How Dems Set Stage for Corporate-Backed Health Care Campaign

by Ben Smith and Kenneth P. Vogel

At a meeting last April with corporate lobbyists, aides to President Barack Obama and Sen. Max Baucus (D-Mont.) helped set in motion a multimillion-dollar advertising campaign, primarily financed by industry groups, that has played a key role in bolstering public support for health care reform.

The role Baucus's chief of staff, Jon Selib, and deputy White House chief of staff Jim Messina played in launching the groups was part of a successful effort by Democrats to enlist traditional enemies of health care reform to their side. No quid pro quo was involved, they insist, as do the lobbyists themselves.

The result has been a somewhat unlikely alliance between an administration that came into power criticizing George W. Bush for his closeness to Big Business and groups such as the Pharmaceutical Research and Manufacturers of America and the American Medical Association.

The previously undisclosed meeting April 15 at the offices of the Democratic Senatorial Campaign Committee led to the creation of two groups - Americans for Stable Quality Care and a now-defunct predecessor group called Healthy Economy Now - that have spent tens of millions of dollars on TV advertising supporting health reform efforts.

In the most recent ad sponsored by Americans for Stable Quality Care, Obama speaks directly into the camera for 60 seconds, extolling the virtues of health care reform, while text at the bottom of the screen encourages viewers to visit the websites of the White House and the Finance Committee, which this week approved a 10-year, $829 billion health overhaul.

Both coalitions operate independently of the administration and Senate Democrats, and spokesmen for both the White House and Baucus said that no pressure - implicit or otherwise - to join the pro-health-care reform groups was applied to industry representatives at the meeting.

After arriving late, Messina delivered a presentation to what was one of many such "outreach" meetings he has attended, and he left before the other participants began talking strategy. Selib, who had convened the gathering, "didn't ask anyone for money," said a Baucus aide.

Indeed, attendees describe a more subtle dynamic: The Democratic officials made no overt demands. Rather, they brought together the players and laid the groundwork for the creation of the coalition, and that was followed by more direct solicitations from an outside Democratic consultant, Nick Baldick, retained by Healthy Economy Now, asking attendees at the meeting to join the coalition and contribute to its ad campaigns.

One ethics expert, however, said the meeting still raises issues. No matter how careful Messina and Selib were to avoid conversation about Healthy Economy Now, their mere presence at what proved to be the coalition's creation raises questions, said Bill Allison, a senior fellow at the Sunlight Foundation, a nonpartisan, nonprofit group that advocates for greater transparency and ethics in government.

"There's no problem with sitting down at the table and talking," said Allison. "But if they are signaling that they would really like these groups to support health care reform and trying to tell the groups how they'll benefit from the plan, they're laying a ‘quid' on the table, and - even if they don't discuss dollar amounts or advertising strategies - they're suggesting what the ‘quo' is, which is the groups' support for the plan."

The White House and committee officials said the meeting and the months of talks that followed it - between officials putting together the health care proposals and the stakeholders who would be affected by them - prove a willingness by the Obama administration and Baucus to engage groups traditionally considered adversaries of health care reform.

Ken Johnson, a senior vice president at PhRMA, called the April meeting "one of the key points where there was a coming together and a discussion of ideas and shared goals."

Johnson said PhRMA, which ultimately provided the lion's share of the $24 million to the two coalitions, "could have walked away at any time."

Days after the meeting, Healthy Economy Now's website address was registered, and meeting attendees began receiving unsolicited calls asking for cash for the coalition from Baldick, whose firm - Hilltop Public Solutions - had been hired to run Healthy Economy Now.

In addition to PhRMA and the American Medical Association, the strange-bedfellows coalition included AARP, the American Cancer Society, the Business Roundtable, the advocacy group Families USA and the Service Employees International Union, as well as trade groups for biotech and medical device firms.

Other attendees opted out. The U.S. Chamber of Commerce and America's Health Insurance Plans refused to participate in a group backing a plan that they would ultimately oppose - and the insurance group this week emerged as the most aggressive opponent to the bill Baucus shepherded through his committee.

Many participants in the meeting had a great deal at stake in health care legislation. At the time Healthy Economy Now launched the first of its ads May 12, PhRMA was negotiating with Baucus and the White House a complex deal in which drug makers would contribute $80 billion to lower costs in exchange for avoiding downward pressure on drug prices.

The Associated Press later revealed that PhRMA had agreed to spend a whopping $150 million pushing the health overhaul - a sum that included its contributions to Healthy Economy Now and Americans for Stable Quality Care.

Some participants said they felt distinct pressure to sign on to the coalitions. "What were we supposed to say? No?" asked a participant who represented a group that joined the coalition but who did not want to be identified discussing the meeting for fear of jeopardizing the group's position in ongoing talks.

But others said the meeting only formalized what had already functioned as an informal alliance.

"This is a natural outgrowth of groups that have worked together previously on health reform issues," said Richard Deem, the senior vice president for advocacy at the American Medical Association.

The groups' backers "had a record of pooling their resources long before the coalition," said Rebecca Kirszner Katz, a former spokeswoman for the now-defunct group. She added that "a core group of these stakeholders approached Hilltop and others about formalizing a coalition."

"The idea that this group of stakeholders - who deal with the problems in health care every day - needed to be told that it was important to communicate about health care, or how to do it, is absurd," she said.

Allison said that it is not only the April meeting that troubles him but also the whole approach Baucus and the White House have taken in attempting to negotiate with potential adversaries.

"What you've had was the Senate and the White House sitting down and cutting deals with special interests," he said. "I don't think that's quite what the American people signed up for when the Obama campaign said that they were going to limit the influence of special interests in this White House."

Criticism - from the left and the right - of the PhRMA deal and the coalitions became more pointed after it was revealed in August that the coalitions were paying two firms with close ties to the White House to cut ads: AKPD Message and Media, which was founded by White House senior adviser David Axelrod, still owes him $2 million and employs one of his sons - and GMMB.

Liberals contended drug companies were being let off the hook. And congressional Republicans distributed talking points asserting the PhRMA deal raised "serious questions as to whether the drug lobby is helping to bankroll a multimillion-dollar severance package for one of the president's senior advisers."

The coalition spawned from the April meeting has evolved since its formation. AARP, a member of Healthy Economy Now, did not join Americans for Stable Quality Care, which welcomed a range of smaller medical groups left out of Healthy Economy Now. The SEIU - dissenting from the implicit endorsement of Baucus's more conservative legislation in the group's most recent ad - recently left the group.

But participants say the coalition will continue its large-scale efforts on behalf of the legislation.

"In the not-too-distant future, you'll see a new set of ads" from Americans for Stable Quality Care, said Ron Pollack, executive director of Families USA, a coalition member that also belonged to Healthy Economy Now.