Medical Interests Spent $876 Million on Reform

Doctors, Drug Firms and Insurers Injected Huge Sums Into Fight

Posted April 30, 2010 at 6:04pm

When President Barack Obama declared in his first address to Congress that health care reform “must not wait,” he sparked a lobbying spree that kept medical stakeholders hustling while fattening the bottom lines of K Street firms.

Medical interests alone shelled out more than $876 million in lobbying expenses during the 15 months beginning in January 2009 and ending in March, when Congress passed the sweeping overhaul.

Those stakeholders, including the drug industry, doctors, hospitals and manufacturers of medical products, were responsible for one out of every five dollars doled out on lobbying during that period, according to a CQ MoneyLine analysis of lobbying disclosure reports filed with Congress.

While health care has historically been an issue that has drawn intense lobbying, even some veterans of Capitol Hill expressed astonishment at the big bucks lavished during the 15-month slog.

“That is an astounding amount of money,” said Ralph Neas, president of the National Coalition on Health Care, which pushed for passage of the overhaul. Neas, who began his career in Washington in the 1970s as an aide to then-Sen. Edward Brooke (R-Mass.), said that in his time here, “I can’t think of anything that remotely comes close to that amount of lobbying.”

But there was much at stake for medical interests as lawmakers put together the bill, which will affect millions of Americans and their employers in the years ahead.

“This is the most important domestic legislation in at least 45 years,” Neas said, referring to the creation of Medicare and Medicaid in the mid-1960s.

Tony Podesta, president of the Podesta Group, which ranked second among K Street firms in fees paid to work on health care reform during this period, said lobbying on the issue is far from over.

Podesta said his firm was still picking up clients with a stake in how the measure is implemented and in any corrections Congress might make. Even companies that are not directly involved in health care are affected by the new law, which includes corporate tax changes related to retirees’ health benefits, sets up insurance exchanges and mandates all individuals purchase health insurance.

“We just did a briefing for non-health care clients on the bill,” Podesta said. “We had really good attendance.”

Prescription for Reform

Within the health care industry, drug companies racked up the biggest lobbying tab, spending $253 million. They were followed by hospitals, which spent
$108 million, and doctors and surgeons, who spent $59 million.

Thomas Mann, a political scholar at the Brookings Institution, said one difference between this health care push and the last time the issue came up, during the Clinton administration, was that many in the health care industry supported the overhaul legislation.

“A good percentage of that lobbying budget was spent on behalf of reform,” Mann said.

Indeed, the drug companies, led by the Pharmaceutical Research and Manufacturers of America, early on reached a deal with Democrats that involved providing tens of billions of dollars in drug subsidies for seniors. In return, name-brand drug companies protected their right to exclusively market groundbreaking biologic drugs over a 12-year period.

The hospital associations also reached a deal with the Democrats to provide $155 billion over 10 years to defray costs for uninsured Americans. The American Medical Association, with a $26.2 million lobbying budget for the stretch, endorsed the legislation, although many medical specialists opposed the overhaul efforts.

Smaller health care interests also joined in on the lobbying. Medical laboratories spent $1.5 million, and acupuncture advocates paid $34,000 to sway lawmakers to include the ancient treatment in the reforms.

Health insurance companies criticized the legislation as not doing enough to control costs. The industry’s chief lobby, America’s Health Insurance Plans, spent $11.5 million on lobbying over the five quarters.

Rolling in Capital

The health care industry’s lobbying easily outpaced other sectors with interests on Capitol Hill, including energy and natural resources, finance and insurance, and communications and technology, the CQ MoneyLine analysis found.

Even as other sectors scaled back during the recent economic downturn, health companies continued to pump big bucks into influencing Congress.

During 2009, health care lobby spending peaked in the fourth quarter, when both the House and Senate approved their separate versions of the legislation.

At the beginning of this year, health care spending dipped as prospects of passage seemed doomed after the Jan. 19 election of Republican Sen. Scott Brown (Mass.) to replace Democratic icon and health care champion Sen. Edward Kennedy.

However, Democrats regrouped, and two months later Congress approved the sweeping health care bill along party lines.

The health care industry was not alone in its interest in the legislation.

During the 15-month stretch, about 2,700 clients, ranging from big-box stores such as Wal-Mart to high-tech firms such as Microsoft, listed health care as one of their lobbying issues, the analysis found.

The U.S. Chamber of Commerce spent $148 million on lobbying activities during this period, much of it on an aggressive media campaign to defeat the Democratic health plan.

Companies and trade associations that named health care as one of their priorities paid $333 million to outside firms to advocate on the issue. As big as they are, the health care lobbying expenditures do not reflect the millions of dollars spent by many outside groups on grass-roots and television ads both for and against the health care bill.

“The real winners in the health care debate were the lobbyists who were laughing all the way to the bank, even in a tough economy,” said Steve Ellis, vice president of Taxpayers for Common Sense.

‘Drinking From a Fire Hose’

For K Street firms, the health care measure allowed them to expand their business.

The law firm Holland & Knight, which ranked ninth among firms in health care fees, fortuitously purchased in early 2009 a small shop that specialized in health care.

“We’ve been drinking from a fire hose,” said firm partner Rich Gold, noting Holland & Knight’s $4.7 million in health care lobbying fees over the past 15 months. He said business has slowed since the bill was signed, but he expects it to pick up as clients seek information about the new law. He said the firm had already prepared webinars for medical device companies and hospitals explaining the new law.

“It’s been a while since we’ve seen something of this scope and magnitude,” said Linda Tarplin, a founding partner of Tarplin, Downs & Young. Her firm ranked 10th among lobbying shops in health care business during the five-quarter period, collecting $4.5 million in revenues.

But Tarplin also noted that her firm, which is different than the others on the top 10 because it specializes exclusively in health care, finds health care issues “are always important and will remain front and center as the new health care reform law is implemented.”

Serdar Tumgoren contributed to this report.