April 5, 2000

New Investigative Study Reveals How Unhealthy Alliance Between HMOs and Congressional Leaders Threatens Patients’ Rights Bill

WASHINGTON, D.C. -- Pro-consumer patients’ rights legislation is being blocked because of an unhealthy alliance -- forged and sustained with soft money -- between pro-managed care interests and the leadership in the U.S. Senate, Public Citizen shows in an in-depth investigative report released today.

This timely report, entitled Holding Patients Hostage: The Unhealthy Alliance Between HMOs & Senate Leaders, reveals the inside story of the intimate working relationships between two top pro-managed care donor lobbies -- the Blue Cross and Blue Shield Association and the National Federation of Independent Business -- with Senate Majority Leader Trent Lott (R-Miss.) and Assistant Majority Leader Don Nickles (R-Okla.). Drawing on interviews with congressional aides and lobbyists, the report reveals the strong-arm tactics that Lott and Nickles have deployed to keep reluctant GOP senators in line, including Sens. Jim Jeffords (R-Vt.), John Chafee (R-R.I.), John McCain (R-Ariz.) and Peter Fitzgerald (R-Ill.).

Based on a new Public Citizen analysis of political contributions data, the report discloses the financial ties that bind the "iron triangle" of pro-managed care contributors, their lobbyists and congressional Republicans who supported the weak GOP bill that the Senate passed (S.1344) and opposed the stronger bipartisan bill that the House of Representatives passed (H.R. 2723).

Managed care groups and the member companies of the Health Benefits Coalition, which leads opposition to patients’ rights legislation, have given nearly $21 million in federal campaign contributions since 1995 -- nearly $16 million (75 percent) to the Republican Party and its candidates. Almost 40 percent of the $21 million consisted of soft money donations to Republican Party committees. As the patients' bill of rights debate took off in 1997-98, coalition contributions jumped 18 percent over 1995-96 -- despite the general decrease in campaign contributions from the presidential to congressional election-year cycles. From 1997 through 1999, Republicans harvested an even greater share of coalition money -- $8.9 million, or 81 percent of total pro-managed care contributions.

"This unhealthy alliance shows how heavily the GOP depends upon campaign contributions from the pro-managed care industry, especially unlimited soft money donations from corporations," said Public Citizen President Joan Claybrook. "And these special interest groups get unlimited access to the GOP leadership so they can kill or seriously weaken vitally important health care legislation affecting millions of Americans. This dramatizes the need for campaign finance reform to ensure the viability of our democracy."

Lott and Nickles represent the last bastion of HMO resistance to public regulation of an industry most Americans blame for decreasing the quality of health care. In 1998, Lott and Nickles prevented the Senate from even considering the patients' bill of rights. Today, Nickles chairs the climactic House-Senate Conference on the bill, waxing pessimistically about the outlook while his pro-managed care allies fight to maintain the status quo. He recently warned that, "It's not a high probability to even have a successful conference."

Among the report's highlights:

•  The Blue Cross and Blue Shield Association, the nation's largest provider of managed care services, has dispatched its national PAC coordinator, Brenda Becker, to serve as one of a small group of co-chairs for major Republican party fundraising events with responsibility for soliciting from the health care industry and other businesses. She has played a leading role in at least eight key Republican leadership fundraising activities since 1997, including co-chairing the annual GOP House-Senate fundraising dinner -- the party’s biggest fundraiser of the year -- orchestrating "Leadership PAC" fundraisers for Lott, Nickles and House Speaker J. Dennis Hastert (R-Ill.) and organizing Nickles-sponsored golf tournaments, including one at the Republican national convention.

• NFIB, which chairs the Health Benefits Coalition, has emerged in recent years as a pro-GOP electoral force and top strategic partner of the GOP congressional leadership. NFIB-related lobbyists have worked almost daily with Nickles and his staff on legislative strategy to blunt a strong patients' rights bill.

• According to interviews with congressional staff and lobbyists, and a leaked Health Insurance Association of America memo, Senate GOP leaders pressured Jeffords (R-Vt.), Chairman of the Health, Education, Labor and Pensions Committee, to drop his efforts to craft a bipartisan bill with the ranking Democrat, Sen. Ted Kennedy (D-Mass.).

• After Senate GOP health care task force member Chafee introduced a bipartisan bill with Sen. Bob Graham (D-Fla.), he was excluded from various Senate Policy Committee briefings on patients' rights issues and was severely ostracized by GOP senators, according to his former aides and others.

• McCain and Fitzgerald (R-Ill.) failed to appear at a press conference for their scheduled endorsement of the Chafee-Graham bill because Senate GOP leaders warned them off, as a former GOP aide indicated and Nickles did not deny.

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Key Fundraising Activities of the Blue Cross and Blue Shield Association (1997-2000)