01-05-2002

LOBBYING: AARP's New Direction

On September 12, the day after the terrorist attacks on the World Trade
Center and the Pentagon, the nation's largest advocacy group for the
elderly put its lobbying campaign for a prescription drug benefit for
Medicare recipients on hold. "We stopped our legislative agenda,
[and] it's basically been frozen since," said AARP's new leader,
marketing whiz Bill Novelli. Novelli, who became AARP's executive director
in June, cancelled big plans for the fall. No more grassroots lobbying, no
hot-air balloon events to publicize soaring drug costs, and no more long
nights monitoring action on Capitol Hill.


This year, however, with congressional election campaigns in full swing,
Novelli says that his group will aggressively remind lawmakers that
prescription prices are still high, that millions of seniors have no help
with those costs, and that the problem is getting worse. "We're going
to go in for the biggest possible package that we can," said Novelli.
"We're going to go for it."


Novelli acknowledges that the challenges will be great. "Everything
has changed," he said. "We had a war, a recession, and a tax
cut. The question now is whether there will be money for this and whether
Congress can do anything."


Members of Congress who want to add a prescription benefit to Medicare
have a question for Novelli, too: Can he fire up his organization to lobby
effectively for a drug benefit? Before September 11, AARP's new leader had
begun sending messages about how the organization would work under his
leadership. The 35 million-member AARP, after more than a decade of
cautious and sometimes muted advocacy on behalf of the elderly, was
gearing up to make its presence felt once again.


Traumatized for years by its high-profile support of a 1988 Medicare law
so despised by seniors that it was repealed the next year, AARP is intent
on recapturing some of the clout-and energy-it seemed to have lost in the
1990s. "AARP has had a certain sense of complacency. We need to do
something about that," admits Novelli. "What we're going to do
is keep pushing the envelope." Even in light of the new economic
realities, he says.


There's some talk that President Bush will include money in his fiscal
2003 budget proposal for a prescription benefit, but the amount is
expected to be considerably less than the $300 billion that some activists
were hoping for last year. House Speaker J. Dennis Hastert, R-Ill.,
recently told a group of health care lobbyists that the prescription drug
issue will be "critical for Republicans" in 2002. One of those
addressed added that "$300 billion was the number [Hastert] was
using." Some other health care lobbyists are still doubtful about
that much money being authorized. With limited funds, the debate may focus
increasingly on lowering drug prices through discounts and making sure
that generic alternatives get to the marketplace in a timely
manner.


"People don't believe there's enough money to give a Medicare
benefit, and that's what opens the price-control issues. We're never
passing price controls, but if the government is involved in paying for
drugs, it would be getting very big discounts," said Robert Blendon,
a professor of health care policy at Harvard University's School of Public
Health. Blendon sees a movement toward discounts, but not toward the
private-company discount cards that President Bush wants. "What is
going to be politically acceptable for seniors is a discount.... They get
discounts on movies, airlines. That's not price controls. The government
does not set it."


A more appealing option to Republicans than price controls may be to
change patent rules. Congress may choose to reopen the Drug Price
Competition and Patent Term Restoration Act of 1984-better known as the
Hatch-Waxman Act.


Hatch-Waxman established standards for approving generic drugs and for
extending the patents on prescription drugs. It was intended to strike a
balance between promoting innovation (guaranteeing brand-name drugmakers a
certain number of patent years) and ensuring that consumers have timely
access to lower-cost generic medicines (guaranteeing generic drugmakers
that patents would eventually expire).


With the pressure on to reduce drug prices for seniors, many members of
Congress-including Republicans-are warming to the idea of closing
loopholes that have allowed brand-name companies to delay the introduction
of generics.


Novelli acknowledges that there will be a greater focus this year on
prices and patents. Though AARP supports the idea of discount cards,
Novelli cautions that movement in this direction should not rule out
adding an actual prescription drug benefit to Medicare.


Since September 11, AARP has been conducting consumer research and
sharpening its plans for when the congressional agenda again turns to
domestic issues. The group is planning an extensive lobbying push and
grassroots campaign for January-to put pressure on Bush to advocate a drug
benefit in his upcoming State of the Union address and to include money
for it in his fiscal 2003 budget proposal.


The 60-year-old Novelli is considered a pioneer in "social
marketing"-the art of changing people's views and behavior through
marketing techniques. "He's an exceptional leader. He has the
capability of seeing the big picture and pushing an organization to think
boldly," said Matthew Myers, the president of the National Center for
Tobacco-Free Kids, better known as the Campaign for Tobacco-Free Kids.
Novelli, who designed the campaign and was its first president, is
credited with significantly increasing public awareness of the problem of
underage smoking. In 1996, he created a series of hard-hitting
advertisements that played off the old "Joe Camel" and
"Marlboro Man" ads. "It was the first time the public
health community used paid ads to promote its policy agenda," Myers
said. "It helped frame the debate, and helped make this new
organization an important voice in the debate."


Members of Congress who still hope to add a prescription drug benefit to
Medicare want Novelli to bring the same kind of bold direction to AARP
that he has to other causes. "It would be helpful if AARP would be
assertive in taking positions. It's been really frustrating on the
prescription [drug] proposal. They're supportive-lukewarm about everything
that comes out," complained a key Senate Democratic aide. "If
they would just take a stand, we could know where they are."


AARP already was hinting at a bolder direction before September 11
paralyzed the prescription drug debate. As members of Congress left town
for their August recess last summer, the Senate Finance Committee's
efforts to create a consensus Medicare bill had broken down. Five
committee members-Sens. Charles Grassley, R-Iowa; Olympia Snowe, R-Maine;
Orrin G. Hatch, R-Utah; John Breaux, D-La.; and James M. Jeffords,
I-Vt.-had unveiled their own prescription drug plan, without the backing
of committee Chairman Max Baucus, D-Mont. An angry Baucus immediately made
it clear that he would not bring their bill to the panel for a vote.
During August, committee Republicans invited Baucus to resume bipartisan
discussions, but the chairman declined.


With an important and politically charged issue at stake, some Senators
were hoping that AARP would step in to help jump-start the deliberations.
Sen. John D. Rockefeller IV, D-W.Va., the most-senior Democrat behind
Baucus on the committee, told Novelli that strong leadership from AARP,
including some clear indications of what legislative provisions would be
acceptable to its members, could bring the lawmakers back to productive
discussions.


Novelli didn't need any prodding. "We'll keep recommending more and
more specifics as we go along," Novelli told National Journal at the
time. "Equally as important, we are going to educate and engage our
members. This is not going to be hard, because we know very well that our
members really, really want this. They don't get revved up about campaign
finance reform. They know what this is." Novelli said that AARP might
eventually craft its own outline of a bill, if that became
necessary.


In the meantime, AARP established an office in every state capital-forming
a comprehensive grassroots network. "We can truly go national in a
way that we were not able to do in the past. Few groups are able to do
that," said an energized John Rother, whom Novelli has promoted from
director of legislation and public policy to director of policy and
strategy. Some of AARP's state offices can mobilize 30-member staffs, plus
volunteers.


"If there's no action in the Congress, I think there will be
consequences in the elections," Rother said.


If Congress does not pass a Medicare bill, Novelli and Rother say that
AARP will not hesitate to work against selected lawmakers. AARP doesn't
endorse candidates, but the group's strategy during the 2000 election was
to get candidates to pledge support for prescription drug legislation-and
then publicize their promises. The strategy for the 2002 election will be
to hold members of Congress accountable for those promises. "Now
we'll see if people acted to fulfill their commitments," Rother
said.


Catastrophic Roots


To understand today's AARP, you need to understand the controversy over
the 1988 catastrophic-illness benefits law. At the time, Horace B. Deets
had just taken over the leadership of AARP, which was then called the
American Association of Retired Persons. With broad backing, including the
active support of AARP, Congress passed legislation that was designed to
prevent the elderly from being bankrupted by catastrophic-illness expenses
not fully covered by Medicare. The new law also helped seniors with
prescription drug bills.


The backlash came early in 1989, after the elections, when seniors
realized that the new prescription benefit came with a high deductible and
that premiums were based on income level. At one point, a group of
protesting gray-haired activists latched onto the car of Dan Rostenkowski,
D-Ill., then-chairman of the House Ways and Means Committee, while he was
at home in his Chicago district.


Congress quickly repealed the measure, despite AARP's continuing support
for the law. And thousands of angry seniors dropped their AARP
memberships. "Since that time, AARP has been essentially allergic to
providing any leadership on public policy matters, including matters
pertaining to Medicare," said one health care lobbyist. "It's as
if the organization doesn't in any way wish to cause any strain in
relationships with any portion of its membership."


Critics say that AARP was lying low to protect its bottom line: The group
sells Medicare supplemental insurance, prescription drugs, and mutual
funds, and it also operates a travel business. "It seems like there
was a decision that the organization wouldn't jeopardize that financial
base. Nothing to upset that membership," said a health care lobbyist.
"Its role has been largely to say, `We're studying this and we're
looking at this,' and deferring hard-nosed positions on issues that are
very difficult to finesse."


Dodging tough issues doesn't make many enemies, but it doesn't necessarily
win friends, either. Some Democrats complain that AARP's past
unwillingness to take a stand on prescription drugs ended up helping
Republicans, who have been generally more reluctant than Democrats to add
new Medicare benefits. In 2000, for example, Rep. Bill Thomas, R-Calif.,
who is now the House Ways and Means Committee Chairman, introduced a
proposal that would have provided incentives to insurance companies to
offer insurance policies just for drug coverage. The health care community
reacted negatively, mostly because insurance industry executives indicated
that their companies would be unlikely to offer such policies.


In a letter to Thomas, AARP raised questions about the proposal, but did
acknowledge that the plan would establish a prescription drug benefit in
Medicare. Thomas waved the letter before the committee, claiming it
represented AARP's validation that his proposal would indeed create a new
Medicare benefit.


AARP critics also point to its role in the debate over President Clinton's
health care reform plan, which contained a prescription drug benefit for
all seniors, as well as some long-term care benefits. Perhaps in reaction
to the debacle of the catastrophic-illness legislation, AARP initially
chose not to endorse the Clinton plan, despite appeals from White House
officials. "When it came out with its policy, the Administration was
going out of its way to get AARP to support it," said one health care
consultant. "But AARP wanted room to work with people on the details.
They didn't want to take an immediate position and then be ignored."
That was in 1993.


In 1994, when Clinton's bill was dying a quick death, then-Senate Majority
Leader George J. Mitchell, D-Maine, tried to salvage the effort by
introducing a milder version of the legislation. Deets endorsed that bill,
which had fewer benefits for seniors than the original. But by that time,
critics say, it was too late. Although public support for "doing
something" about health care was strong in 1993, it had dissipated in
1994. In the end, Congress passed no bill.


Throughout the rest of the `90s, the AARP staff was split between those
who favored a cautious approach and those who were eager to hit
high-priority issues quickly and aggressively. Novelli says that it's
beside the point to debate whether AARP lost its backbone after the fiasco
with the catastrophic-illness bill. "Whether we did or didn't, we've
got our nerve today," he says.


Even so, political strategists don't entirely blame AARP for its cautious
approach. Indeed, they suggest that that's how the organization has
managed to remain on friendly terms with many members of Congress on both
sides of the aisle. Jumping to a position or endorsement quickly can leave
an organization powerless to negotiate beyond that point.


Novelli maintains that AARP already does many things right, and he says he
must now find a happy medium between caution and assertiveness. "We
need to be quicker to make decisions. It's good to have a
consensus-building culture, which we do, but we need to be faster on the
decision-making. More agile."


Novelli also wants to create a broader revenue base to enhance AARP's
effectiveness as an advocacy organization. "It may sound strange,
coming from an organization that has a $600 million budget," he said.
"But if you look at some of the ambitious things we hope to do, we
need revenues to do that." That may mean slimming AARP's staff and
redeploying dollars to more important priorities, he said. "It may
mean stopping some programs that are under way, so we can spend more on
high-priority stuff."


AARP's staff is now defining what that "high-priority stuff" is.
But Novelli already has some ideas. For starters, he wants to promote
healthful aging by pushing programs for independent living, long-term
care, and quality at the end of life. He said that AARP is crafting a
strategy now, and that he wants to "invest a lot of resources, and
find partners." And in the wake of September 11, Novelli says he
wants AARP to help seniors become more involved in volunteerism in their
communities.


First, Fabric Softeners


Novelli has a long history of making things happen. "People look at
Bill and they see him taking the reins with a sense of commitment to be
more aggressive and timely," said Chris Jennings, the president of
Jennings Policy Strategies Inc., and a former Clinton health care policy
adviser. "He has a history of being someone who does get things done.
He doesn't have a job to have a job." Novelli says AARP is a perfect
fit. "The thing I've always been really interested in is social
change. To apply marketing communications to health and social
change."


Novelli, a native of Bridgeville, Pa., started his professional career at
Unilever, a worldwide packaged-goods marketing company, where he promoted
detergents, fabric softeners, toothpaste, and "other sexy
stuff." Then he joined a big New York ad agency, now defunct, called
Wells, Rich, and Greene, where he pushed kids' cereals and pet foods.
"I was completely in this career in marketing," he said.


Then came his eye-opener. In 1969, the agency put Novelli to work on an
account for the Public Broadcasting System. It was the first time that PBS
had hired an ad agency to help build an audience for public television.
The first thing Novelli did was to attend a press conference by the
creator of Sesame Street. He says that's when he realized that marketing
could be used to sell something other than cat food and detergent.
"Here's a woman selling ideas, selling education. And so, kind of a
lightbulb went off," he said.


He's been selling ideas ever since. He did it for the Peace Corps in the
early 1970s. "Developing countries were saying, `Hey, we love you,
but could you send us a few less art history majors, and could we get some
plumbers and MBAs, and some nurses?' " So Novelli repositioned the
Peace Corps to attract skilled people, not just 22-year-old college grads.
He placed articles in professional publications to reach out to nurses and
MBAs, and advertised in agricultural trade publications for farming
experts. He set up exhibits at conferences and arranged for speeches to
professional groups.


After the Peace Corps, Novelli spent nine months working on President
Nixon's re-election campaign. He and other aides conducted research and
focus groups that Novelli says went beyond the kind of polling that was
then commonplace. "A lot of this is garden-variety thinking
today," he said.


Following the 1972 campaign, he co-founded Porter Novelli, now a public
relations giant. (In the early 1980s, AARP was one of his clients.)
Novelli says he's particularly proud of an education campaign on high
blood pressure he championed for the National Heart, Lung, and Blood
Institute in 1973. "It's still considered, I think, the most
successful national health-promotion program in the country. It had a
profound effect on the disease."


He conducted extensive research to identify the people with undiagnosed
high blood pressure and to determine what steps they would be willing to
take to combat their disease. "You can't offer things that people are
not going to accept," he said. Novelli called it a
"push-and-pull" strategy. "We pushed down through the
medical system by persuading doctors and nurses to detect high blood
pressure by taking patients' blood pressure and treating it
aggressively." There were lots of articles in professional
publications. He also helped initiate a consumer campaign, using ads and
other techniques, to "pull" people to ask their doctors to test
their blood pressure.


Not the Only Game


At 35 million strong, AARP is far and away the largest advocacy group for
older Americans. But it's not the only one. New groups have emerged, both
to the left and to the right of AARP, in recent years. The AFL-CIO created
the Alliance for Retired Americans last year, for example, to replace the
National Council of Senior Citizens, a group of about 250,000 members that
was loosely tied to organized labor. The alliance has already enrolled 2.6
million union retirees, according to Dan Schulder, the group's director of
legislation. It's also recruiting nonunion members. Like the earlier NCSC,
the alliance plans to push its priorities forcefully. At its first
meeting, the group's board set prescription drugs as its top legislative
priority and adopted the principle that any such benefit must be
"universal, comprehensive, and affordable."


Despite the current budget troubles, Schulder says that the alliance will
continue to push for a comprehensive benefit that's even more generous
than proposals Congress considered last year. "We hope that the 2002
elections might stimulate Congress to act on this and not punt,"
Schulder said. The alliance is advocating taking the $300 billion that
Congress set aside in its fiscal 2002 budget and spending it in six years
as opposed to 10, so that individual benefits could be higher.


The alliance indicated last year that even the most generous prescription
drug bill wasn't good enough. It complained that a bill sponsored by Sen.
Bob Graham, D-Fla., cost seniors too much to meet its criteria. "Our
members say a $53-a-month premium is too much," according to
Schulder. He also said the bill gave health plans too much discretion to
allow pharmacy benefit managers to create their own lists of covered drugs
and to substitute generic medications. Still, Schulder is clear about the
alliance's goals. "We represent a progressive line-liberal. We think
governmental programs work well in this country." The alliance is in
a different position from AARP's, he added. "They represent a very
wide swath of people and have to be sensitive to their members'
desires.... We are looking for results quicker, and they may look at a
more global view. We think that now is the time to do it." He notes
that AARP "tends to have a regal view of the budget and the larger
needs of the federal government. We have a narrow view of what working
people and older people within working families need. AARP is not the
whole world." Still, he said, the two groups are not in conflict, and
may even complement each other.


Several conservative seniors groups also sprang up during the `90s. The
Seniors Coalition has nearly 4 million members; the United Seniors
Association Inc. has 550,000 members; and the 60 Plus Association Inc.
counts 500,000 members. Although these groups are smaller than AARP,
Republicans on Capitol Hill are paying attention to them. They
participated in several Medicare discussions with the House Ways and Means
Committee last year, and have been called to testify at hearings.


But while these groups are having an impact, it's unlikely they'll ever
achieve the kind of clout that's traditionally been associated with AARP.
Novelli's challenge will be to reassert that clout in a politically
divided Washington, without dividing AARP's politically diverse members.
Hardly an easy task.


Marilyn Werber Serafini

National Journal