By Drew Armstrong
Bloomberg News
November 17, 2010

Health insurers last year gave the U.S. Chamber of Commerce $86.2 million that was used to oppose the health-care overhaul law, according to tax records and people familiar with the donation.

The insurance lobby, whose members include Minnetonka, Minnesota-based UnitedHealth Group Inc. and Cigna Corp. of Philadelphia, gave the money to the Chamber in 2009 as Democrats increased criticism of the industry, according to a person who requested anonymity because laws don’t require identifying funding sources. The Chamber got the money from the America’s Health Insurance Plans as the industry urged Congress to drop a plan to create a competing government-run insurance plan.

“Clearly the secrecy was important to industry,” Sheila Krumholz, executive director of the Washington-based Center for Responsive Politics, said in an interview. The group tracks money in politics and isn’t affiliated with a political party. “Eighty-six million dollars is an astonishing sum,” she said.

The spending on the Chamber exceeded the insurer group’s entire budget from a year earlier and accounted for 40 percent of the Chamber’s $214.6 million in 2009 expenditures. The spending reflects the insurers’ attempts to influence the bill, which the Congressional Budget Officeestimates will provide coverage to 32 million previously uninsured Americans, after Democrats in Congress and the White House put more focus on regulation of the insurance industry.

U.S. Disclosure Law

The $86.2 million paid for advertisements, polling and grass roots events to drum up opposition to the bill, said Tom Collamore, a Chamber of Commerce spokesman. The Chamber said in a statement it used the funds to “advance a market-based health-care system and advocate for fundamental reform that would improve access to quality care while lowering costs.”

The organizations disclosed the funding yesterday in annual tax records required under U.S. law. The Chamber’s records show it received $86.2 million from a single group, which a second person briefed on the transaction by those involved identified as Washington-based America’s Health group.

Insurers gave the $86.2 million to the Chamber in August 2009, funded by health insurers, said the first person. Early that month, America’s Health Chief Executive Officer Karen Ignagni said Democrats were trying to “demonize” insurers.

Only Amounts Required

Tax forms require organizations to list only the amounts granted or received from other groups, not the organizations’ identities. Health insurers expressed opposition to parts of the health-care legislation while they conferred with congressional Democrats writing the bill and the White House. At the same time, the Chamber of Commerce was advertising its opposition.

The Chamber spent $45.5 million on a campaign against the bill in 2009, according to TNS Media Intelligence/Campaign Media Analysis Group, an Arlington, Virginia-based company that tracks political advertising.

The Chamber began in March 2010, weeks before the bill became law, another $10 million effort focused on pressuring lawmakers to vote against the bill. Blair Latoff, a spokeswoman for the Chamber, wouldn’t say how much of the money was spent in 2009 and how much, if any, was used in 2010.

“With so much at stake we, like other major stakeholders, invested in advocacy,” Robert Zirkelbach, a spokesman for the insurers, said in an e-mail. “We supported a number of leading health-care advocacy organizations and coalitions that shared our views.” He declined to answer other questions on the money.

‘Breathtaking’ Amount

The amount is “breathtaking,” said Trevor Potter, the head of the political activity practice at Washington law firm Caplin & Drysdale.

The $86.2 million dwarfs other large donations given to the Chamber, such as a $15.4 million 2008 transaction whose contributor isn’t identified, as well an anonymous $4.5 million contribution in 2009, according to records.

By funneling the money through the Chamber, insurers were able to remain at the table negotiating with Democrats while still getting the bill criticized. “It enables you to have it both ways,” Potter said in a phone interview.

“They clearly thought the Chamber would be a more credible source of information and advertising on health-care reform, and it would appear less self-serving if a broader business group made arguments against it than if the insurers did it,” said Potter, a former chairman of the Federal Election Commission.

Critics Pounce

The Center for Responsive Politics’ Klein said that the public would have been “better served” by insurers disclosing the money when they gave it. “Perhaps this key debate would have progressed differently if the true source of the chamber’s spending had been known at the time,” Klein said.

The White House criticized the insurer money in a blog post. Insurers were “desperate to preserve their ability to discriminate against you if you had a preexisting condition, drop your care when you got sick and limit the amount of care you could receive in a year or a lifetime,” wrote Stephanie Cutter, assistant to the president for special projects.

Representative Pete Stark, a California Democrat who helped write the health-care law in the House, criticized the insurer spending in a letter to fellow members of Congress. “That $86 million in attack ads could have been better spent to reduce insurance premiums,” he wrote.

U.S. ChamberWatch, a Washington group that has been critical of the Chamber of Commerce, called the $86.2 million transaction “breathtakingly” large. “The U.S. Chamber has given up the right to call themselves the voice of American business; they are the voice of the insurance industry,” Christy Setzer, the group’s spokeswoman, said in a statement.

Insurance company members of America’s Health that didn’t respond to questions about whether they gave money to the 2009 effort were: Jim Turner, a spokesman for Louisville, Kentucky- based Humana Inc.; Tyler Mason, a spokesman for UnitedHealth Group; Mohit Ghose, a spokesman for Hartford, Connecticut-based Aetna. Kristin Binns, a spokeswoman for Indianapolis-based WellPoint Inc., and Cigna spokeswoman Gloria Barone declined to comment.