expanding Medicaid. Michael Bennet of Colorado and Barbara Mikulski of Maryland wanted something added so that seasonal workers, even those working long hours during the months they worked, would not be considered full-time employees for whom companies had to provide health insurance. Bennet was concerned about Colorado ski resorts; Mikulski was looking out for Maryland crabbers.
With every Democratic vote necessary to reach sixty, no one could be ignored. It was a retail sale, one by one, requiring the Baucus draft to grow every day, quickly becoming a monstrous document. “This was healthcare, not some narrow subject,” Fowler realized. “Everyone had some personal policy priority and/or pet issue around healthcare.”
Baucus, too, had priorities and pet issues, and they all made it into his draft, including a provision to provide healthcare for people suffering from asbestosis. He had not forgotten his friend Lester Skramsted or the people back in Libby, Montana.
And everyone, it seemed, had lobbyists. Unlike most big pieces of legislation, where there is a clear divide between who’s for it and who’s against it, the lobbying was splintered, covering a range of interests as broad as an industry that on its own is larger than the economies of all but five countries.
“The pressure was just so intense,” recalled a woman who handled healthcare for one of the Finance Committee Democrats. “And the lobbyists were everywhere. The insurance lobby. The cancer patients’ lobby. The tanning bed lobby.” (One proposal afoot was a tax on tanning salon revenues.) “The insulin lobby. The ambulance lobby. You name it. And everyone was watching who we were talking to in the halls.”
STANDING TALL ON ALL FOURS AT THE WHITE HOUSE
The internal fights at the White House continued. Orszag and his team infuriated Lambrew by contradicting numbers she had prepared for a presentation to be given to the president detailing the revenues and costs of the various plans everyone was still considering.
On August 5, 2009, they focused on provisions for allowing the continuation—called grandfathering—of those insurance policies already out in the market that had annual limits on payouts or other coverage gaps that would not meet the reform law’s new requirements. How long could people who had a policy like Emilia Gilbert’s that covered only $2,500 of her $9,400 trip to the emergency room in Connecticut be allowed to keep these policies? What kinds of offending limits would be so bad as to require the policies to be withdrawn from the market immediately? In other words, they were wrestling with the exact issue that contradicted Obama’s promise, repeated just a week earlier at the AARP town hall, that “if you like your insurance you can keep it.”
Lambrew wanted no insurance policies to be grandfathered at all once the exchanges were launched. She hated the insurance companies, she told one meeting, and especially hated the insurers who sold those skimpy, often useless policies. Consumers needed to be protected. Period.
The same day, August 5, Rahm Emanuel reported, according to notes of a staffer, that he had had a “great meeting with the Gang of Six,”—the Baucus-led Senate group whose Republican members now included just Grassley and Snowe, with Enzi of Wyoming having dropped out. “But no fucking leaking,” Emanuel warned his people.
Four days before, Emanuel had told the staff, according to the same staff member’s notes, “Never does a man stand so tall as when he is on all fours kissing a congressman’s ass.” Now the chief of staff seemed unusually upbeat after having apparently stood tall with Grassley. He didn’t want any leaks that might scare off the Iowa Republican.
Not even Emanuel could anticipate what Grassley and other members of Congress would find waiting when they arrived home for the August recess.
* * *
*6. Although Jarrett declined comment, assistant press secretary Eric Schultz denied this account offered by these senior Obama advisers, saying, “Valerie doesn’t use this phrase and regularly reminds our staff that the president and our senior team don’t like surprises, to further encourage staff to bring to their attention both problems and solutions.”
*7. Tanden would leave the Obama administration in early 2010 for the Center for American Progress, because, according to a Washington Post profile of her, she was “frustrated by the administration’s insular culture.”
*8. The simplest explanation for this legal argument, which the U.S. Supreme Court agreed to in an unrelated and not exactly similar case in 2013, is that because biologics are derived from living organisms, not chemical formulas, they cannot be patented.
CHAPTER 10
THE TEA PARTY SUMMER, “I’M FEELING LUCKY,” AND “YOU LIE”
August–September 2009
IT BEGAN IN PHILADELPHIA ON AUGUST 11, 2009, WHEN THE CABLE and network news shows led with footage of Arlen Specter getting heckled at a town hall meeting. Specter, a courtly twenty-eight-year veteran of the Senate, seemed stunned. He had switched to the Democratic Party in April thereby supplying (with Al Franken of Minnesota, following a recount there), the critical sixtieth vote to overcome a potential filibuster. But that shouldn’t have been a problem in Democratic Philadelphia, especially for Specter, who had begun his political career there.
What had inflamed the crowd was healthcare reform, which was now starting to be called Obamacare. The crowd had been organized by one of the Tea Party groups that had
sprung up following Rick Santelli’s CNBC rant in February. They were fed up, they proclaimed, with bailouts, crony capitalism, secret deals, and the government relentlessly trying to interfere with their lives. To them, Obamacare epitomized all that.
The next day, in Adel, Iowa, Chuck Grassley got booed off the stage by hecklers holding “You’re fired” signs. Their principal complaint, too, was the purported government takeover of their healthcare.
Other Grassley town halls that day were more polite, but no less hostile. “I had seen some of this at a town hall I held in July,” Grassley later recalled. “But this was different. Usually, about forty or fifty people showed up and we met in a library. Now there were three or four hundred, and we had to move the meeting out onto the lawn.”
The veteran Iowa Republican promised that he would never vote for a public option because “government is a predator.” That was a nuance lost on the crowd. The public option seemed like Washington jargon, a detail.
They were more concerned about the backroom deals that had by now gotten so much press, and about the kind of government intrusion that they thought healthcare reform threatened—particularly the “death panels” that former Republican vice presidential candidate Sarah Palin had been saying were part of the proposed law.
