propublica.org

by Alec MacGillis

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.

The Supreme Court last week announced that it would again hear Fisher v. Texas, an affirmative action case in which a white woman claims she was denied admission to the University of Texas because of her race. In 2013, the court ruled narrowly on the case, requiring the federal appeals court that had ruled against the woman, Abigail Fisher, to re-examine her arguments. Last year, the appeals court again decided against Fisher, affirming that race could be one of the factors considered in trying to diversify the student body at the university.

In 2013, ProPublica published one of the most widely read analyses of the Fisher case. It highlighted an overlooked, deeply ironic fact about the case: when one actually looked at Fisher’s records, she actually had not been denied admission because of her race, but rather because of her inadequate academic achievements.

Turns out, that is hardly the only fascinating twist in the Fisher case. Joan Biskupic’s 2014 book “Breaking In: The Rise of Sonia Sotomayor and the Politics of Justice” revealed the very personal and charged dealings among the court’s justices in taking up the case. Biskupic is an editor in charge of Legal Affairs at Reuters. She was a member of the Reuters team that was a finalist for the 2015 Pulitzer Prize in explanatory reporting. Biskupic and her colleagues, Janet Roberts and John Shiffman, used data analysis to reveal how an elite cadre of lawyers enjoy extraordinary access to the Supreme Court, raising doubts about the ideal of equal justice.

Biskupic agreed to a brief written Q and A with ProPublica.

Q: Given what happened two years ago, were you surprised to see the court take the Fisher case again? Or not surprised in the least?

A: I didn’t know what was happening behind the scenes as the justices delayed, for weeks, announcement of whether they would take it. But I knew there was some unfinished business among the justices from 2013. And I suspected that at least four justices (the number needed to hear a case) were displeased with the decision by the U.S. court of Appeals for the Fifth Circuit again upholding the University of Texas policy.

Q: When the court sent the case back to the Appeals court in 2013, there seemed to be mostly disappointment and or relief among the parties. But you discovered there was a lot more to that narrow ruling than either side could have known. Tell us about that.

A: The justices had taken an unusually long time with the case, eight months from oral argument to ruling. But the 7–1 decision handed down in June 2013 seemed particularly tame, given that protracted delay and earlier signals from the court. Remember, the court had reached out to grant the case in February 2012, over protests from the University of Texas that nothing was at stake anymore because Abigail Fisher had already graduated from her second-choice school, Louisiana State University. Then when the case was argued in October 2012, it appeared the five conservatives, including swing vote Justice Anthony Kennedy, were ready to strike down the UT program and restrict affirmation action nationwide. As I was doing research for my book, I tried to find out what had transpired and discovered a majority had been ready to rule against UT, but that during the secret deliberations that followed the vote, Justice Sonia Sotomayor had written a scathing dissent that led the majority to back down.

Individual justices from both sides of the ideological divide revealed to me elements of the negotiations after what was essentially a 5–3 split against the University of Texas (Justice Elena Kagan had recused). Not all the justices would talk, and Sotomayor declined to disclose private negotiations. But I heard enough to know Sotomayor had drafted a dissent suffused with the personal experience of her Puerto Rican Bronx background. She was mounting a strong defense of affirmative action while denouncing the majority’s attitude toward race and racial policy. The tone from the nation’s first Latina justice: You haven’t lived it and you don’t get it. Justice Stephen Breyer (a liberal who began in dissent with Sotomayor and Justice Ruth Bader Ginsburg) helped broker the compromise with Kennedy, who was writing the majority opinion. Kennedy had dissented when the court last upheld affirmative action, in the 2003 University of Michigan case. But, like Breyer, Kennedy wanted to lower the temperature among the justices and he was open to a position that would draw as many justices as possible to an opinion. The five conservatives were split on their rational anyway; Clarence Thomas, for example, wanting to end all race-based classifications. Kennedy knew another opportunity to review affirmative action would come their way. With Chief Justice Roberts supporting the shift, Kennedy amended his opinion to allow the UT program to stand – temporarily at least – and to return the case to the Fifth Circuit for another review.Kennedy’s opinion did fault the Fifth for deferring to the university rather than undertaking its own inquiry into whether UT could achieve sufficient campus diversity without considering race in applications. Sotomayor filed away her draft dissent, and she and Breyer signed Kennedy’s opinion. Justice Ginsburg, the senior liberal on the court, continued to dissent from the majority because she did not think the Fisher case should be sent back to the lower court.

When I asked justices for words, phrases, any specifics of Justice Sotomayor’s draft dissent, they suggested I would soon see a version of it. By that point, the court had heard the new case of Schuette v. Coalition to Defend Affirmative Action, testing a Michigan state ban on racial affirmative action, including at public universities. I was in the courtroom that April 22, 2014, when the majority upheld the ban and Sotomayor delivered her dissent – her first oral dissent from the bench. Retrieving sentiment from the Fisher draft, she in the new case criticized the majority for ignoring people on the margins of society. This is when she referred to “the slights, the snickers, the silent judgments” that people encounter because of their race. She also turned a well-known phrase of Chief Justice Roberts against him. He had written, “The way to stop discrimination on the basis of race is to stop discriminating on the basis of race.” Her take in the Schuette dissent: “The way to stop discrimination on the basis of race is to speak openly and candidly on the subject of race.”

Q: Are you able to say how common or rare such a backstory takes place with the court – that emotions run so high among the justices that peace has to be brokered? This latest term, in which cases on gay marriage and Obamacare were decided, suggests hard feelings were on open display.

A: It’s not unusual for things to get tense and emotional at the end of a term, especially when race is the issue. But it’s rare that we know. Journalists usually do not discover such inside information until a justice’s archives are opened years, even decades, later. (Not all justices make their papers available; in my book research, I’ve relied mainly on the papers of Marshall, Brennan, Blackmun and Powell.) The hottest rhetoric is often taken out of an opinion before it is released to the public. That’s what happened in the Fisher case. I was just fortunate enough to find out about it when I was working on the Sotomayor book. (As you know, the justices rarely sit for interviews, let alone disclose what goes on in their private conference.)

Q: Your book on Justice Sotomayor traced her ascent to the court, and her early impact on it. She doesn’t seem shy, for she did write that dissent in which she said: “Race matters because of the slights, the snickers, the silent judgments that reinforce that most crippling of thoughts: ‘I do not belong here.’” Has she changed the way the court talks about and debates race?

A: Her openness about race is different for the court. And it’s clear that some of her colleagues are not comfortable with it. Chief Justice Roberts took umbrage in the Schuette dispute. He rejected her claim that the majority was “out of touch” when it asserted that racial preferences themselves reinforce feelings among minorities that they do not belong. And he said that it “does more harm than good to question the openness and candor of those on either side of the debate.”

Q: Is there much doubt in your mind how the court will ultimately rule when it takes up Fisher in the fall?

A: The fact that they’ve taken it again suggests they’re ready to strike down the program. They plainly are not going to let the Fifth Circuit have the last word. But I’m reluctant to call the case until I’ve heard the oral arguments.