The Army Built to Fight ‘Medicare for All’

Chip Kahn took one look at the scene playing out inside the stately Hart Senate Office Building and knew he needed to do something about it.

It was mid-September 2017 and Sen. Bernie Sanders had just ascended a stage to the cheers of more than a hundred health care activists, grassroots organizers and political supporters. The packed hearing room had played host to some of the most solemn moments in Washington’s modern history: the crafting of a landmark missile treaty with the Soviet Union, the investigation of the 9/11 terror attacks, the consideration of at least five Supreme Court nominees.

On this day, it had been transformed into a staging ground for the first stop in Sanders’ latest political crusade. Standing in front of a bright blue HEALTHCARE IS A RIGHT banner tacked to the back wall, Sanders heralded the renewal of a “long and difficult struggle” to fulfill the liberal dream he’d pursued for decades: “Medicare for All.”

The speech was classic Bernie, full of grand visions for a universal health care system at the expense of greedy corporate executives getting rich off the status quo. For Kahn, the CEO of the Federation of American Hospitals, which represents more than 1,000 for-profit hospitals, it wasn’t so much the rhetoric that bothered him, despite the fact that he — as head of one of the nation’s most powerful hospital lobbies — was one of the corporate executives in Sanders’ crosshairs. A 67-year-old former GOP operative who’d worked in and around politics since high school, Kahn was familiar with the Vermont senator’s lengthy, mostly solitary campaign for single-payer health care.

What he couldn’t ignore this time was the group right behind Sanders. Nine Democratic senators, many of them rising stars and likely presidential candidates, stood on stage to pledge their support for Medicare for All — a proposal that would obliterate the private health insurance sector, reorder one-sixth of the nation’s economy and jeopardize a system Kahn and his industry allies had worked so hard to construct.

Democrats were less than a decade removed from passage of the Affordable Care Act, the most significant health care legislation in a half-century. The fight over how to shape, implement and ultimately rescue it had cost the industry millions of dollars in time and effort, and exacted a steep political price. But hospitals across America had now largely adapted to the new landscape the law had established—and now, Kahn recalled thinking at the time, politicians wanted to go out and do it all again?

“The Democratic Party had this … amnesia,” Kahn said in a recent interview, searching for the right word to express the disbelief he still feels many months later. “That set off alarm bells.”

As recently as a year earlier, Medicare for All was little more than a progressive pipe dream, a policy proposal dismissed in most Democratic circles as pure fantasy. Yet suddenly it had leaped from the fringes into the center of the conversation, urged on by the party’s progressive base and increasingly embraced by leading Democrats.

With the images of that Sanders event replaying in his head, Kahn made a phone call — and then, over the next few weeks, another and another. Those calls would lead to a series of secretive meetings in downtown D.C. where officials from every part of the health care industry — from insurance companies to hospital giants, drugmakers and even, for a time, doctors — would forge an alliance united to ensure that Sanders’ promises never became reality.

Out of their pact grew an influence operation known today as the Partnership for America’s Health Care Future, a multimillion-dollar cooperative designed to overwhelm not just the swelling Medicare for All movement, but every single Democratic proposal that would significantly expand the government’s role in health care.

Its core conviction: Right now, things aren’t actually that bad. Nine in 10 people have health coverage, insurance premiums are stabilizing and the system is working better than ever for the vast majority of the country. What Americans need now is a Washington willing to tinker and to shore up Obamacare’s weak points, not take a sledgehammer to the entire structure.

“The reason for the invention of the Partnership was that the Democratic Party was forgetting what it had done and, in our view, going off on a tangent that would shake everything up if they ever really got power,” Kahn said. “In this country, incremental change, and pragmatic change, has always been the style.”

Health care’s warring tribes

Like most blandly named coalitions in a town bursting with them, the Partnership is a vehicle for funneling the money and missions of a set of disparate organizations with just enough in common to make nice with each other against a common threat.

Though the health care industry is often seen as a single broad entity, in Washington it’s in fact more like an assortment of warring tribes competing to secure the biggest slice of the nation’s $3.6 trillion in annual health spending. Hospitals and doctors, for example, spent tens of millions of dollars this year fighting the insurance industry to a stalemate over who should pick up the tab for surprise medical bills.

At the same time, hospitals are playing defense against the pharmaceutical industry over an obscure-yet-lucrative discount drug program that allows them to purchase medicines at a steep markdown — ostensibly to aid low-income and underserved patients, yet with little accountability for where it directs the billions in annual savings. The pharmaceutical industry, meanwhile, is at odds with nearly everyone over the rising cost of drugs, combating separate efforts by Democrats in Congress, Senate Republicans and the Trump administration to rein in prices — all while trying to shift blame back onto the insurers and pharmacy benefit manager middlemen it argues are the real culprits.

Even in a town with more than 20 lobbyists for every member of Congress, the corporate health care army is outsized; health care companies spent nearly $568 million on lobbying in 2018 alone, according to the Center for Responsive Politics, more than any other industry. For the past four years, its spending has topped a half-billion dollars.

With so much lobbying power often aimed in opposite directions, big changes to America’s health care system are already few and far between. But when it came to Medicare for All — a proposal that would upset the business model of every part of the health care industry at once — Kahn realized a more unified front was needed. He would have to broker a ceasefire.

At first glance, the timing was odd. Kahn and his private-sector colleagues had only weeks earlier received perhaps the best news of their year: Republicans’ bid to dismantle the ACA without any clear plan for replacing it had suddenly collapsed.

The health care lobby had initially regarded Obamacare with varying levels of disdain and even alarm, yet mostly ended up embracing the law, due largely to the financial incentives President Barack Obama dangled in front of it. Obamacare contained sweeteners for hospitals and insurers by covering more poor patients and expanding the private insurance market, and it mostly left the drug industry alone, declining to impose strict new restraints on the rising price of medicines. Republicans’ effort to eliminate Obamacare threatened to hurl that carefully crafted system into chaos, and the health care lobby threw its collective might into saving the law, and prevailed.

Still, as the health care world celebrated its victory over the GOP’s repeal attempt in the late summer of 2017, Kahn couldn’t help but notice the energy and fury building on the other side of the aisle — the growing sentiment within the Democratic base that Obamacare hadn’t gone nearly far enough, and the only way to secure its gains was with something more radical. And from Kahn’s perspective, if repealing Obamacare was bad for business, Medicare for All represented an existential danger.

“There was a centrifugal force taking place,” Kahn recalled. “Just as the Republican Party was pushing further and further to the right, that centrifugal force was pushing the Democratic Party further and further to the left.”

That newfound liberal momentum needed a counterweight, he added, something that could forcefully remind Democrats that their alternative to Republican repeal and replace — and the best pathway toward universal health coverage — was staring them right in the face. Better yet, it was already the law of the land. “You’ve achieved the framework you wanted to achieve as a party,” Kahn said of Obamacare. “Now let’s just make it work.”

‘Everybody saw the threat’

Kahn’s broad coalition would be a rare collaboration in Washington lobbying’s ultracompetitive culture, and it took some months to coax his chief rivals on board. There were negotiations over who would control the group and set its principles, coalition members present at the time said, and importantly, how it would remain isolated from the groups’ individual policy agendas.

“One of the ground rules we agreed upon early on,” said David Merritt, a participant on behalf of insurer lobby AHIP, “was you’re not going to bring your baggage to this coalition.”

But the hypothesis at the group’s core — that without organized pushback, Medicare for All represented a real and imminent threat to survival — was never in dispute.

Under Sanders’ single-payer plan, private health insurance — a $670 billion business — would cease to exist. Hospitals, no longer able to strong arm private insurers into paying far higher rates for care than the federal government, could lose billions. And drug companies would face fresh scrutiny and regulation of pricing practices that have allowed the cost of medicines to skyrocket.

“Everyone saw the threat,” said one lobbyist involved in the early discussions. “You didn’t have to convince anybody that this was a problem.”

The Partnership officially launched in June 2018 with five founding members: Kahn’s Federation of American Hospitals, AHIP and fellow insurer lobby the Blue Cross Blue Shield Association, drug industry giant PhRMA and the country’s premier association of physicians, the American Medical Association.

It’s since expanded at breakneck speed, signing up the influential American Hospital Association and some of the nation’s largest individual hospital systems; biotech trade group BIO; the health care executive roundtable Healthcare Leadership Council; and a series of trade associations representing smaller slices of the industry like insurance brokers and financial advisers, generic medicine manufacturers and radiologists. Recently, the Partnership branched onto the state level, adding local Chambers of Commerce, industry groups and private companies.

In fact, by earlier this year, virtually every part of the health care industry was on board.

The coalition’s ambitions grew with its membership. Initially focused on beating back the Medicare for All movement, the Partnership has since expanded its efforts to oppose all major expansions of government-financed health care.

The industry still views single payer as the doomsday scenario. But by early 2019, it’d become far from the only worrying possibility, as prominent Democrats floated all manner of routes to universal health care. The problem: each achieved their goal in roughly the same way — by having the federal government annex broad swaths of the private insurance market, either by creating a competing public option or expanding the existing Medicaid or Medicare programs deeper into the private sector’s territory.

Those plans might sound more palatable to the ordinary American, but to Partnership members it still meant fewer customers, lower pay rates and a new, unnecessary regime of profit-pressuring regulations. So as each 2020 presidential contender rolls out their own signature take on an overhaul, the response from the Partnership has been loud and unflinching: No.

“The politicians may call it Medicare for All, Medicare buy-in, or the public option,” reads an ad run by the Partnership during September’s Democratic presidential debate. “But they mean the same thing.”

Defending a lucrative status quo

The Partnership received $5.1 million in 2018, during its first six months of existence, according to newly filed disclosures — a period that by several members’ admission was something of a test run for the coalition. Its current budget remains closely guarded, but members point to the clear ramp-up in activity nationwide this year, a suggestion its spending has grown noticeably. Kahn said only that the Partnership is prepared to spend “many millions.”

Measured by sheer size and the financial resources backing it, that would make the Partnership the most formidable source of focused resistance to 2020 Democrats’ health plans outside of the Trump reelection campaign.

And they have a lot to protect. The current health care setup is good business for many of the companies represented by those in the coalition. Insurance industry profits ballooned to $23.4 billion in 2018, up from $10 billion a year before Obamacare went into full effect in 2014. The hospital industry has consolidated, vacuuming up physicians and strengthening the nation’s largest systems’ abilities to negotiate higher rates for care, even as enrollment gains mean they’re treating fewer uninsured Americans for free.

Kahn is a veteran of Washington’s health care wars, having spent more than four decades in and around Capitol Hill; he’s played a role in every major piece of health legislation during that time.

He also has experience taking down ambitious plans for health care reform. As executive vice president of the Health Insurance Association of America — then the insurance industry’s main trade group — he was a driving force behind the “Harry and Louise” TV ads that played a key role in tanking Bill Clinton’s health care package in 1993 and setting the standard for a generation of hard-hitting special interest campaigns that have shaped policy debates ever since.

The Harry and Louise ads — which featured a middle-aged couple in their home, agonizing over the rising costs and fewer choices under what the ads called Clinton’s government-driven system — did little to shift public opinion on their own, studies later showed. But supplemented by grassroots pressure targeting key lawmakers, the television spots and publicity surrounding them unnerved Congress and helped tank support in Washington for Clinton’s health plan within a year.

“They weren’t run nationally, but the reporters covered them and showed them across the country,” Rep. Donna Shalala (D-Fla.), who was Clinton’s Health and Human Services secretary at the time, said of the ads. “It was earned media.”

The Partnership is now deploying a similar playbook. Run out of a Washington lobby shop and supported by a phalanx of consultants and political operatives, it aims to simultaneously influence voters’ perception of Medicare for All and its offshoots, while amplifying doubts about the plans’ political viability for the Washington elite.

Outside the Beltway, the Partnership pitches itself as a nonpartisan educational resource on health care. Inside the Beltway, it provides a constant reminder of the power players Democrats are up against if they try for yet another health care overhaul.

The message to both those audiences is simple: Health care reform will take away Americans’ “choice” and “control” and empower government “bureaucrats” by forcing everyone into a “one-size-fits-all system.” (Medicare for All proponents would counter that few Americans have choice or control now, since insurance is largely managed by their employers, and health care decisions are currently made by insurance, hospital and drug company bureaucrats with little transparency or accountability.)

The group bombards policymakers, journalists and voters with its talking points daily, leaning heavily on digital platforms to reach specific constituencies. Nearly $300,000 in the last year-and-a-half alone went toward Twitter and Facebook messages targeting voters in swing states, the primary battleground of Iowa and the lawmaker-heavy Washington area, according to metrics made public by the social media companies.

Many of those ads feature a local citizen — Matthew Majestic in Macomb County, Mich., Lisa Smith in White Stone, Va. — talking to the audience about government-run insurance systems that will force Americans to “pay more to wait longer for worse care.” It’s effectively Harry and Louise, if Harry and Louise happened to be real people living in your community. Another several hundred thousand dollars have gone toward similar TV spots, according to filings with the Federal Communications Commission.

Much of this messaging is aimed at eroding support for Medicare for All specifically among Democrats, and the Partnership has leaned on Democrats to make that case.

“You can basically get up to 98 percent coverage through our current structure,” said Lauren Crawford Shaver, a former Obama health official who is now the Partnership’s executive director and runs its day-to-day operations. “If you use the tools of the Affordable Care Act, if it was fully implemented, you will get more people covered.”

The coalition’s messages are built on extensive polling and research, and produced with help from Bully Pulpit Interactive, a well-known ad firm that works with the Democratic National Committee and until earlier this year aided messaging for Sen. Elizabeth Warren’s Senate campaign. They’re designed to emphasize that, while the status quo may not be perfect, it’s a safer bet than whatever might come next.

“Building on what we have today and fixing what’s broken, not starting over — that earns the most support of any policy proposal,” said Phillip Morris, a former Obama field organizer and current partner at public affairs firm Locust Street Group who runs tracking polls for the Partnership.

To reinforce the point, the Partnership churns out reams of research warning of shuttered hospitals, dwindling competition and major shifts in employer-provided benefits under 2020 Democrats’ proposals. Federal lobbyists with ties to moderate Democrats encourage the party to keep the focus on pre-existing condition protections and defending Obamacare — issues that paid dividends during the 2018 midterm elections.

And the Partnership is in reporters’ inboxes often multiple times a day, highlighting the latest articles and polls casting doubt on any big health care overhaul — and offering rapid responses to whichever top Democrat happens to be pushing a universal coverage plan that day.

The overarching goal is to create a kind of anti-Medicare for All feedback loop, where the Partnership’s warnings are amplified through so many sources that they become ingrained in the national consciousness and make it feel — in perception, and potentially in reality — like the debate is shifting.

“I don’t think it’s difficult to get Americans worried about health care,” said Paul Starr, a Princeton professor who was a senior adviser on Clinton’s health plan. “These groups can take advantage of that anxiety.”

The doctors defect

The Partnership — as its critics are eager to point out — makes no claim to being a popular, up-from-the-ground movement. The biggest portion of its funding comes from a minority of its membership, and most of the 92 groups listed as Partnership members don’t weigh in on its day-to-day strategy in any substantial way.

Two Washington lobbying powers, meanwhile, defected in the past year. The National Retail Foundation quietly dropped out amid its escalating feud with hospital and doctor groups over surprise billing legislation.

Then in August came the bigger blow: The American Medical Association, the premier group representing the nation’s physicians and a founding member, headed for the exits. Partnership members launched a series of broadsides at the doctor group in the wake of its departure, with multiple coalition members accusing it of caving to the liberal left.

The AMA had come under pressure from more progressive factions within its membership, and months earlier agreed to study the feasibility of a public option. But it emphasized that the split was driven more by a desire to focus more on what the industry supports and not just what it’s vehemently against — a contention that Kahn now says is accurate.

“They wanted more specifics in terms of what the plan would be,” he said. “And I don’t think we’re in the plan business. I think we’re in the defending the law business.”

Still, it served as a reminder of the fragility of the industry’s single-issue truce. After a recent revamp, the Partnership’s website now includes a carefully worded section titled, “What we’re for.”

The critical calculation for Medicare for All proponents and the Partnership alike is whether, in the years since Harry and Louise, Americans have grown more frustrated with the health care system’s shortcomings — its expensive premiums, insurance denials, surprise bills and sky-high drug prices — than they are nervous about changing it.

The concept of Medicare for All polls well, in general. Senior citizens already benefiting from the government-run Medicare program overwhelmingly approve of it, and a majority of Americans support creating a single-payer system. Even more — about two-thirds of people — are in favor of trying out a public option. Kaiser Family Foundation polling this month found that Democrats and Democratic-leaning independents are most likely to trust Sanders on health care over the other 2020 candidates.

But in the two years since Sanders and his Democratic colleagues unveiled his plan, polls suggest that anxiety has also steadily risen. Voter support for Medicare for All narrowed from a high of 59 percent in March 2018 to 53 percent this month, according to Kaiser. High-profile Democrats from Harry Reid to Nancy Pelosi to Barack Obama have warned the party establishment about embracing another health care transformation.

And of the four 2020 candidates who stood shoulder to shoulder with Sanders in 2017, only one — Warren — is still running on single-payer health care.

The Partnership can’t take all the credit. But it’s reveling in the results.

“The fact that Bernie Sanders was bothered about this,” Kahn said when asked how he’s measuring the coalition’s impact, pointing to a May op-ed Sanders wrote railing against the group. “That says he’s concerned people are making other arguments out there to his voters that there might be another way of looking at it.”

The Medicare for All movement’s leaders make a similar case about the Partnership. If the industry is training so much firepower on an effort still a few years and several dozen votes short of reality, Rep. Pramila Jayapal (D-Wash.) mused to reporters one October day, it must mean proponents are doing something right.

A leader of the Democrats’ liberal wing and author of the House companion to Sanders’ Medicare for All bill, Jayapal was on her way to deliver copies to various Democratic lawmakers’ offices of a single-payer petition backed by 2 million signatures and a number of advocacy groups. It was one example, she contended, of how progressives are pushing back on the entrenched health care lobbies in a more organized and powerful way than ever before.

The Partnership, reform advocates argue, is evidence they’ve been successful enough to make the industry sweat.

“What’s lost often is the history of Medicare for All — Jimmy Carter ran on this in 1976,” said Rep. Ro Khanna (D-Calif.), the co-chair of Sanders’ campaign. “So why is it that over 50 years later we’re still debating it? Obviously, the special interests have been very effective.”

“We’re not up against an intellectual argument,” he added. “We’re up against interests.”

Sitting in his office one night earlier this fall, Kahn acknowledged that things might be different this time around — that the liberal voices within the Democratic Party are louder and more insistent, and that centrism has lost its cachet. Increasingly, there is sentiment on both sides of the aisle that the health care system no longer works, and the only solution is to blow it up and start over.

“I’m not stupid, Kahn said. “There’s part of the Democratic Party that’s bought into this.”

Kahn has a harder time predicting what comes next. He knows that the industry has always wielded outsize influence over Washington’s ambitions, whether in quelling the original single-payer effort 50 years ago, stalling Clinton’s health plan or giving Obama’s ACA a final shove over the finish line. And he believes that now, through the Partnership, industry is ready for the next fight. It has deep pockets and plenty of political sway. It’s got a strategy that’s time-tested and a simple message that works. And most important, Partnership members believe they can’t afford to lose.

“We have threads that hold health care together,” Kahn said, intertwining his fingers to represent the enmeshed interests of the health care industry. “If you just want to cut all those threads, I don’t know what the outcome will be.”

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