How Much Big Insurance Paid a Small-Business Group to Fight a Premium Tax

By Chris Frates

Updated: May 14, 2013 | 10:04 a.m.
May 13, 2013 | 9:30 p.m.

The nation’s leading health insurance industry group gave $850,000 to a top small-business trade association as part of a campaign to repeal a key provision of President Obama’s health care law, National Journal Daily has learned.

America’s Health Insurance Plans cut the six-figure check to the National Federation of Independent Business as part of a partnership aimed at blocking a tax on health care premiums that goes into effect next year and will cost insurers roughly $100 billion over the next decade.

The back-channel spending shows how insurers were able to fund a key—and much more politically popular—ally in their fight against the premium tax. After all, helping small businesses is a political no-brainer while aiding big insurers is a political nonstarter.

NFIB officials say they are fighting the tax because it will disproportionately affect small businesses whose owners and employees will end up footing the bill. They expect insurance companies will simply pass along the cost of the new taxes to their customers, which, according to one congressional estimate, could cost a family as much as $400 in 2016. Meanwhile, big corporations that self-fund their insurance plans are exempt from the tax.

The look behind the curtain is sure to fuel the already-intense partisan warfare over the Affordable Care Act. Republicans have vowed to run against the law in 2014 and are almost sure to point to provisions like the premium tax as reasons why the law should be repealed and its supporters replaced. Democrats, meanwhile, are likely to point to the insurance industry’s shadowy spending as more proof of why reform is needed.

The $850,000 behind-the-scenes transfer was difficult to track because the law does not require groups to publicly disclose where they are sending the money or who they are getting it from. AHIP’s 2011 IRS forms show an $850,000 advocacy expense. The group explained in the filing that the expense was for health care reform advocacy that included “grassroots outreach, education, and mobilization; print, online, and broadcast advertising; and coalition-building efforts.” The group also noted it “did not control or direct any of these activities.”

NFIB listed a contribution of $850,000 on its 2011 tax forms but did not disclose the money’s origin; NJ Daily has confirmed that the transfer was from AHIP to NFIB for its efforts to defeat the premium tax.

AHIP has a history of funding like-minded groups without disclosing its involvement. The organization poured more than $100 million into the U.S. Chamber of Commerce’s efforts to defeat “Obamacare,” which was enacted three years ago. The back-channel spending allowed insurers to publicly stake out a pro-reform position while privately funding the leading antireform lobbying group in Washington. The chamber spent tens of millions of dollars bankrolling efforts to kill health care reform.

Officials from AHIP and NFIB declined to discuss the $850,000 disclosed in their tax forms.

“But we have a long-standing partnership with the small-business community to raise awareness of the harmful effects of the health insurance tax,” AHIP spokesman Robert Zirkelbach said.

And NFIB lobbyist Amanda Austin said: “We feel very comfortable in engaging AHIP, particularly on this issue.... We may continue to partner on this and even broaden that partnership down the road.”

Indeed, in August 2011 the two groups announced their joint efforts “to get out the facts about the impact the premium tax will have on the cost of coverage and to build bipartisan support to prevent it from going into effect in 2014. The two organizations will commission research, educate policymakers, and raise awareness through new media,” according to an AHIP announcement.

Zirkelbach said the groups have been using grassroots and digital efforts, as well as outreach to reporters, to build support for repeal. Austin added that small businesses and insurers have successfully pushed state lawmakers to pass resolutions opposing the tax and have lobbied against it at the state and federal levels. Austin said that insurers have not done any paid media.

This article appears in the May 14, 2013, edition of National Journal Daily as Big Insurance Pays Small-Business Group to Fight Tax.

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