The Economic Calculus of the Health Care Reform Fight

Last updated on: August 10, 2009 at 3:59 pm by Timothy Dalrymple

The Economic Calculus of the Health Care Reform Fight 2009-08-10T15:59:43-04:00 Timothy Dalrymple

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Verum Serum, which has been driving some of the conversation on health care reform with its videos, has some interesting information on who is funding and organizing support for health care reform. To summarize (see more here), a variety of liberal interest groups are cooperating to pay people $4000-$6000 to canvass and agitate in favor of health care reform. We also know that unions with thorny legal histories, like the SEIU, are showing up and doing violence to the opposition. When you send a bunch of union toughs to counter and intimidate the protesters, what do you expect is going to happen? One wonders whether the violence wasn’t desired, as a way of frightening opponents away from the town hall meetings–except the union thugs shouldn’t have picked an African-American, much less hurled racial epithets at him.)

Where have these interest groups gotten their money in order to press for reform? One answer: George Soros (who committed $5M for the fight) and others like him. But this is nothing compared to what “big Pharma” has devoted: $150M. Why would Big Pharma do such a thing–because of the Faustian bargain the Obama administration struck with them. Big pharmaceutical companies pledges to reduce the cost of their medications by $80B as long as the Obama administration would not use the leverage of government-provided health care in order to force them to lower their costs even more. Some estimates show that Big Pharma saved themselves over $100B by this deal, and many on the left feel that the Obama administration did not push hard enough. However, in return, Big Pharma agreed to pump $150B (more than the McCain campaign spent in the entire general election campaign) for pro-Obamacare advertisements.

This has gone from ugly to uglier, and it’s ugly not only for the fisticuffs at the town hall meetings but also for the back-room deals. Robert Reich condemns the administration deal here. He calls it “extortion” on the part of the industry, since the industry gave its support in return for changes to the legislation, but the industry simply made a wise business decision. The Obama administration also made a wise business decision–but politics is not supposed to be a business. You are not supposed to sell changes to legislation in return for millions in advertising in support of your priorities. Reich can’t quite bring himself to condemn the Obama administration, but the condemnation is implicit. As he writes:

How soon until big industries and their Washington lobbyists have become so politically powerful that secret White House-industry deals like this are prerequisites to any important legislation? When will it become standard practice that such deals come with hundreds of millions of dollars of industry-sponsored TV advertising designed to persuade the public that the legislation is in the public’s interest? (Any Democrats and progressives who might be reading this should ask themselves how they’ll feel when a Republican White House cuts such deals to advance its own legislative priorities.)

Reich is right. And this is a move of questionable legality. Anyone who thought Obama and his circle were too pure or idealistic for deals of this sort should disabuse themselves of that notion. Just as we don’t need companies or industries spending tens or hundreds of millions of dollars in advertising on behalf of their favored candidates, we don’t need them spending tens or hundreds of millions on behalf of their favored legislation.

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