Yes, Let's Talk About Backroom Deals

by Jonathan Cohn | February 18, 2010

The most effective Republican arguments about health care reform lately have been about procedure, not policy. Over and over again, Republicans have accused Democrats of making shady backroom deals, of twisting the legislative process, and of trying to foist a secret plan on the country. From the looks of things, the attacks are working.

In December and January, Scott Brown made many of these allegations in his successful run for the U.S. Senate. And today, on Capitol Hill, fear of more such attacks are probably the single biggest reason so many Democrats are nervous about using the budget reconciliation process--another legislative trick, according to the Republicans--to pass a compromise reform bill.

But are the accusations fair? In a republic like ours, representatives will inevitably negotiate in private. And in the course of those negotiations, the representatives will inevitably cut deals that, either at the time or in retrospect, will look pretty unsavory. Franklin Roosevelt made common cause with racist Southern Democrats in order to pass Social Security. Lyndon Johnson accommodated the hospital industry in order to enact Medicare.

Needless to say, neither man negotiated those deals in front of microphones. Or, to put it another way, demanding that Congress hold all negotiations in public--and never make any unpleasant deals--would pretty much mean the end of legislation as we know it.

That doesn’t mean you should be happy, or stay quiet, when you learn about this activity. I’ve repeatedly criticized the deals Democrats have made and plan to keep doing so.

But it does mean you should keep things in perspective. Insofar as you’re deciding whether health care reform is worth passing, the question is not whether Democrats trying to pass health care reform held some private discussions, cut some deals, and used the legislative tools available to them. The question is whether the Democrats’ deals were particularly egregious--and whether their legislative tactics were fundamentally undemocratic or even illegal.

As far as I can tell, they weren’t. And the best proof comes by comparing another recent episode of legislating--one in which the majority party in power routinely resorted to underhanded tactics in order to pass a bill. If you follow health care policy, then you know what episode I’m talking about: It’s the enactment of the Medicare drug benefit in late 2003. Everything that the Republicans accuse Democrats of doing now, the Republicans actually did then. And they did it brazen, shameless fashion.

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You’re upset that the Democrats cut a deal with the drug industry? You should be: They gave the industry a more favorable arrangement than it deserved. But the Democrats also extracted some concessions. The industry agreed to accept greater discounts on Medicaid drugs and--more important--signed off on comparative effectiveness research.

Comparative effectiveness is the study of which medications work best. Given the amount of money Americans (and their insurers) spend on medications widely believed to offer little, if any, clinical benefit, such research is bound to curb industry revenues in the future. And while the Obama Administration promised not to seek further concessions for now, it explicitly reserved the right to pursue more aggressive changes later on.

The drug industry arguably got a much better deal out of the Medicare drug benefit, known today as Medicare Part D. The Republicans (and, yes, some Democrats) working on Part D shelved every major provision that might have threatened the industry--including a proposal, from then-Senator Hillary Clinton, to invest in comparative effectiveness research. The result was a bill that really was just a huge giveaway, since it guaranteed that millions of seniors would start buying more drugs. Even some Republicans were aghast: One told 60 Minutes that "the pharmaceutical lobbyists wrote the bill."

And it wasn’t just the drug industry that fared so well. The insurance industry did even better. Not only did the insurers win the right to administer the new benefit; the Republicans graciously agreed to give them huge subsidies that, in the years since, numerous experts and government authorities have ruled unjustified.

The Democrats’ health care reform bill, by contrast, would eliminate those subsidies in order to help pay for coverage expansions. And as you go down the list of special interests that had a role in shaping this bill, you'll see that most of them gave up something. Hospitals signed off on reimbursement changes that, under the projections, will reduce their revenues by between $100 and $200 billion over ten years. Doctors signed off on the ramping up of "pay-for-performance," which will reward or penalize them based on their reporting of data (and, eventually, what the data shows). Labor agreed to a tax on expensive health benefits.

In each case, the special interest won concessions, often in the form of delayed implementation. But they did agree to live with some changes they didn't like. It was give-and-take, rather than just take. 

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Fine, fine--but what about all the ways the Democrats are manipulating the legislative process? Yes, let’s talk about those manipulations. There haven’t been any.

The Democrats put health care reform through five separate sets of committee hearings, which stretched out for weeks. At every step of the process, they posted legislation online so that members, their staffs, and other interested parties had time to read it before votes. They made arrangements to consider health care reform through the reconciliation process if necessary--an option Republicans have used repeatedly in the past, one that would merely allow a majority of senators to pass a bill. But Democrats also decided to pursue legislation through the regular order first.

If you want to see true manipulation of the legislative process, you have to go back to late 2003--and the push to get the Medicare drug bill through the House of Representatives. The Republicans famously waited until the last minute to release a bill and, as I understand it, did not bother to post a version online. Democratic staffers told me recently they had to scan the bill, by hand, in order to send it around. (Note: I couldn't find any accounts of the articles about this episode, but it's consistent with what I remember hearing at the time.) When it came time to vote, the Republicans discovered they didn’t have enough support to pass the bill. Their solution? Hold the voting open past the usual fifteen minutes, until they could persuade enough members to switch their votes. An hour went by, then another, and then another.

The New York Times would later describe what transpired as "an extraordinary bout of Republican arm-twisting." At one point, then House Majority Leader Tom DeLay approached Nick Smith, a Republican congressman from Michigan, and offered to endorse his son’s congressional candidacy if Smith would vote “aye.” Smith would later allege that he was offered more than endorsement. Specifically, he said that somebody offered to dump $100,000 into his son’s campaign funds--a promise that might have constituted bribery. Smith never said whether it was DeLay or somebody else; indeed, he eventually retracted the accusation altogether. But many observers suspect the bribe was offered and, in any event, a House ethics panel eventually reprimanded DeLay simply for offering the endorsement. (Slate’s Timothy Noah was all over the story, if you want to read the clips.)

The architects of the Medicare drug bill also seem to have engaged in some intimidation. In the summer before the vote, at a time when Republicans were promising their bill would cost only $400 billion, Richard Foster, the official actuary for Medicare, made his own projection and concluded it would cost much more, between $500 and $600 billion. The difference might have been enough to alienate some fiscal conservatives and, given the tight margins, enough to kill the bill altogether.

The projection had been made by the request of members of Congress. But Tom Scully, who was then head of Medicare and Medicaid services, ordered Foster not to share that information. Foster would later testify that Scully threatened to fire him if he disobeyed; a Democratic congressional staffer said that Scully told her he’d “fire [Foster] so fast his head will spin” if Foster reported the estimates. Scully denied saying such things, but an internal government investigation determined that Scully had indeed made the threat. (It also determined that the threat was not illegal, since, by law, Scully had the right to control the flow of information to Congress.)

If Foster’s name sounds familiar, by the way, that’s because he’s still on the job--and has been making cost estimates of the Democrats’ reform plans. His estimates haven’t always produced the numbers Obama and his allies wanted. He determined, for example, that the House reform bill would actually raise overall spending on health care, albeit slightly. But Obama and his allies didn’t try to silence him. Instead, they’ve responded with their own arguments--while pressing harder for the Senate bill, which Foster found would spend less money.

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To be clear, none of this is to say the Democrats have acted like saints this year or that the deals they made to pass health care reform aren't, on their own terms, objectionable. But lawmakers have done far worse things in the name of passing a bill. And nobody knows that better than the people trying to block this one.

Follow Jonathan Cohn on Twitter: @jcohntnr

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