Andrew Harnik/AP Photo
House Ways and Means Committee Chairman Richard Neal of Massachusetts speaks during a signing ceremony for the Paycheck Protection Program and Health Care Enhancement Act after it passed the House on April 23, 2020.
The flood of economic consolidation in the wake of the coronavirus crisis has begun. In the first two days of this week, Uber bought Postmates after an unsuccessful attempt to buy Grubhub, narrowing the increasingly popular online food delivery sector; rooftop solar rivals Sunrun and Vivint teamed up to become the primary rival to Tesla’s Solar City; and Allstate acquired National General to create a dominant insurance giant. With economic upheaval growing and business bankruptcies continuing, there will be fewer competitors taking greater market share, with dangerous implications for workers, consumers, entrepreneurs, and democracy, to name a few. (I do have a book on this subject coming out in two weeks if you want more information!)
With greater economic power comes greater political power, as corporate giants install and co-opt allies in office and use them to bend the system to their will. That has been the largely one-sided history of monopolies in America over the past 40 years. But an important countervailing force launched on Tuesday, which could turn lining up with monopolists into bad politics.
The test case for the anti-monopoly movement’s foray into elections couldn’t be more perfect. Rep. Richie Neal (D-MA), chair of the House Ways and Means Committee, is best described as a sentient cash register, taking contributions from massive corporations in exchange for gifts and perks. Nobody received more corporate PAC donations than Neal last year, which stands to reason: he runs Congress’s lead tax-writing committee, of interest to every corporation in America. This year, however, Neal faces a viable primary challenge on September 1 from the young progressive mayor of Holyoke, Alex Morse.
On Tuesday, a new group called Fight Corporate Monopolies called Neal on his favor trading, running an ad in the Springfield area backed by at least $300,000 (a decent sum for that market). If sucking up to corporate power can actually create political danger for incumbent lawmakers, it could transform the calculations in Congress between self-interest and the public interest. So this is a critical experiment.
Neal stands accused of siding with Blackstone, the world’s largest private equity kingpin, and upending a compromise solution to mitigate the abhorrent tactic of surprise medical billing. Blackstone owns TeamHealth, one of two large physician staffing groups that are mostly responsible for slapping patients with thousands of dollars in unexpected charges for “out-of-network” medical professionals working at in-network emergency rooms or surgical centers. This practice has become more acute in the coronavirus era, with the heightened level of ER visits providing more opportunities for Blackstone and others to trap unsuspecting patients.
Rep. Richie Neal (D-MA), chair of the House Ways and Means Committee, is best described as a sentient cash register, taking contributions from massive corporations in exchange for gifts and perks.
Following Neal’s deep-sixing of the legislation, Blackstone gave him $48,600 for his unusually close re-election campaign; in recent years, when Neal had no serious challengers, the firm hadn’t supported him financially. Blackstone’s recent contribution, though, reads like a classic payoff: Blackstone gets to preserve its extortion racket and Neal gets money to stay in office. “Corporate power is corrupting democracy, and Richie Neal is part of the problem,” the ad concludes.
Neal spokesperson Kate Norton responded by calling the ad false, adding that “the surprise billing measure [its proponents] support would actually HURT hospitals and workers in Western and Central Mass, so Richie proposed his own bill.” This is a serious distortion of what actually went on. I wrote up the whole sordid story in February, but the summary I’ll provide here shows how Neal approached the surprise billing debate in purely transactional terms. He used the controversy solely to maintain his power and maximize campaign support.
Democrats and Republicans both wanted to do something about surprise billing; horror stories of patients being charged substantial amounts without their consent created too much political pressure. The issue involved delicate mediating between corporate interests: insurers who shed the obligation to pay doctor bills by placing them out of network, and health care providers like Blackstone’s TeamHealth who capitalize on out-of-network rules to maximize profits. You could hurt one or the other or both with a solution. The charges now hitting patients can either be resolved by preventing providers from making them, or forcing insurers to pay them.
After months of talks, Democrat Patty Murray of Washington and Republican Lamar Alexander of Tennessee, leaders of the Senate Health, Education, Labor, and Pensions (HELP) Committee, fashioned a compromise. It mostly involved setting a fair “benchmark” rate for out-of-network bills, and a limited arbitration system to allow providers to ask for more. It wasn’t the best solution, but experts agree that by and large it would have removed confusion and reduced outrageous charges.
Neal responded by teaming with his Republican counterpart on Ways and Means, Rep. Kevin Brady of Texas, to blow up the compromise, as virtually everyone involved in the issue—left, right, and center—firmly acknowledges. The Neal-Brady bill eliminated the benchmark and left arbitration as the sole resolution mechanism. It also removed a network adequacy clause, allowing insurers to continue to push providers out of network and offload costs onto patients.
In other words, the Neal-Brady bill was the best of both worlds; both physician staffing groups like Blackstone’s and insurance companies would continue to maximize profits. More important, killing the compromise extended the status quo, keeping the out-of-network bills flowing. The delay itself was palatable to both sides.
That’s why both sides are funding Neal, as a token of gratitude for his service. Not only has Blackstone given him $48,600, but the insurance industry has delivered $237,325. Neal found a way to get opposite sides of a corporate dispute to donate to him, because he intervened to end a legislative advance that might have hurt them.
I’ve also been told that Neal was piqued that Rep. Frank Pallone (D-NJ), chair of the House Energy and Commerce Committee, took the lead in the House on surprise billing. So Neal was also asserting jurisdictional dominance, which also comes back to consolidating his power with corporations: If Neal is seen as the hinge point for getting anything done on surprise billing, the corporate players all must go to him to pay tribute.
The justification from Neal’s spokesperson that the bill would have hurt hospitals is a familiar and silly TeamHealth talking point. The idea is that if TeamHealth cannot extort from patients, they might not give hospitals discounts to staff their facilities. It’s like saying we should make armed robberies on the street legal to protect banks from being robbed.
So that’s what happened. Neal blew up a deal that would have finally limited Wall Street and insurance titans from preying on the sick. He’s lying about why. He did it for money. And now there’s significant financial muscle behind an ad telling his constituents all about it.
Will it succeed? The Bay State’s First Congressional district is fairly liberal but contains a significant chunk of conservative Democrats in Neal’s base of Springfield. And he does have all that money to play with; $4.5 million on hand as of the end of March, compared to $139,000 for Morse. (We’ll see new numbers soon.)
But no politician likes to have the story of their going to bat for corporate giants told in public, especially involving such a salient issue as people getting ripped off for necessary medical care (including in the Springfield area, where TeamHealth is expanding). Without a political movement, nothing will get done on the monopoly problem, and the movement to take on corporate power electorally is in its early stages. But the effort itself is a signal that politicians can no longer reward special interests in the dark. Anti-monopoly forces are rising, and they will catch up to someone sooner or later. Maybe Richie Neal.
