Key Players Have Stakes in Industry
By Paul Kane, Washington Post, June 13, 2009
Almost 30 key lawmakers helping draft landmark health-care legislation have financial holdings in the industry, totaling nearly $11 million worth of personal investments in a sector that could be dramatically reshaped by this summer's debate.
The list of members who have personal investments in the corporations that will be affected by the legislation -- which President Obama has called this year's highest domestic priority -- includes Congress's most powerful leaders and a bipartisan collection of lawmakers in key committee posts. Their total health-care holdings could be worth $27 million, because congressional financial disclosure forms released yesterday require reporting of only broad ranges of holdings rather than precise values of assets.
Senate Majority Leader Harry M. Reid (D-Nev.), for instance, has at least $50,000 invested in a health-care index, and Sen. Judd Gregg (R-N.H.), a senior member of the health committee, has between $254,000 and $560,000 worth of stock holdings in major health-care companies, including Bristol-Myers Squibb and Merck.
The family of Rep. Jane Harman (D-Calif.), a senior member of the House Energy and Commerce Committee drafting that chamber's legislation, held at least $3.2 million in more than 20 health-care companies at the end of last year.
The reports come on the eve of what is sure to be a dramatic health-care debate in Congress, beginning with a key Senate committee hearing Tuesday. With several proposals floating on Capitol Hill, the legislative battle could overhaul an industry that represents nearly 20 percent of the national economy.
While no congressional rules bar members from holding financial stakes in industries they regulate, some ethics experts suggest that it often creates the appearance of a conflict of interest, particularly if there is a chance that the legislation could result in a personal financial boost.
"If someone is going to be substantially enriched by the consequences of the vote, particularly if it represents a meaningful amount of their net worth, then there is a problem," said Harlan Krumholz, a professor of medicine at Yale University. "This is such important legislation that you don't want to be tainted by any conflict."
But many legal experts say the health-care industry is so predominant that it is impossible for lawmakers to avoid financial ties to that sector, suggesting that the best antidote is a clear disclosure system that makes every lawmaker's finances publicly available. Robert L. Walker, a Washington lawyer and former House and Senate ethics counsel, said that in many cases, members of Congress are "simply one of perhaps thousands or more" investors in a single corporation and such investments are not "prohibitive conflicts."
In many cases, the lawmakers' health-care holdings represent a small fraction of their assets. Harman, whose husband, Sidney, is the founder of electronics-maker Harman International Industries, is one of the wealthiest members of Congress, with a minimum net worth of almost $120 million.
The new data come from yesterday's release of financial disclosure forms for the House and Senate, though most of the House forms were accidentally posted online Wednesday, and subsequently the data were captured and posted online by congressional watchdog LegiStorm.
The first big congressional moment on health care comes Tuesday in the Senate's Health, Education, Labor, and Pensions Committee, which will consider a liberal-leaning proposal that includes the creation of a "public plan" meant to be a government-administered alternative to private health insurance.
On that 22-member panel, at least eight senators have financial interests in the health-care industry worth a minimum of $600,000 -- and potentially worth as much as $1.9 million. The investors include Sen. Johnny Isakson (R-Ga.), a senior member of the panel, who holds at least $165,000 in pharmaceutical and medical stocks, and freshman Sen. Kay Hagan (D-N.C.), who holds at least $180,000 in investments in more than 20 health-care companies.
The hearings will be led by Sen. Christopher J. Dodd (D-Conn.), who is filling in for Sen. Edward M. Kennedy (D-Mass.), the committee chairman, who is battling brain cancer. Dodd's wife, Jackie Clegg Dodd, serves on the boards of four health-care companies, receiving more than $200,000 in salary and stock from her service in 2008, according to the Associated Press.
Dodd's aides say his wife's financial interest will not have any impact on his leading role in the health-care debate, noting that she is not a lobbyist and has never represented clients before any branch of the federal government.
"Jackie Clegg Dodd's career is her own; absolutely independent of Senator Dodd, as it was when they married 10 years ago," Bryan DeAngelis, Dodd's spokesman, said in a statement. "The senator has worked to reform our health care system for decades, and nothing about his wife's career is relevant at all to his leadership of that effort."
Reid's aides also said he could be a fair arbiter of the legislative debate, pointing to a letter enclosed in his disclosure from his investment manager at Wells Fargo declaring that neither the senator nor his wife has any role in choosing financial moves. "All decisions on purchases, sales and retention of assets in the above mentioned investment management accounts . . . were made in the sole discretion of Wells Fargo Bank, N.A., without input from Harry and Landra Reid," the letter said.
Later this month the Senate Finance Committee will take up the debate, with at least a half-dozen senators on the panel holding stakes in health-care companies. Sen. John F. Kerry (D-Mass.) and his wife, ketchup heiress Teresa Heinz Kerry, hold at least $5.2 million in companies such as Merck and Eli Lilly.
Sen. Michael D. Crapo (R-Idaho), one of the few lawmakers who listed the specific values of his stock holdings, held $16,879 worth of stock in companies such as St. Jude Medical at the end of last year.
Health care is not the only industry that is both heavily regulated by Congress and heavily invested in by lawmakers. As The Washington Post reported Thursday, more than 20 members of the House leadership and the House Financial Services Committee hold investments in companies that received more than $200 billion in federal bailouts.
On the Senate banking committee, at least a half-dozen senators had significant investments in companies that benefited from the $700 billion bailout legislation that the panel helped draft last fall. Sen. Charles E. Schumer (D-N.Y.) reported $18,000 to $95,000 in investments in Freddie Mac and Fannie Mae bonds, and also that he sold at least $15,000 in Fannie "step-up" bonds at the end of last year. The committee's ranking Republican, Sen. Richard C. Shelby (Miss.), reported holding $260,000 to $850,000 in money market and retirement accounts with Countrywide, Citigroup and Wachovia.
Staff writers Dan Eggen, Garance Franke-Ruta, Carol D. Leonnig, Sarah Lovenheim and Ben Pershing, along with research editor Alice Crites, staff researcher Madonna Lebling and graphics editor Karen Yourish, contributed to this report.