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Watchdog: Follow the Money

Advocacy group behind White House Obamacare event is funded by Blue Shield firm that will profit on program

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Watchdog,Richard Pollock,Obamacare,Ethics,Follow the Money

Small Business Majority, a pro-Obamacare advocacy group that helped organize a Dec. 3 White House promotional event, is substantially funded by a major health insurance firm that stands to profit from the federal program.

Blue Shield of California is one of the three major insurance companies slated to sell its insurance policies through Obamacare's Covered California exchange.

Small Business Majority brought nine of its members to the event, which featured 18 individuals standing behind President Obama.

A Federal Register notice posted the day before the White House event said insurance companies, including Blue Shield of California, will get tax-funded "offsets" for losses incurred as a result of participating in Obamacare.

White House officials refuse to identify any of the people on the platform behind Obama, their organizational ties or how they were selected to participate in the event.

However, one of the participants was identified as Michael Cadigan, a former Albuquerque city council member, who told the Washington Examiner's Byron York that the Small Business Majority contacted him and invited him to the White House.

Cadigan told York that the Small Business Majority recruited others to the White House event as well.

A spokesman for Small Business Majority told the Examiner that nine of its members attended the White House event, but only Cadigan was on the podium.

The Small Business Majority has received more than $1.4 million from the California Physicians Service Foundation since 2008.

The foundation is wholly owned by Blue Shield of California.

The insurance foundation’s contribution to the Small Business Majority represents nearly 40 percent of the group’s $3.7 million in revenues, according to the Foundation Search database.

Blue Shield of California is an independent member of the Blue Cross Blue Shield Association. It is a not-for-profit insurance company that was originally founded in 1939 as California Physicians' Service.

Since 2005, Blue Shield has contributed more than $200 million to the California Physicians Service Foundation, according to the insurance company’s web site.

Blue Shield’s point man on Obamacare in California is Thomas Epstein, its vice president of public affairs. Epstein is also a trustee on the eight-person board of California Physicians Service Foundation.

Epstein has played a large role in Blue Shield’s work with the Obamacare health exchange, but he is a veteran of Washington politics, having previously worked as a White House special assistant to former President Bill Clinton.

While at the White House, Epstein worked on political affairs, including, “handling sensitive political and policy issues during President Clinton’s first term,” according to a profile published by the Bay Area Democrats, a San Francisco-based political action committee.

Epstein also was involved in the failed “Hillarycare” health care effort in 1993, serving as a key liaison staffer to elected officials, as well as to business and community leaders.

Since September 2009, Epstein has visited the Obama White House nine times on behalf of Blue Shield. Most of his meetings were with Nancy-Ann Min Deparle, Obama’s former deputy chief of staff and director of the White House Office on Health Reform.

Epstein, who also served as vice president of communications for the Public Broadcasting Service, has contributed heavily to Democratic candidates and to the Democratic National Committee.

Since 2004, he has contributed $38,244 to Democratic candidates for office, including payments of $9,200 to Obama for America and to the Obama Victory Fund, the maximum allowable under law. He has given $19,000 to the Democratic National Committee.

The Small Business Majority, founded by John Arensmeyer, has had issues of its own. Earlier this year, the Examiner reported that the group's funding comes mainly from special interests, including the left-leaning Public Welfare Foundation.

Arensmeyer filed for Chapter 7 bankruptcy in 2007 when he amassed $211,000 of debt. Court documents also show he stiffed a Pennsylvania firm for $20,000 of supplies he had purchased.

His former organization, Arensmeyer Communications, was hit with tax liens in two states and the California Franchise Tax Board suspended the firm in 2004 for "missing multi-years of tax returns," according to a board spokesman.

Tom Fitton, president of the non-profit watchdog group Judicial Watch, criticized the use of a group without public disclosure.

“This to me was a lobbying effort that had the stamp of President Obama. Yet It was paid for, in part, courtesy of the health insurance industry,” said Fitton. “That disclosure should have been made up front."

Neither the White House, nor the California Physician Service Foundation, responded to request for comment.

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