Why So Many CEOs Are Cozying Up to Trump

Why So Many CEOs Are Cozying Up to Trump


I’ve managed to find what I believe is the only explicit show of support for the American Health Care Act outside of House Speaker Paul Ryan’s office. Joseph Swedish, the CEO of health insurance giant Anthem, threw his support behind the bid to repeal and replace Obamacare in a letter to Congress, saying it “addresses the challenges immediately facing the individual market and will ensure more affordable health plan choices for consumers in the short term.”

As the Republican plan promises generally stingier support for health insurance, with higher premium costs, co-pays and deductibles on the individual market, I don’t understand Swedish’s claim. Even in the short term, the proposal eliminates the individual mandate penalty, enabling healthy consumers to avoid getting insured unless they get sick. That could worsen the current problem for insurers: a sicker covered population than expected. Indeed, even America’s Health Insurance Plans, the main lobbying group for big insurers like Anthem, expressed concern over numerous pieces of the GOP bill, including the inadequate tax credits to purchase insurance and the vanishing mandate penalty.

Related: Why the Republican Health Care Plan Is Destined to Fail 

So why does Anthem see success in repeal and replace where so many see failure? Why is the CEO more excited about this plan than many Republicans are? It may have something to do with the fact that Anthem wants to buy fellow giant Cigna for $54 billion. And in the Trump era, Anthem, like many other corporations seeking mergers and acquisitions, has decided that the path to success in building monopoly power goes directly through the White House.

That’s a very disturbing prospect, because merger reviews operate out of nominally independent federal agencies, at both the Federal Trade Commission and (in the case of the insurance industry) the Antitrust Division of the Justice Department. Yet corporate wooing of Trump to grease the wheels for merger approval creates a serious conflict of interest hanging over one of the greatest challenges facing the U.S. economy.

A federal judge blocked the Anthem/Cigna merger in February; Anthem decided to appeal (Cigna is grudgingly going along with the challenge). In its arguments ahead of the March 24 appeal, Anthem said in open court that it believed the Trump administration would be more favorable to the merger than Justice Department officials under President Obama. And just a couple weeks after that comment, Anthem’s CEO stakes out a lonely position in favor of what to this point is Trump’s signature legislative initiative.

Related: Republican Health Plan — Good for the Budget, Bad for the Poor and Elderly

If anything, Anthem’s strategy is less overt than those of its corporate counterparts. CEOs of companies awaiting completion of merger reviews have formally met with Trump. AT&T chief Randall Stephenson sat down with the president-elect in January; the two sides claimed the telecom’s pending $85.4 billion merger with Time Warner didn’t come up. Even if true, ex parte communications between the president and CEOs awaiting merger approval are highly unusual.

The heads of Bayer and Monsanto, meanwhile, did discuss their $66 billion proposed merger with Trump at a January meeting. In fact, Trump appeared to dictate terms, announcing a pledge that the new company would spend $8 billion on research and development and add jobs. This completely disregards due process, sells out family farmers and weakens competition in the seed and pesticide markets, in exchange for vows that were apparently already made well before the Trump meeting, and a vague reference to jobs, when the merger itself is designed to create corporate “synergies” that will downsize workers, as is typical for corporate consolidations.

Trump also met with SoftBank’s Masayoshi Son, securing another dubious pledge of $50 billion in U.S. investment. But the meeting appeared to give SoftBank the greenlight to pursue a merger between its subsidiary Sprint and T-Mobile, which SoftBank has considered previously. Talks between SoftBank and Trump’s team have continued since that initial meeting in December. Last week, reports indicated that Son was “betting big on Trump,” and that Sprint could join with either T-Mobile or Comcast.

Related: OMB Director Mulvaney Blowing Smoke on Health Law’s Impact

It was strong antitrust enforcement from the Obama administration that blocked T-Mobile from a series of proposed mergers, leading to competition that has proved beneficial for consumers. We wouldn’t see every major wireless carrier offer unlimited data plans without T-Mobile making the first foray.

But Trump hasn’t filled any of the vacancies in antitrust positions at the Justice Department or the Federal Trade Commission, much like the other open posts across the federal government. This centralizes power inside the White House in unusual and disturbing ways. We have a legal process for determining whether markets have grown unfairly concentrated, based on enforcing century-old laws that promote competition. That doesn’t include sucking up to the president and hoping that influences whatever monopolization corporations want.

The Justice Department has of course maintained that it won’t be swayed by political considerations in merger review. But Attorney General Jeff Sessions was one of Trump’s closest confidants on the campaign trail, and his independence has already been questioned. Moreover, if Trump is cutting deals with the likes of Bayer and SoftBank, the Justice Department will be under enormous pressure to not inhibit them by blocking those plans.

Related: GOP’s Repeal of Obamacare Taxes Could Put Medicare Closer to Insolvency

The end result here is a de facto private government, with corporations able to appeal to one man who thinks running the country equals having CEOs visit the White House every other day to chat. Communications channels to Trump come overwhelmingly from a small subset of the country, one that has its own agenda in mind: more consolidation, more accumulation of power and more use of that power to maximize and hoard profits while destroying competitors. We know that concentrated markets, which have worsened over the past three decades, equal higher consumer prices, fragile supply chains, greater inequality and a kind of sickness in the economy — a lack of dynamism that harms all of us. While it’s bad for the country, it’s good for those at the top. And they have a straight channel to the president to get things done.

The Republican health care proposal is so battered that Anthem might not get its wish of a reworked insurance market. But it will have shown a president who values loyalty highly that it was willing to give support when few others would. And that could mean getting its prized merger. These days, success in business merely means pleasing a small man who lives on Pennsylvania Avenue.