ALEC: The Industry-Sponsored Group Behind State Efforts to Sabotage Health Reform

The last time the states were rallied to rise up against federal legislation was during the civil rights battle over forced integration of schools. A similar call for organized state-level resistance is now being made in a manifesto recently published by the American Legislative Exchange Council (ALEC), a powerful but “discreet” group that counts some 2,000 conservative state legislators as well as representatives from some of the nation’s largest industries as members.

The Council’s publication, “The State Legislators Guide to Repealing ObamaCare”, urges lawmakers to “Decline to Build the ObamaCare Edifice” and offers 14 practical steps states can take to undo or impede the Affordable Care Act. These steps include having states return federal grants for setting up health insurance exchanges, encouraging them to opt completely out of Medicaid, and urging them to file federal waiver petitions to block the medical loss ratio requirement (the new rule requiring insurers to spend 80-85% of premiums on patient care).

When it comes to health care reform, ALEC is perhaps best known as the group that drafted the “Freedom of Choice in Health Care Act;” model state legislation drawn up in 2008 that would block any state or federal “public option,” bar the individual mandate and obviate other major provisions of the Affordable Care Act. According to the Council, eight states (including Virginia, Idaho, and Arizona) have actually enacted such model legislation and it has been “introduced or announced” in 42 others. The mission of ALEC’s health and human services care task force is to promote “free-market, pro-patient health care reforms at the state level.”

The stated focus of ALEC is to “advance the Jeffersonian principles of free markets, limited government, federalism, and individual liberty”—in large part by indoctrinating state legislators with their brand of governance. For example, 20 Kansas lawmakers and at least two officials from Gov. Sam Brownback’s office attended an ALEC-sponsored conference on Aug. 3 in New Orleans. Shortly afterward, Gov. Brownback announced he was returning to the federal government a $31.5 million innovator grant that was awarded to help the state create a health insurance exchange as required by the ACA. (Step 5 in “Declining to Build the ObamaCare Edifice) Texas state legislators affiliated with ALEC have proposed that the state opt out of Medicaid or turn it into a block grant program—perhaps not coincidentally, these are also two pieces of the Council’s “model” legislation.

Although ALEC bills itself as the voice of conservative state legislators, the real voice—and most of the money—comes from powerful corporate interests. ALEC’s membership lists “thousands of state legislators,” who pay token dues of $50 each that account for slightly more than 1% of the group’s funding. According to the Center on Media and Democracy, a non-profit investigative reporting group, the other 98% of ALEC's funding comes from hundreds of large corporations including Exxon Mobil, Kraft and Altria (formerly Phillip Morris); conservative foundations like Heritage and those bankrolled by Koch Industries and Peter Coors; as well as trade associations like the American Petroleum Institute, the American Rifle Association and PhRMA. Only membership dues are reported in tax filings; “gifts” from corporate members that in some cases have totaled well over $1 million in the past decade add to the group’s coffers and have only recently been unearthed by groups like CMD and the National Institute for Money in State Politics. “Those funds help subsidize legislators' trips to ALEC meetings, where they are wined, dined, and handed ‘model’ legislation to make law in their state,” writes CMD’s executive director Lisa Graves.

Corporate representatives sit on and co-chair (with Republican state legislators) “task forces” that approve “legal rules that reach into almost every area of American life: worker and consumer rights, education, the rights of Americans injured or killed by corporations, taxes, health care, immigration, and the quality of the air we breathe and the water we drink,” according to Graves. Click here to see the CMD’s full report on ALEC, details on the Council’s membership, funding and, for the first time, listings of over 800 “model bills” jointly crafted by its corporate and state legislative members.

As a veritable font of pro-industry legislation (826 bills either drafted or backed by the group were introduced in the states in 2009 and 115 were enacted into law) ALEC is deeply in the pocket of private interests. Elected officials who introduce their bills are disingenuous if they claim to be acting in the interest of their voting constituents. They are more likely to be advancing the agenda of corporate America—often to the detriment of consumers, the environment and public health.

According to the American Association for Justice (a trial lawyers group), “ALEC’s campaigns and model legislation have run the gamut of issues, but all have either protected or promoted a corporate revenue stream, often at the expense of consumers.” Initiatives have included working on behalf of oil companies to undermine the science of climate change; helping pharmaceutical companies block states from importing cheaper prescription drugs; and reducing taxes on tobacco products.

In terms of health care, Wendell Potter, a former health care executive and CMD’s Senior Fellow on Health Care, writes in The Nation, “As its archive reveals, ALEC has been at work for more than a decade on what amounts to a comprehensive wish list for insurers: from turning over the Medicare and Medicaid programs to them—assuring them a vast new stream of revenue—to letting insurers continue marketing substandard yet highly profitable policies while giving them protection from litigation.” This includes model bills that allow insurers to sell products across state lines—including “junk insurance” and very high-deductible plans—even though they may not meet the standards of state insurance commissions.

The 2011 ALEC manifesto is more of the same from this group. But thanks to the treasure trove of information now made public by the Center for Media and Democracy’s “ALEC Exposed” site, the Council’s work has been put under a brighter spotlight. ProPublica has published a “Step-by-Step Guide" for journalists to help them (and the public) understand how ALEC influences state laws—as well as a searchable database of ALEC corporate members donations and the state legislators they influence. Consumer groups and media outlets are starting to delve into this newly available data and publicize the outsized influence of ALEC’s corporate partners on state legislation.

Last month, Common Cause called for an Internal Revenue Service audit of ALEC, charging that the group “may have filed false tax returns and put its tax-exempt, charitable status at risk.” In a letter to the IRS, the government watch-dog group wrote, “it seems incontrovertible that ALEC is substantially and indeed primarily engaged in attempting to influence legislation [i.e. engaged in lobbying]… All of its efforts are geared toward developing and promoting favored state legislation. These proposals are generated in a private process where the business interests of its corporate members are highlighted, then shared only with the organization’s legislator members so they can take the proposals back to their states and introduce them as their own idea.”

Supporters of health reform and its planned roll-out in the states need to cut through the consumer-friendly façade of proposed laws that mimic ALEC’s legal models, and they need to highlight the complicit role of national corporate interests. Rather than protecting patient rights, ALEC’s recent call to state legislators to block the “ObamaCare edifice” is nothing more than a brazen attempt to protect the profits of insurance companies, pharmaceutical companies and other entrenched players whose actions have helped drive up health care spending to the crisis levels we are currently experiencing.

19 thoughts on “ALEC: The Industry-Sponsored Group Behind State Efforts to Sabotage Health Reform

  1. To use the word sabotage in reference to ALEC with health reform is like saying the Libyian rebels are trying to sabotage Gaddafi’s dictatorship. Health reform will die by a 1000 cuts and then be repealed and/or declared unconstitutional.

  2. Hoyt,
    Comparing the federal government’s health reform plan to Gaddafi’s rule is reason enough to ignore this comment. When a group enlists corporate members to help craft legislation out of the public’s eye that is then meant to repeal or seriously impair a federal law, I’d call that sabotage.

  3. I’d suggest you and the general public become familiar with the tenets of praxeology: everyone’s actions (or inactions) are taken (or not taken) in their own interests, as determined by themselves.
    Why would it come as a surprise to anyone that ALEC is acting to protect those who butter its bread; or why people continue to write articles that cry foul of these facts of self-interested actions?
    There’s no mistaking the that there are competing interests on display here. With that said, other than the call for an IRS investigation by another group, I didn’t find a single reference to anything that ALEC did or does that was wrong. All I read was an author pointing out that ALEC’s supporters are different than those the author has. How does that forward the discussion?

  4. ah, this capitalism stuff is really confusing. first the insurers and drug companies make deals with the White House to craft a bill they favor and then spend millions of dollars lobbying the public to get it passed. Now they’re spending millions more to undermine implementation. seems like the money might be spent better on something important like executive compensation. inquiring minds are somewhat curious as to whether they employed the same ambidextrous lobbyists in both efforts.

  5. This week I called Blue Cross to place my client in a new policy.
    He has had his Blue Cross plan for 20 years. Every 5 years or so, the family proves health, and the new premium is about 50% lower. Apparently, this is because this family enters a new “class” of insureds upon proving health. The old “class” was probably a closed block, in which no new policyholders entered. Heck, even a ponzi scheme requires new people.
    Anyway, this time, if they proved health, the new premium would be 19 a month more!
    Flabbergasted, I asked why. The Blue Cross representative said due to Obama’s mandated benefits – particularly unlimited preventive, no annual limits, and no lifetime limits, the premium was higher.
    I went to ehealthinsurance to see if a new company made any difference. The results were similar.
    Folks, hold on to your seat belts!
    No wonder Blue Cross lost its federal tax exempt status in 1986. It was no different than its commercial for-profit counterparts.
    Obamacare without a meaningful rise of not-for-profit insurers who sell insurance at cost, and treat the class as one big community, will simply mean higher premiums for better benefits.
    Don Levit

  6. Blue Cross has been taking full advantage of the law to use as an excuse to raise rates. So far, they’ve been denied. They had to pay back customers for overcharging recently in North Carolina.
    Of course, they’re trying to take credit for the 85% bit here, forgetting to mention that it’s a requirement of the PPACA in their commercials.
    When the pool of insured becomes larger, premiums will go down because you’ll have a better and larger mix of the healthy and sick.
    In the meantime, I fully expect insurers to skim what they can using reform as an excuse.

  7. Certainly lobbying, influence buying and doing the jobs of others is part of the problem, not part of the solution.
    As long as money is the big driver in politics, both sides do pretty much anything their supporters ask to build war chests to maintain power.

  8. America is going to need to decide if health care is a protected right versus a luxury of the free market system for those that can afford it. Trying to have it both ways is creating a system that will inevitably harm everyone involved.
    Our nation’s health care bill is 17% of GDP. We should not be surprised at growth of healthcare as a percentage of GDP in a free market economy. Basic economics: the demand for healthcare products and services is growing due to demographics (aging population, etc), decline in health (obesity, etc) and the fact that just about everyone wants to live another day and avoid suffering.
    Business and technology offer products and services that appear to satisfy these needs/wants. At certain points in life, life-saving surgical procedures or drug treatment become more important than a nice car or a new house. With aging population, the shift in demand from one to the other is inevitable, as is the growth of enterprise ready and willing to profit from mushrooming demand.
    Add to this the contortions of the free market system rampant in healthcare industry system (the insurance industry and Medicare, etc) and it’s no wonder health care is such a large and growing part of our economy.

  9. Naomi, Maggie, whoever…
    Ed Costello’s request is more important than you may think. Everybody but EVERYBODY now has third-party aps with url-shortners and icons for sharing every individual post.
    Get with the program, ladies. It should only take a few minutes with the template.
    I’d love to drop some of your posts on my Facebook contacts. (I reserve the use of the word “friends” for when it’s appropriate.)

  10. Ed Costello & John Ballard-
    It had occurred to me that Health Beat should have icons that let readers “twitter” posts,put them on Facebook,whatever.
    I have spoken to the IT person at The Century Foundation who is in charge of the blogs, and hope that he will do this.
    Ed–thanks for making hte suggestion, and John, thanks for following up on it.

  11. Panacea–
    You’re right. Though while some insurers will skim what they can in the short term, I suspect these will be the insurers who plan to get out of hte business in 2014. (The regsl are too tough for them to make money.)
    Those that plan to stay (bigger insurers) are less likely to raise premiums because they want to begin building market share and good PR . . .
    We’ll see.