ObamaCare: Shot Across the Bow
posted at 12:30 am on October 13, 2009 by Karl
I am following up on yesterday’s story about the health insurers’ revolt against the Baucus vapor bill because I — like a lot of people — may have undersold it.
The White House may attack the America’s Health Insurance Plans (AHIP) study, which predicts the healthcare bills pending congressional approval could cost the typical family up to $4,000 more in monthly premiums each year. Liberal bloggers like Steve Benen may bring out the lazy sarcasm, claiming that “[p]rivate health insurers haven’t exactly played a constructive and supportive role on health care reform this year.” In reality, AHIP’s decisions to promote healthcare reform and not run negative ads were important factors in ObamaCare’s survival over the summer.
Smarter analysts like Jonathan Cohn (on the Left) and Keith Hennessey (on the Right) can criticize the study on its merits, though Hennessey ultimately agrees that the Baucus vapor bill would make health insurance more expensive.
But Hennessey is about the only pundit on the right track, because he goes further to ask about the politics of the study — asking why AHIP waited until now to attack. Part of the answer is because the Baucus bill undoes the Faustian bargain insurers struck with the Democrats — “guaranteed issue” and “community rating” for mandates and fines. When AHIP president Karen Ignagni says, “You really have to have a coverage level in the high 90s to make this work,” she means “to make this work for health insurers.”
Another part of the answer is that since ObamaCare survived the August recess, the six largest publicly-traded health insurance companies have taken it in the shorts:
Weighted for market capitalization, these insurance stocks have lost 11 percent of their value since Labor Day, wiping out about $10 billion in value. And that’s understating the case since the major indices have gained 5-8 percent over the same period — the insurance industry stocks are underperforming the market by just shy of 20 percent.
AHIP’s Ignagni is a Democrat and former labor apparatchik who wants to work with Democrats, but after losing $10 billion of market cap in a few short weeks, the membership may be rethinking the collaboration strategy.
Accordingly, the pundits’ analyses of the merits of the AHIP study likely miss the point. Frankly, would anyone be shocked if AHIP does not care about the merits of the study? No. The entire point of the study is political. It is a message to the politicians that the insurers are not going to simply complain if Reid sends a bill to the Senate floor that is not to their liking. They will take action. They will drive news cycles. They may launch an air war.
So let’s look at AHIP and its war chest:
AHIP spent $3.9 million in lobbying activities in the first six months of 2009, according to lobbying disclosure forms. In the first half of 2008, they spent $3.7 million on lobbying activities.
AHIP’s PAC has contributed $189,000 to committees and federal candidates during the 2010 election cycle, according to Federal Election Commission records. Recipients this year have included the Blue Dog PAC; Congressional Black Caucus PAC; Democratic Senatorial Campaign Committee; National Republican Congressional and Senatorial committees; Senate Majority Leader Harry Reid, D-Nev.; House Speaker Nancy Pelosi, D-Calif.; Senate Finance ranking member Charles Grassley, R-Iowa; and House Minority Whip Eric Cantor, R-Va. During the 2008 election cycle, AHIP’s PAC donated $591,000 to committees and candidates.
AHIP has run television ads promoting health care reform, but it has not disclosed the amount of money spent on the ads.
The group’s total revenue for 2007 was $75.9 million, according to IRS forms.
In short, with the industry’s future on the line, AHIP did not spend much more in the first half of 2009 than it did in the first half of 2008. AHIP’s pro-reform ad buy was reportedly seven figures, which suggests it has tens of millions of dollars to spend. That money could be spent on anti-ObamaCare ads — and for comparison, consider that the famous “Harry and Louise” ad buy was only $14 million in 1993-94. AHIP could spend two or three times that much and still have tens of millions that could be withheld from old allies, and donated to new ones.
You do not have to read the AHIP study to understand it. It’s a threat, and now the Democrats also have to start worrying about other special interests leaving their coalition of the bought-off.
Update: The AHIP study has put Democratic noses out of joint, with anonymous rumors of retaliation. That sounds imprudent, but if the Dems respond to the shot across their bow by launching a war against the insurers, I will bring the popcorn.
Update x2: Surprise, surprise, surprise — AHIP has made a multi-state (Pennsylvania, Colorado, New Mexico, Missouri, Louisiana and Nevada), million-dollar ad purchase claiming that seniors will see their care cut under Democrat-crafted legislation.