Analysis — Insurers’ ‘friends’ will influence public option debate in Conn.

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As I noted Friday, health insurers in Connecticut will call on some of their longtime allies to help turn the public and state lawmakers against the idea of creating a state-run public option.

Legislators in Hartford are taking up the idea of doing just that today, as three legislative committees hold a joint public hearing on SustiNet, which they actually created in theory but didn’t fund in 2009. If implemented, SustiNet would provide a health care benefits package starting in 2014 for a prospective pool of recipients including state workers, Medicaid recipients, individuals and small businesses.

A similar public option was proposed in last year’s federal health care reform debate, but it didn’t survive — and that was no accident. In Washington, lobbyists for insurance companies wanted to kill the public option, because they knew it would be a formidable competitor — offering greater value to customers because it would not have to divert a big chunk of premium revenue to meet Wall Street’s profit expectations or to pay executives millions.

Polls showed that the public option enjoyed substantial public support — so much so that it was included in the House version passed in the fall of 2009. Alarmed, insurance lobbyists went to work in the Senate and hit paydirt when they convinced Sen. Joe Lieberman of Connecticut to come out against it.

Lieberman had previously expressed support for the public option, but also had to manage relationships with several rich insurance company executives who are among his most powerful constituents. Lieberman became such a steadfast shill for the industry that Harry Reid had to strip the public option out of the bill. The House ultimately had no choice but to follow the Senate’s lead, which is why the bill that became law last March did not include what President Obama had said was necessary “to keep insurance companies honest” and to ensure that Americans had at least one option for affordable coverage.

Meanwhile, though, state legislators in Connecticut passed a bill to create the framework for SustiNet. In an effort to quash funding that SustiNet will need to get off the ground this year, the insurance industry will be calling in favors from its friends in the business world. That’s because industry executives know that the public would be highly skeptical of a big PR campaign overtly led by insurers.

As I describe in Deadly Spin, in times like these, special interests turn to allies, preferably allies with better reputations, to lead efforts to manipulate public opinion. Two such allies fit the bill for insurance firms: the U.S. Chamber of Commerce and the National Federation of Independent Business (NFIB).

As Bloomberg reported last November, insurers secretly funneled $86.2 million of their policyholders’ money to the Chamber in 2009 to help finance a deception-based campaign to influence the reform debate. That campaign played an important role in convincing many Americans that a public option would lead to a “government takeover of health care.”

At the state level, the insurers will find that the NFIB, which bills itself as the voice of small business, is potentially more helpful. In fact, the NFIB is already on the job in Connecticut.

The Hartford Courant last week quoted an NFIB official as saying that “SustiNet’s faults go beyond the problem of duplicating many of the features of federal health care reform.”

Andrew Markowski, the NFIB’s Connecticut director, told the Courant that, “What everyone is talking about is the state’s fiscal situation and the need to downsize government. SustiNet is going to create a whole new quasi-government authority at exactly the time we’re trying to move away from that. I have not talked to a single business owner who thinks SustiNet is a good idea.”

My belief is that there’s a good chance,Markowski can make that claim by carefully avoiding small business owners who are not dues-paying members of the NFIB. The federation has a long history of being tight with Republican candidates and lawmakers and the health insurance industry. I know this first-hand from working closely with the NFIB in previous attempts to defeat reform initiatives insurers didn’t like.

One of the NFIB’s tactics is to conduct polls of its membership — a membership that declined from 600,000 members in the late 1990s to fewer than 350,000 in 2009 — and suggest that the opinions expressed by its members are representative of all small business owners.

The reality is quite different: the NFIB is one of the nation’s most conservative, anti-government lobbying organizations, and attracts like-minded business people as members. According to CQ MoneyLine, the NFIB’s political action committee directed 93.7 percent of its Congressional campaign contributions to Republicans in the 2010 election cycle.

As I noted Friday, the insurers and their allies will conduct an extensive fear-mongering campaign to persuade Connecticut residents and lawmakers that the public option would lead to a massive layoff of insurance company workers in the state. It is a common tactic to put either higher taxes or job losses — or both — at the center of such campaigns. The NFIB is especially adept at waging such efforts.

As U.S. News & World Report noted in a 1994 piece about Bill and Hillary Clinton’s ill-fated attempt to reform the health care system, the NFIB played a lead role in killing the Clinton plan by scaring people into believing they could lose their jobs if it became law. The magazine reported that the NFIB used a study it conducted to argue that “Hillarycare” would kill up to 1.5 million jobs.

About those NFIB studies. They are not necessarily representative of all small business owners in the country, although the media dutifully report them as if they were. In reality, as the organization acknowledges, the surveys typically are of its own dues-paying members.

For example, in a May 22, 2007, news release about one of its surveys, the NFIB noted that it only surveyed its members to reach the conclusion that small business owners were more concerned about the cost of health care than about expanding coverage. The federation said that “making consumers more aware of health care and health insurance costs will encourage them to become better-health care consumers.”

That language is almost verbatim from one of the talking points I used when I was an insurance industry PR executive.

The reality is that the public option enjoyed significant support from the small business community during the recent national debate on reform. At least two small business groups, the Small Business Majority and the Main Street Alliance, were vocal supporters of reform in general and the public option in particular.

During my time in the industry, I had first-hand knowledge of how insurers use the NFIB as a front for its messaging. During the late 1990s and early 2000’s, I was a participant at numerous strategy sessions in a conference room at the Porter Novelli public relations firm in Washington, where plans were being developed to turn public attitudes against the Patient’s Bill of Rights. That bill of rights at the time enjoyed wide bipartisan support in Congress, but the industry opposed it, and especially hated a provision that expanded patients’ right to sue insurers if they had been wrongfully denied coverage for doctor-ordered care.

The industry hired Porter Novelli to create a front group it named the Health Benefits Coalition, and to lead a fear-mongering campaign in an attempt to make Americans fear trial lawyers and “frivolous lawsuits” more than denials of coverage for potentially life-saving procedures. The campaign was so successful that the Patient’s Bill of Rights, co-sponsored in the Senate by John McCain and Ted Kennedy, never made it to the president’s desk. Dan Danner, the current NFIB CEO, was the group’s vice president of public affairs at the time, and he served as the coalition’s lead spokesman.

Connecticut residents and lawmakers can expect the insurers and it’s allies — the NFIB in particular — to conduct a similar well-financed and extensive campaign to scare the bejesus out of everybody in the Nutmeg state. And if it succeeds like previous efforts, people won’t even know the insurance industry is pulling the strings -- or that they themselves will be financing the campaign with the health insurance premiums they pay every month.

News analysts Wendell Potter, a former insurance company executive, is the author of Deadly Spin: An Insurance Company Insider Speaks Out on How Corporate PR is Killing Health Care and Deceiving Americans.

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