Firms with Obama ties profit from health push

By SHARON THEIMER, Associated Press Writer Sharon Theimer, Associated Press Writer – Wed Aug 19, 6:08 pm ET

WASHINGTON – President Barack Obama's push for a national health care overhaul is providing a financial windfall in the election offseason to Democratic consulting firms that are closely connected to the president and two top advisers.

Coalitions of interest groups running at least $24 million in pro-overhaul ads hired GMMB, which worked for Obama's 2008 campaign and whose partners include a top Obama campaign strategist. They also hired AKPD Message and Media, which was founded by David Axelrod, a top adviser to Obama's campaign and now to the White House. AKPD did work for Obama's campaign, and Axelrod's son Michael and Obama's campaign manager David Plouffe work there.

The firms were hired by Americans for Stable Quality Care and its predecessor, Healthy Economy Now. Each was formed by a coalition of interests with big stakes in health care policy, including the drug maker lobby PhRMA, the American Medical Association, the Service Employees International Union and Families USA, which calls itself "The Voice for Health Care Consumers."

Their ads press for changes in health care policy. Healthy Economy Now made one of the same arguments that Obama does: that health care costs are delaying the country's economic recovery and that changes are needed if the economy is to rebound.

There is no evidence that Axelrod directly profited from the group's ads. Axelrod took steps to separate himself from AKPD when he joined Obama's White House. AKPD owes him $2 million from his stock sale and will make preset payments over four years, starting with $350,000 on Dec. 31, according to Axelrod's personal financial disclosure report.

A larger issue is a network of relationships and overlapping interests that resembles some seen in past administrations and could prove a problem as Obama tries to win the public over on health care and fulfill his promise to change the way Washington works, said Sheila Krumholz, executive director of the Center for Responsive Politics, a government watchdog group.

"Even if these are obvious bedfellows and kind of standard PR maneuvers, it still stands to undercut Obama's credibility," Krumholz said. "The potential takeaway from the public is 'friends in cahoots to engineer a grass roots result.'"

White House spokesman Ben LaBolt said that Axelrod has had no communications with Healthy Economy Now or with Americans for Stable Quality Care, and his payments aren't affected by the ad contracts. Axelrod's son, a salaried AKPD employee, doesn't work with either coalition "or stand to benefit from that work," LaBolt said.

"David Axelrod has fully complied with the toughest-ever ethics rules for administration officials, including divesting from AKPD before the administration began," LaBolt said.

Ken Johnson, a PhRMA senior vice president, said GMMB and AKPD were the only two firms working on the $24 million in ads. He declined to reveal how much each was paid beyond saying that each received a small percentage of the total. The coalition's campaign team decided to hire the two firms, he said.

"In a perfect world, it's a distraction we don't need right now, but these are very gifted consultants who have done very good work," Johnson said. "And it's also important to remember that at the end of the day, the coalition partners determine the message."

Healthy Economy Now spokesman Jeremy Van Ess said the two firms were hired because "they are the best at what they do. Period." The coalition didn't seek approval or direction on any of its activities from the White House, said Van Ess, a partner in a consulting firm that has worked on Democratic Senate election activities and a former speechwriter for Senate Majority Leader Harry Reid, D-Nev.

AKPD and GMMB both proudly proclaim their connections to Obama on their Web sites.

AKPD has a full page on Axelrod that includes pictures of Obama. In one photo, Obama hugs Plouffe on election night.

"We are deeply honored to have been part of Barack Obama's historic campaign to change America and the world," GMMB says on its Web site. GMMB's partners include Jim Margolis, a senior strategist for Obama's presidential campaign.

Both GMMB and AKPD also have worked for Democrats this year. The Democratic National Committee paid AKPD at least $106,000 for polling, media production, communication consulting and travel costs from February through April. The Democratic Congressional Campaign Committee paid GMMB roughly $75,000 from February through June for ads. And GMMB took in at least $9,000 this year from Senate leader Reid's political action committee for communications consulting.