Health care industry injects big spending in Statehouse lobbying

[I]n 2015, lawmakers were in a fight with the health care industry over whether to disclose the price of various hospital procedures.

Senators argued for strong transparency measures so patients would know how much they were paying.

The industry argued that price transparency would be detrimental for local hospitals because they wouldn’t get as much business.

“That’s an example of the tension we face,” Sen. Tim Ashe, D-Chittenden, said in an interview late last year. “Is the point to serve the patient or for the patient to serve the hospitals? Sometimes I feel that the industry forgets its role is to serve the patient and not the other way round.”

As the health care sector’s share of the state economy has grown, the amount spent on lobbying at the Statehouse in Vermont since 2011 has also grown. Hospitals, providers, insurers and pharmaceutical companies have spent between $1.1 million and $1.8 million a year over the past eight years, or about $12.9 million total, according to data gathered by VTDigger.

Many lobbyists, lawmakers and advocates say industry representatives play an important role in informing Vermont policymakers, who do not employ personal staff, as they consider complex health care policies. Others are wary of the influence of the health care lobby.

Lobbying expenditures in the past two bienniums have outstripped monies spent on political campaigns.

In the 2015-2016 biennium, $20.5 million was spent on lobbyists in the Statehouse. About $18.3 million was spent on lobbying in the 2017-2018 biennium, not including information from the final report, which is due Jan. 15.

Campaign spending in 2016 was more than $13 million; in 2018, more than $5 million was expended on political campaigns.

According to data collected by the secretary of state, there are 618 registered lobbyists in Vermont and 28 firms.

The number of lobbyists in dwarfs the number of elected members of the Vermont Legislature.

In the 2017-2018 biennium, there were three times as many registered lobbyists as lawmakers, and the amount spent on lobbying was the equivalent of more than $100,000 for each lawmaker–Vermont’s [median house-hold income] is $57,000.
https://www.census.gov/quickfacts/vt

MMR was the top earning firm in Vermont, taking in $1.5 million in 2018 and $2.8 million in revenue during the biennium. Necrason Group grossed $2.2 million, Leonine Public Affairs made $1.6 million, Downs Rachlin Martin (DRM) was just behind with $1.5 million, and Morris and DeMag brought in $830,000.

These firms represent a wide array of clients from different sectors, including energy, telecommunications, pharmaceuticals and transportation.

When broken down by business sector, health care — not including pharmaceuticals — leads the way, spending $3.5 million in the 2017-2018 biennium, and $1.9 million in the second year of the biennium alone. Meanwhile, between 2015 and 2018, $1.9 million was spent on lobbying for pharmaceutical companies and $7 million was spent on health care lobbyists, according to data gathered by VTDigger.

In comparison, between 2011 and 2018, the gun lobby spent a combined $676,000.

In this past biennium, the top business sectors for spending on lobbying after health care were: energy, $1.8 million; telecommunications, $1.2 million; environment, $1 million; and pharmaceuticals, $950,000.

The health care industry — including hospitals and insurers — employs private lobbying firms, but also has associations like the Vermont Medical Society and the Vermont Association of Hospitals and Health Systems (VAHHS) that lobby on its behalf. VAHHS spent $346,000 on representing its health care clients in the biennium and has spent $1.8 million in the last six years.

From 2011 to 2014, the amount of money spent annually on health care lobbying was about $1.5 million, but this number spiked up to $1.8 million in 2015, in the wake of the controversial single-payer health care plan that had been debated and abandoned at the end of 2014 by former Democratic Gov. Peter Shumlin.

Vermont adopted single-payer legislation in 2011, which required Shumlin to submit a detailed financial plan by 2013, but the plan went through myriad issues including strong opposition from the industry and dissatisfaction with the Affordable Care Act.

In the fight over single-payer, a system in which the government pays for health care bills instead of private insurance companies, Shumlin received pushback from lobbyists working on behalf of insurers and dealt with public discontent with the dysfunctional roll out of Vermont Health Connect, which insures people who receive commercial health insurance and Medicaid through the Affordable Care Act. Shumlin also faced the challenge of creating a system for the state to pay for the health care plan before he eventually admitted defeat.

Though many health care lobbyists were unsure what specifically caused the spike in spending in 2015, most agreed it was in some way the result of the health care reform Shumlin has been pushing and the health insurers’ opposition to the legislation.

Currently almost all of the major lobbying firms in Vermont have health care players as clients. One lobbyist said firms look to get big health care clients “because there is more power, more clout, with those clients” and it gives the firm a larger profile in the Statehouse.

When it comes to clients, the Montpelier-based MMR leads the way with 15 health care-related clients, including the Vermont Association of Hospitals and Health Systems, and five pharmaceutical companies, including Johnson and Johnson. Necrason Group follows with 11 health care clients, including UVM Health Connect.

Leonine Public Affairs boasts MVP Health Care–one of the largest insurers in the state–and six other health care clients. Downs Rachlin Martin carries eight health care clients, including Dartmouth-Hitchcock Medical Center, and Morris and DeMag has four.

“To be frank, a lot of the reasons lobbyists want bigger clients is because there is more power, more clout, with those clients. It’s about perception,” a lobbyist said. The lobbyist, who works at a top Vermont firm, spoke on the condition of anonymity.

The lobbyist, who does not work directly on health care issues, said the health care lobby is influential, but that power is derived from health care being the biggest economic driver in Vermont and lawmakers being responsive to that pressure.

The health care sector is big business in Vermont, making up 20 percent of the state’s gross domestic product, and economic forecasts projects the share will continue to rise.

The Green Mountain Care Board — the quasi-judicial health care regulatory agency — estimated in a report released in May that residents spent $6 billion on health care in 2016. A Rand Corporation report estimated that in 2017 the total spending on health care for Vermont residents was $6.8 billion.

“The power of a lobbyist is dependent on our clients,” the lobbyist said. “If I go in working for UVM Medical Center, one of the largest, if not the largest, employer in the state, that’s a ton of power.”

Ashe, the Senate president pro tem, who has been a staunch critic of lobbyists’ influence in the Statehouse, said the health care experts are basically “government partners to a great extent.”

Lawmakers have no staff to help them do research. Ashe said lobbyists are so intertwined in the legislative system that they create a “complete lobbyist umbrella over health care” issues in the state.

“For the in-state medical providers I don’t think there is anyone out there with bad intentions, but powerful institutions have to be watched closely and the harder it is to bend it to the public’s interest,” Ashe said.

Vermont Public Interest Research Group director Paul Burns, who has worked on health care issues in the past but not recently, said there’s no question the health care lobby is among “the more powerful” influencers in the Statehouse, but that the power is derived from the industry affecting “most everyone’s life in the state.”

“I think they are powerful but there are different kinds of interests there. It’s not all Blue Cross and Blue Shield or MVP Health Care,” Burns said, “You have powerful characters that aren’t always aligned with the same interests. And not one of them is all powerful.”

Former lawmakers who have now gone on to roles on the Green Mountain Care Board and Vermont Legal Aid, went a step further and said the health care sector has the most powerful lobby in the Statehouse and that if the president of a hospital in a lawmaker’s district tells them legislation is bad for business, that is a pretty compelling argument for a lawmaker that may be new to the Statehouse.

Kevin Mullin, a former Rutland senator and currently the chair of the Green Mountain Care Board, said it’s “simply a fact” that the health care lobby carries the most influence in the Statehouse.

“It’s probably the most powerful lobbying force in the building,” Mullin said, “When a chief executive officer is calling from a hospital in your district, that’s very powerful.”

But Jeff Tieman, the president of VAHHS, said his organization sees lobbying as a way to inform lawmakers and the public about what policy will be beneficial for the hospitals and therefore patients in Vermont.

Sen. Chris Pearson, P/D-Burlington, said it’s not surprising the health care sector is spending the most on lobbying because “they have a lot of interests to protect” and it is a “powerful industry and they want to protect themselves so they stand up for themselves.”

Tieman said his organization’s first goal is to “advocate for health care providers in a state where health policy is front and center.” He stressed that it takes a lot time and resources to work with lawmakers and health providers on complex issues and to “transform the health care system” in the state.

“I think the investment in advocacy reflects the interest in the conversation and that it is as informed as humanly possible,” Tieman said. “I would say that what we get is a better, more informed, health care system.”

Others say the health care lobby’s goals are more self serving.

“I have seen them try to slow the push for transparency, to try to limit our ability to regulate, to discourage us from adding conditions that would be covered by insurance,” Pearson said. “They are obviously interested in basically thwarting our attempts at cost control. But I don’t knock them for that.”

Pearson went on to say that hospitals and health insurance providers are not just “giving their money away because they want to support lobbyists” but are making sure the industry’s best interests are being looked after.

“These guys want to protect their portion of the pie. They hire expensive advocates in the building to do that,” Pearson said.

Tieman said he disagreed with that characterization.

“I think the customer is being looked after in so many ways in this system. To make sure that customers and communities are done right by hospitals,” Tieman said, “I think that makes us special and gives consumers more of a voice than they may have elsewhere.”

Lobbyists, lawmakers and medical association spokespersons all agreed that the breadth and importance of the health care industry is a reason why this sector leads the pack when it comes to spending on lobbying. Also, the industry employs tens of thousands of people and its representatives should be in the room when laws are being drafted that impact the sector.

Devon Green, a lobbyist for VAHHS who previously served as special counsel on health care reform for the state of Vermont, said the amount of money spent on lobbying is important both for the economy and for Vermonters themselves.

“Providers want to provide Vermonters with the best health care they can. So it’s important to work in real time to make sure that Vermonters receive the quality of care that they need,” Green said, explaining the spending on health care lobbying.

Green said she does not believe a hospital has any more sway with a lawmaker than a constituent does.

“It’s a citizen legislature and they are all interacting with the citizenry,” Green said. “So I think that any call to a legislator that is compelling, whether it be one person with a big issue or a hospital with an issue, it gets listened to and we have to give the Legislature a lot of credit.”

But Pearson said the customer is not always being looked out for and that insurance payers are getting “short-changed” by prices while the health care sector continues to lobby for less regulation.

“I think our health care system is extremely bloated and it is concerning,” Pearson said. “I think that is part of what the industry is paying to protect.”

Not all legislators share Pearson’s view of the health care lobby.

Retired Sen. Claire Ayer, D-Addison, a former nurse and chair of the Senate Health and Welfare Committee, said she would not call the health care sector the most powerful lobbying force in the Statehouse. In her 16 years in the Statehouse, Ayer said the amount of money spent on lobbying on health care was a result of the effort in Vermont to address health care and to get “good care at a reasonable price” for patients.

Lobbyists and medical associations say there is no undue influence on lawmakers — no matter the amount of money that is being spent on lobbying for certain interests.

Laura Pelosi, the health care lobbyist for the firm MMR, said the lawmakers look to lobbyists to provide them with information because they do not have staff, but she said that lawmakers do not solely rely on the lobbyists and also draw on a variety of other sources when they are crafting legislation.

Before Pelosi joined MMR, she was the executive director at the Vermont Healthcare Association, and has a history in health care policy. When she came to MMR, she continued work on behalf of VHA, VAAHS, and the Bayada Home Healthcare, a hospice group.

Pelosi said there is a strong health care presence in the Statehouse because health care is constantly being discussed and the agenda is being set by the lawmakers, and so she does not feel the money spent on lobbying creates a corrupting force.

Every session there are numerous health care, health insurance, or pharmaceutical related bills that get introduced in the Statehouse, Pelosi said.

“It’s the legislators who set those issues. There are a lot of health care issues and a lot of health care bills and they take a lot of time and a lot of attention,” Pelosi said. “So it wouldn’t surprise me that lawmakers have a fair bit of interaction with us.”

But some institutions have more influence and bigger budgets than others.

UVM Medical Center has three in-house lobbyists, Necrason Group, and VAHHS all lobbying on its behalf. Advocates question whether that level of lobbying is excessive.

Mike Fisher, a former representative from Lincoln and currently the chief health care advocate for Vermont Legal Aid, said that insurers and providers spend large amounts of money on lobbying because it is effective, and that the lobbyists, without a doubt, have an “influence” on how bills get drafted.

“There is not a doubt that there is a very large presence of lobbyists, people who are lobbying for health care entities who are obviously representing their clients interests,” Fisher said. “It does go to how the Vermont Legislature is set up. There is a staff, but it’s minimalist staff. So they need to depend on people from the industry.”

Fisher did say that he has often worked with with the health care lobby and that the “interests of the health care industry often aligns with public health and Vermont consumers.”

“But at the end of the day it always supports the organization, or the industry, and not always the person paying the bill,” Fisher said.

Lucy Garand, the health care lobbyist for Downs Rachlin Martin, said her job is to make sure lawmakers understand the industry needs as best they can, and said that the importance of the industry to Vermont’s economy necessitates it to be involved in the lawmaking process.

“Lobbyists do play an important role,” Garand said. “Everybody deserves representation and this is one way to go about it.”

Garand also said that lawmakers are usually very accommodating to her health care clients, but that they aren’t afraid to say they don’t support what her client is suggesting.

“If I go in with one of my pharmaceutical clients, they aren’t afraid to say we don’t support this,” Garand said. “There is an open dialogue and I think that is unique to Vermont. And it is always respectful.”

Ayer said it is not uncommon for big pharmaceutical companies to sponsor patient support groups in Vermont. The pharmaceutical company will usually give funds to the patient or disease groups, and then push them to lobby on subtle policy proposals that might not seem obviously connected to the pharmaceutical company.

“Most of the foundations for large groups for a disease have funding from pharmaceutical companies that treat that disease,” Ayer said. “It’s common in all aspects and all areas. In natural resources and farming — it’s not exclusive to health care.”

While Ayer said this type of covert lobbying is common across the country in different states, she said in Vermont she wouldn’t consider it the rule but she wouldn’t say it is rare either.

“I think it’s important that legislators know that and are aware of that,” Ayer said.

Pearson also said he had dealt with this type of lobbying.

“Yes, I’ve heard of it. It concerns me for sure,” Pearson said. “This is part of our larger problem of dark money in politics.”

Pearson said another concern is that industry groups that meet with lawmakers are not mandated to disclose who their members are. He is concerned about that total “lack of transparency.”

“That is a strange dynamic,” Pearson said. “To have people around the Legislature and it’s not clear who they represent.”

CORRECTION: The total amounts for lobbyist expenditures were overstated when this article was first published on the afternoon of Jan. 6. The mistake was corrected at 6:30 p.m. Jan. 6.