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January 31, 2020 02:19 PM

Hospital, insurance execs prefer moderate Dems in early campaign giving

Rachel Cohrs
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    Modern Healthcare Illustration / Getty Images

    The Iowa caucuses serve as the official kickoff of the presidential primary season. Based on early donations flowing into candidates' coffers, hospital and insurance executives favor moderate Democratic hopefuls who oppose single-payer healthcare reform.

    A Modern Healthcare review of publicly available federal campaign finance records of more than 60 healthcare industry chief executives showed that the majority have not yet given to a presidential candidate. However, the trend of hospital and insurance industry leaders giving to moderate candidates and pharmaceutical executives abstaining is an early indication of what they believe to be their best-case scenarios in 2020.

    Campaign finance experts say there are many reasons why executives might decide to individually support a candidate for office, but they are unlikely to contribute against their company's financial interests.

    "One of the main lenses to look at political contributions is as investments. That often leads to big investors hedging their bets, which they often do," said Grant Reeher, a professor of political science at Syracuse University.

    Democratic presidential candidates

    On the presidential front, hospital and insurance executives have almost universally shunned President Donald Trump, as well as Medicare for All proponents Sens. Elizabeth Warren (D-Mass.) and Bernie Sanders (I-Vt.) in favor of candidates pushing for a public insurance option. Pharmaceutical executives have stayed out of the fray so far.

    Dr. Robert Grossman, CEO of NYU Langone Health, has donated $5,600 to the campaign of Pete Buttigieg, former mayor of South Bend, Ind., during the 2019-20 election cycle, while Providence CEO Dr. Rod Hochman gave $2,250 to Sen. Amy Klobuchar (D-Minn.). Before taking over as Kaiser Permanente's CEO in December, Gregory Adams gave $2,800 to Joe Biden. Children's Hospital of Philadelphia CEO Madeline Bell also gave the former vice president's campaign $2,800.

    Individuals can give up to $2,800 per candidate per election, or up to $5,600 for the primary and general elections combined. The reported totals only include itemized donations of more than $200.

    Some donations by hospital executives kept money local. Dr. Penny Wheeler, CEO of Minneapolis-based Allina Health, has given $4,500 to Klobuchar. Seattle-based Virginia Mason Health System CEO Dr. Gary Kaplan gave $1,500 to Washington Gov. Jay Inslee before the Democrat's exit from the presidential race.

    The CEOs did not return requests for comment on their contributions.

    Hospital, insurance executives shun Sanders, Warren in favor of moderates

    Insurance executives Daniel Hilferty, CEO of Independence Blue Cross, and Paul Markovich, CEO of Blue Shield California, each gave $2,800 to Biden.

    A moderate Democrat like Biden would likely be the best outcome for the hospital and insurance industries, said Ipsita Smolinski, managing director of the Capitol Street consulting firm, noting that even if Biden campaigns on a public option, he may need to water it down to get it through Congress.

    "He knows that shoring up the Affordable Care Act and bolstering subsidies for insurance poll really well, and that would be a real winner" for the hospital and insurance industries, Smolinski said.

    Universal Health Services CEO Alan Miller was the outlier with a $25,000 donation to the Trump Victory Committee. Joint fundraising committees like this can be created by multiple candidates or political action committees to share the costs of fundraising and split the money. It's a way for donors to write one large check.

    Top executives at several large pharmaceutical manufacturers have not yet given to presidential candidates. Health policy observers said that pharma executives don't have a great option in the presidential race because Trump has made lowering drug prices a priority for his administration and all leading Democratic candidates have endorsed allowing Medicare to negotiate drug prices, a policy the branded-drug industry despises.

    Gary Jacobson, professor emeritus of political science at the University of California at San Diego, said early donations can be a significant help to candidates.

    "Early money for the presidential field is always better than late money, because it allows a candidate to raise more money with it. It can be a better investment because once you give a candidate money, they tend to listen a bit more readily," Johnson said.

    Senate races

    Sen. Susan Collins (R-Maine), who is running a tough re-election race, is an early favorite of hospital and insurance company executives.

    Several hospital chief executives gave similar amounts to Collins' re-election efforts over a seven-day span in early September: Hochman, Advocate Aurora Health CEO Jim Skogsbergh and Atlantic Health System CEO Brian Gragnolati each gave $500, and Yale New Haven Health System CEO Marna Borgstrom gave $250.

    Collins has also been a favorite of the industry's main lobbying group, the American Hospital Association, where Hochman takes over as board chair in 2021. Gragnolati is immediate past chair and currently serves on the board with Borgstrom. Skogsbergh is a former chair. The AHA has contributed $11,000 to Collins' re-election effort, making her the second-largest recipient of AHA contributions in Congress this election cycle, trailing the $15,600 given to House Minority Leader Kevin McCarthy (R-Calif.).

    A Collins campaign spokesman did not respond to a request for comment on the donations.

    Leaders of insurance companies also gave to Collins, though their contributions were spread out over time. Blue Cross and Blue Shield Association CEO Scott Serota has given $2,800, as did Hilferty. Centene Corp. CEO Michael Neidorff gave $2,800 to Collins and $5,600 to a Collins-affiliated PAC so far this election cycle. Anthem CEO Gail Boudreaux gave $1,000 in June 2018.

    Campaign observers aren't united in a theory as to why Collins is an early favorite for hospital and insurance executives, but they generally agree that she will be running a tough, expensive reelection campaign. A Morning Consult poll published in January showed Collins has the highest disapproval rating of any senator at 52%.

    "One of the reasons you get money is that you ask for it," Jacobson said.

    Collins is hospital, insurer CEO favorite

    Mark Brewer, a political science professor at the University of Maine, said Collins' advocacy on healthcare over her Senate tenure may be a factor. Collins cast one of the deciding votes that killed the GOP's repeal-and-replace effort in 2017 and she led a failed push to fund cost-sharing reduction payments and a $30 billion reinsurance pool in 2018. She also chairs the Senate Special Committee on Aging, has supported policies that would lower prescription drug costs and has advocated for research funding in areas such as Alzheimer's and Lyme disease.

    "My guess is that you are not going to find one big thing, but you might find a number of small things over the course of her career that are valuable to these healthcare institutions," Brewer said.

    Pharmaceutical executives have focused their spending so far on building a firewall of conservative Republican senators up for re-election who have generally advanced the industry's interests: Senate Majority Leader Mitch McConnell of Kentucky and Sens. Thom Tillis of North Carolina, John Cornyn of Texas and Cory Gardner of Colorado.

    Bristol-Myers Squibb CEO Dr. Giovanni Caforio, Pfizer CEO Albert Bourla, Eli Lilly CEO David Ricks and Merck CEO Kenneth Frazier have all given to the four senators.

    "Giovanni is focused on partnering with members of Congress on both sides of the aisle to discuss policy reforms that improve the affordability of innovative medicines for patients, while enabling the biopharmaceutical industry to maintain investment in breakthrough science," a Caforio spokesperson said.

    If the president after the 2020 election wants to advance major drug-pricing reform like Medicare price negotiation, a McConnell-led Senate could provide the protection pharma executives will be looking for.

    "These Republican Senate races will be what keeps (Medicare negotiation) from happening," Reeher said.

    Looking to Iowa

    A president who pushes for single-payer healthcare reform, namely either Sanders or Warren, would be a liability for the healthcare industry. Sanders has said he would push for Medicare for All legislation starting his first week in office, while Warren has outlined a longer transition with passage of a full-scale Medicare for All plan in her third year in office.

    In the weeks leading up to the Iowa caucuses on Feb. 3, Sanders has seen a polling surge. He is also polling well in New Hampshire ahead of its primary on Feb. 11.

    Smolinski said if Sanders pulls off a victory in Iowa, there could be some short-term market volatility. However, the road to the Democratic nomination will be a long one and legislation to implement a Medicare for All plan would face significant political obstacles even if Sanders ultimately wins the presidency.

    "I would say don't panic," Smolinski said.

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