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Insurance Lobby That Fought Hillarycare and Obamacare Now Has Sturdy Bridges to Democrats

After insurers helped to torpedo Hillary Clinton’s 1993 health care reform, its lobby sought influence among Democrats through a new kind of Washington firm with ties to the Clintons.

Marilyn Tavenner, then administrator of the Centers for Medicare and Medicaid Services, testifies at a House Oversight and Government Reform Committee hearing. She is now chief executive of America’s Health Insurance Plans, or AHIP. (Tom Williams/CQ Roll Call/Getty)

The Breakdown

How politics and government really work, and why they don’t.

This story was co-published with The Daily Beast.

When the former head of the U.S. government’s health insurance programs was hired in July to run a lobby that had spent tens of millions of dollars trying to derail Obamacare, it was more than just another spin of Washington’s revolving door.

Marilyn Tavenner, former administrator of the Centers for Medicare and Medicaid Services, became chief executive of America’s Health Insurance Plans, the industry’s main lobbying group, which is known as AHIP. As the latest of a half-dozen prominent architects and overseers of Obamacare to move into the health industry, her move signified growing ties between health insurers and Democrats despite battles over the Affordable Care Act.

The relationship has long been marked by ambivalence and tension. Tavenner’s predecessor at AHIP, Karen Ignagni, was a former Democratic staffer on Capitol Hill, but the insurance lobby led the way in defeating the Clinton health coverage plan in 1993 and secretly spent about $100 million to attack Obamacare even as it negotiated to make it palatable to the industry. More recently, as the law added millions to the insurance rolls and generated big profits for many companies, they have turned to defending it.

The connections may continue or strengthen if Hillary Clinton wins the Democratic nomination and the presidency. That’s because a Washington firm called the Dewey Square Group, which is closely identified with the Clinton campaign, was at the center of the industry’s efforts to win influence among Democrats — at a time when the two sides were sharply opposed.

As it helps corporations play both sides of the street, Dewey Square stands as a primary example of an ascendant breed in the Washington influence industry: Democratic consulting firms that, over time, have expanded from advising political campaigns into advising industry groups.

While these firms may do actual lobbying here and there, their main service is what’s known as “grass-tops organizing,” to help corporate clients win over Democratic constituencies. Others in the business, including Glover Park Group and SKDKnickerbocker, also lean Democratic. Their clients generally need less help reaching Republicans.

Among Dewey Square’s clients have been the U.S. Chamber of Commerce, which hired the firm to fight for limits on damages that can be awarded in lawsuits — a longtime plank in the Republican platform — by invoking the plight of Hispanic restaurant owners taken to court; the National Restaurant Association, which paid Dewey Square $772,000 in 2009 as it was fighting legislation that would make it easier for unions to organize workers; and the Private Equity Growth Council, which paid it $188,544 in 2009. And in 2012, Dewey Square was hired by the advocacy campaign Fix the Debt, which pushed an austerity approach to budget deficits.

Dewey Square was founded in Boston in 1993 by Charlie Baker III, a longtime Michael Dukakis hand; Charles Campion, a former aide to Walter Mondale, and Michael Whouley, a legendary master of Election Day turnout tactics. (He is credited with helping Al Gore narrowly beat Bill Bradley in the 2000 New Hampshire primary by sending Gore, with his Secret Service motorcade, into strong Bradley areas on voting day to cause traffic jams.)

The firm was bought by British advertising giant WPP in 2006. It evolved from mostly consulting for candidates to advising other clients — nonprofit groups, companies and industry groups — on how to win political fights.

Among the more than 40 consultants at Dewey Square is Minyon Moore, the director of its multicultural and state and local practice, a former political aide in Bill Clinton’s White House who joined the firm in 2004. Moore is close with Hillary Clinton — in 2008, she asked a Washington businessman to fund a shadow pro-Clinton effort during the Democratic primaries in four states and Puerto Rico costing $608,750. Moore weathered that revelation, and it was she who organized the first meeting at Clinton’s Embassy Row home in 2013 to discuss what another run for president would entail.

Moore, Baker and Whouley were in the so-called working group that oversaw the Clinton campaign-in-waiting before her formal announcement. And Baker was hired as the campaign’s “chief administrative officer” — essentially, its liaison to the Democratic National Committee. If Clinton wins the nomination, Baker is expected to assume control of the party structure in 2016. Further affirming Dewey Square’s influence in Hillary-land is its alum Guy Cecil, who leads the main pro-Clinton super PAC, Priorities USA.

None of the firm’s known projects was as directly opposed to the Democrats’ core agenda as its work on behalf of AHIP in 2007 and 2008.

When Democrats took control of Congress after their 2006 election sweep — a sweep in which Whouley played a key role in boosting turnout — one of their first agenda items was to expand health insurance for low-income children. To pay for it, they proposed reining in subsidies given to insurers who offered seniors coverage under Medicare Advantage, the privately run alternative to Medicare.

Medicare Advantage was created on the logic that it would increase choice and provide more efficient care. But by 2007, the plans were costing the government about $1,000 more per enrollee than traditional Medicare. Congressional budget analysts found that if the government cut payments to insurers to match those in the traditional system it could save $54 billion over five years.

That would be bad news for AHIP’s members, who were relying on Medicare Advantage for an increasing share of their profits. The insurance lobby, then led by Ignagni, turned to Dewey Square.

The firm already had offered AHIP its services as a conduit to Democratic lawmakers and activists, in particular African-American and Hispanic ones, according to a person involved in the discussions. The two came up with a shrewd argument against cuts to Medicare Advantage: Minorities were especially prone to chronic conditions such as diabetes and high blood pressure. Since Medicare Advantage plans purported to be superior at managing those problems, the subsidy cuts, and resulting benefit cuts, would hit minorities especially hard. (In fact, enrollment levels were no higher among minorities than white retirees.)

It was an all-out effort, as described by the Wall Street Journal in 2007. Dewey Square held a briefing for black and Latino lawmakers, with the invitations sent out by a Dewey Square principal who used to be executive director of the Congressional Hispanic Caucus. There, the lawmakers heard a pitch for Medicare Advantage from Aetna CEO Ronald Williams, who is African-American.

The message seemed to register with several Democratic House members, including Stephanie Tubbs-Jones, from Cleveland, who spoke up against the cuts at a House hearing, saying, “It’s a program where a significant number of minority seniors have decided to place themselves.” (Among the black lawmakers who weren’t persuaded was Sen. Barack Obama.)

AHIP unveiled an advisory committee on the issue that included three dozen black, Latino and Asian-American leaders, including the former mayors of Denver and Miami. Dewey Square coaxed letters to Congress opposing the Medicare Advantage cuts out of the NAACP and the League of United Latin American Citizens.

The firm even flew in from Orlando an 81-year-old Hispanic woman in a wheelchair who had had five heart attacks and three strokes to testify against the cuts, saying that her Medicare Advantage plan paid for a foot doctor to come to her house to clip her toenails to avoid diabetes complications. “It was a creative way to look at the issue that I don’t think had been examined before — and it did catch folks’ attention on the Hill,” said Dan Elling, who was a Republican health-policy staffer on the House Ways and Means Committee at the time.

Congressional Democrats ended up implementing some cuts to Medicare Advantage in 2008, over President Bush’s veto. But the fight arose again the next year, with higher stakes, when Obama and congressional Democrats launched their push for the Affordable Care Act, which called for additional cuts to Medicare Advantage to help pay for near-universal health coverage.

This time, AHIP’s campaign included getting seniors to send letters to their local newspapers opposing the cuts — a tactic that backfired when an editor at the Lawrence Eagle-Tribune, in Massachusetts, discovered that some of the people whose names were attached to the letters had no recollection of writing them. He got even more suspicious when he found that a young man who had called to make sure the letters were published was an intern at the Dewey Square Group.

The AHIP campaign didn’t keep Congress from including more Medicare Advantage cuts in the final legislation. “I knew they were out hustling lobbyists to work the crowd, as it were, but it didn’t seem to make any difference to us,” said Pete Stark, a California Democrat who chaired the health subcommittee on Ways and Means prior to losing his seat in 2012.

But AHIP did ultimately win important concessions. The industry limited the impact of cuts by getting the Obama administration to expand a demonstration project rewarding high-quality insurers with higher payments.

With insurers under less pressure to raise the plans’ costs to enrollees or reduce their benefits, the big exodus from Medicare Advantage that AHIP had warned about never happened. In fact, enrollment has surged to nearly 17 million beneficiaries, more than a third of all Medicare enrollees.

Ginny Terzano, a spokeswoman for Dewey Square, said it stopped working with AHIP in 2008.

“The firm tends to work with businesses and organizations that are like-minded in our policy views and values," she said. "If it becomes clear that a policy position is not in line with our thinking, we either won’t take the work or we will step away from the work.”

She declined to comment on how the firm's work for AHIP reflects on Clinton given the firm's prominence in her campaign: "If you’re looking at the Clinton campaign and what they think, I refer you to the Clinton campaign.”

A Clinton campaign spokesman did not respond to a request for comment.

With Obamacare, the next occupant of the White House will preside over a continual tweaking of health-care rules and payments that will have more consequence for the insurance industry than ever. Congress and the next administration will also be facing the big decision of whether to retain an excise tax on high-cost insurance plans, which is supposed to go into effect in 2017. AHIP is already lobbying to repeal it.

Richard Kirsch, the former director of Health Care for America Now, which lobbied for universal coverage, said he isn’t kept awake nights by Dewey Square’s connections to the insurance lobby. Just because the firm was doing the industry’s bidding when it was being paid doesn’t mean its principals would take up the industry’s cause if they ended up in a Hillary Clinton administration, he said.

Kirsch said he and other policy advocates are more worried about Obama officials like Tavenner, the former Medicare and Medicaid chief, who have moved into the industry.

Clare Krusing, a spokeswoman for the insurance lobby, said the hiring of an Obama official as chief executive doesn’t reflect a change in the group’s strategy. “This isn’t a shift or an evolution,” she said. “How you move forward in a way that creates and delivers affordable choice for consumers has always been our focus.”

To Kirsch, though, Tavenner’s connections raise the prospect of unfair influence even though government ethics rules forbid her from directly lobbying the administration over the next two years.

“It’s a huge conflict and a great example of revolving door,” Kirsch said.

Related stories: For more coverage of politics and lobbying, read ProPublica’s reporting on Hollywood’s gift to U.S. embassies, how the gas tax explains Washington gridlock and the impact of Scott Walker’s legal victory.

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