In Shift, Lobbyists Look for Bipartisan Support to Repeal a Tax

Cook executives had backed Representative Bobby Schilling, her Republican opponent in last year’s election for Illinois’s 17th District seat, after he had joined with other House Republicans to push for the repeal of a new medical device tax imposed to pay for President Obama’s health care law. The company said the tax would cut its profits this year by an estimated $15 million, perhaps limiting future expansions. But in a hint of a shift in corporate lobbying strategy now under way in Washington, the industry pitch is now focused on Democrats like Ms. Bustos.

“Republican or Democrat, we need them to understand who we are and what we do,” said Steve Ferguson, the chairman of Cook’s parent company, who was there alongside Ms. Bustos as she toured his company plant. The visit ended with Ms. Bustos telling local reporters she would consider joining the effort to repeal the tax, which is expected to raise $29 billion over 10 years.

“If current laws are holding businesses back from hiring locally, I’m open to looking into ways to improve and fix them,” Ms. Bustos said in a statement.

Just last year, with Republicans still within reach of taking over the Senate and White House, many companies were willing to burn a chunk of their corporate lobbying budget to push House Republicans to pass bills that everyone on Capitol Hill knew had no chance of ever becoming law. The muscle flexing at least made a political point — and potentially set up special-interest groups, like the medical device industry, for a successful push this year, assuming their hoped-for Republican victories had been scored.

But then the 2012 election took place. Candidates like Mr. Schilling were defeated, even though Cook executives had contributed generously to his re-election effort, to try to keep Ms. Bustos, a strong advocate of the Obama health care plan, out of office.

Now, lobbyists across the city are redoubling their efforts to build bipartisan coalitions — not just on the 2.3 percent medical device excise tax, but other hot topics, like the possible rewriting of corporate tax laws and revisions to the 2010 Dodd-Frank Act that revamped the way financial corporations are regulated.

Republicans still get the bulk of the money that the medical device industry contributes. But there are some key Democrats who are pulling in large amounts of industry financial support, like Senators Amy Klobuchar of Minnesota and Bob Casey of Pennsylvania, who have been outspoken in their opposition to the medical device tax.

Bipartisanship, of course, is not unheard of in Washington, and the lobbyists and corporate players who have intensified their bipartisan push this year credit their dedication to good governance. But much of this is about figuring out a way to get the legislative train running again — so they can deliver some rewards to their clients.

“Lobbing grenades back and forth — that is not good enough,” said Don Nickles, a former Republican senator from Oklahoma, who runs a lobbying firm whose client roster includes Medtronic, one of the nation’s top medical device companies.

It remains unclear whether the strategy will work. The animosity between Republicans and Democrats on Capitol Hill — and between the White House and Republican leaders — might be so intense that even this lobbying push will fail.

But this is the moment to try, lobbyists in Washington are telling their clients. The first two years of any presidential term are when Congress, at least by historical precedent, is typically more productive — before the political posturing for the next election takes over.

“It is no longer just about sending signals or messages,” said L. F. Payne Jr., a former House Democrat whose lobbying firm was hired by Cook Medical’s parent company last year to help its push to appeal to Democrats. “But it is time to actually pass some laws.”

The bid to repeal the medical device tax is a prime example of this shift in lobbying tactics. Last year in the Senate, the industry effort was led by Senator Orrin G. Hatch, Republican of Utah, who secured the support of 33 other senators, all of them of his party. A House version pushing the tax repeal passed in June largely with Republican support. But the measure died, after it failed to come to a vote in the Senate.

This year, Mr. Hatch is again sponsoring a repeal bill, but he has four Democrats as co-sponsors, including liberals like Senator Al Franken of Minnesota.

Perhaps even more important, industry lobbyists helped circulate a letter among Senate Democrats in December, after the election, criticizing the tax and urging a delay in its Jan. 1 establishment. Sixteen sitting Democratic senators and two who had just been elected ultimately signed on. It was a real coup for the industry, as the letter included top Senate Democrats like Richard J. Durbin of Illinois and Charles E. Schumer of New York.

The behind-the-scenes story of how those signatures were secured offers a window into the changing lobbying tactics. Companies like Cook Medical have seen their lobbying budgets soar, as they have beefed up their representation by lobbying firms with Democratic credentials, like the firm where Mr. Payne works, McGuire Woods, which also has former Senator Evan Bayh, Democrat of Indiana, as a lawyer on its team.

The appeal has included dozens of telephone calls from executives at medical device companies to the Senate Democrats or their staff, as well as many meetings in person on Capitol Hill.

Trade associations like the Advanced Medical Technology Association, have organized rallylike events in different states, and “fly-ins” to Washington, in which employees of medical equipment firms make it clear that they expect the help of their local members of Congress.

Donations from industry executives to certain important Democratic allies, like Ms. Klobuchar of Minnesota and Mr. Casey of Pennsylvania, surged in the last election cycle as the industry played a significant role in their re-election efforts.

Ms. Klobuchar, whose state has an estimated 400 medical device companies employing about 35,000 people, has emerged as one of the industry’s most important allies — cornering other Democrats on the Senate floor to press them to join the push, industry lobbyists said. The first real test will come this week. Senate backers of the device tax repeal, like Mr. Hatch and Ms. Klobuchar, plan to propose a nonbinding amendment to a federal budget bill to make their bipartisan opposition to the tax clear.

The industry executives and the lawmakers involved have at least so far avoided identifying how they would pay for the repeal of the device tax. They realize that they would only draw opposition from lobbyists representing whatever industry it is that would be targeted to make up the money. The biggest obstacle remains the White House, which last year threatened to veto the House medical tax repeal bill. The White House argues that demand for new devices will offset the economic impact of the tax.

But the industry, which sells devices ranging from wooden tongue depressors to pacemakers, has important Democratic allies now trying to squeeze the White House as well. Ms. Klobuchar and Mr. Franken brought up the topic last month with Mr. Obama during a ride they took with him on Air Force One.

“I think that there has been some renewed understanding on the president’s part,” Mr. Franken told the editorial board of a Minnesota newspaper last month — which then repeated his call for the repeal of the tax, under a headline, “If a tax has bipartisan opposition, Obama should listen.”

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For Opponents of Health Care Law, No Easy Road to Repeal

The court’s ruling that Congress can use its taxing power to assess a penalty fee on Americans who ignore the individual insurance mandate certainly opens a gateway for anti-tax Republicans to attack the law. Should they win the White House and gain even a narrow majority in the Senate, Republicans would be able to use the same procedural approach Democrats took to get the health care law over the finish line two years ago to undo the taxes and federal subsidies that are at the core of the law.

But attacking the law by stripping away its layers of taxes, fees and subsidies is not the same as dismantling it. Undoing the major benefits and policies of the law — which include medical coverage for children up to age 26, protections for people with pre-existing conditions and the end of annual and lifetime caps on certain forms of coverage — would require the acquiescence of Senate Democrats, which is highly unlikely.

In essence, the Republicans could not muster sufficient votes by themselves to undo most of the regulations and benefits of the law, but could for the parts that pay for them.

“You can’t get everywhere with reconciliation,” said Senator Rob Portman, Republican of Ohio, referring to the Congressional process that Democrats used, which allows certain budget measures to pass with 51 votes instead of the 60 that would be required to block a filibuster vote on a full repeal. “You will need to use other procedures,” he said. He added later: “We may get a majority. But we will need to work with the other side.”

While some Republicans fantasize about a bipartisan solution to undoing the elements of the law, Representative Tom Price of Georgia, a physician who is the Republican leadership’s point man on health care, said Friday that a health and human services secretary under a Romney administration would dismantle other parts of the law through fiat.

That would no doubt attract lawsuits and might leave haters of the law unsatisfied.

For their part, Democrats have largely dismissed the biggest blow dealt to the law by the Supreme Court, which said the federal government could not require states to expand their Medicaid programs. Supporters of the law argue that the federal government offers too rich a cash incentive for any state to actually pass it up.

But while Democrats remain publicly confident that states will still choose to take the federal matching funds and expand Medicaid, Republican governors who have made undoing the law one of their main goals will be hard pressed to take up that optional expansion, especially since the federal dollars meant to help them would decrease over time.

Either way, whether Republicans lawmakers pull apart some of the law on their own, or if a large number of states opt out of expanding Medicaid, it will spell trouble for the health care industry. It is counting on the expansion of the market through the individual mandate, fees and the newly insured to cover the cost of greater benefits and regulations.

“It’s problematic to only take down the pieces with budgetary impact and leave the market reforms,” said Catherine Finley, a health care specialist at Thorn Run Partners, a Washington lobbying and government relations firm. “Doing so would seriously disrupt the functioning of the market.”

Both Republicans and Democrats agree in theory that part of the law should be changed, and President Obama has suggested he is open to improvements.

But bipartisanship around health care seems unlikely, no matter who runs Washington.

The central difficulty is the seemingly irreconcilable differences between the goal of most Democrats, which is to expand health care coverage to as many Americans as possible, and that of Republicans, which is to push down government spending on health care. With costs rising sharply every year, those basic conflicts will remain, and policy solutions inevitably will require a bias toward one of those goals.

Further, the partisan bitterness that began long before the Affordable Care Act was even a notion has only deepened during two years of divided government.

For example, in 2009 Republicans who supported the expansion of the Children’s Health Insurance Program felt betrayed when Democrats, taking their lead from the new Obama administration, unilaterally dropped several important features that Republicans had managed to win in an earlier bill at some political risk. Democrats opted for a more partisan bill that covered various groups that Republicans had resisted.

“I’m a little bitter,” said Senator Orrin G. Hatch of Utah. “I worked my butt off” on the measure, he said, only to end up voting against it. “It set the tone.”

Democrats feel equally angry that, in spite of packing the health care bill with many ideas, including the individual mandate, that originated with Republicans years ago, they could get no Republican cooperation in the end.

Many Republicans also say that they would like to preserve many aspects of the law, including the provisions for dependent coverage for adult children and for lifting annual and lifetime spending caps.

However, “it might be difficult for the Romney administration to come back and say, ‘Oh we really like some parts of A.C.A., we are not going to repeal them,’ ” said James Brasfield, a professor of management and political science at Webster University in St. Louis.

It is possible that governors and legislatures may do some of the Congressional Republicans’s work for them by opting out of the Medicaid expansion. But that expansion was going to put 16 million to 21 million additional people into the system.

Insurance companies had or were developing plans to cover these new Medicaid enrollees, also anticipating millions of new customers who were going to buy insurance through new federally subsidized purchasing exchanges. That would be endangered if Republicans legislate away the subsidies, and possibly harm the party’s friendly relationship with the companies.

“That population presents great opportunities for health plans,” Ms. Finley said. “Now we have to see how the states play this out. If they opt out of the expansion, it certainly would decrease the availability of new markets.”

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