Two of the region’s significant ballot issues coming up next month – Oregon’s Measure 50 and Washington’s R-67 – ought to be watched closely by marketing professionals. The point: Can sheer weight of money, Niagras of dollars, do the job of winning the public over to the side of two of the least-liked institutions in the country over to their side of an issue?
Target point for Measure 50 is tobacco companies, and for R-67 insurance companies – who better if you could choose your opposition in a popularity contest? That doesn’t mean either will necessarily pass; the outcome of both is in some doubt. The biggest reason for that is that these fat-pocketed targets aren’t sitting still. They’re throwing major bucks into these campaigns.
Their strategies are somewhat different, befitting the availability of their targets.
Washington’s Referendum 67 (passed by the Legislature this year, now up for action by voters) is targeted directly at the insurance industry, and is fairly simple. It says that if an insurance company unreasonably denies a claim (and discussion about what “unreasonably” eventually means), the policyholder can sue for triple damages.
(A bit of background: Treble damages are not an unusual concept in the law. From Wikipedia: “The ability to award treble damages is a typical feature in legislation that recognizes the potentially willful nature of the prohibited acts. For example, such damages may be awarded by a court in the United States for willful violation of the antitrust laws, for willful patent infringement, for trademark counterfeiting, and under the RICO statute, 18 U.S.C. § 1964(c). The idea behind the creation of such damages, also called exemplary damages, is that they will encourage citizens to sue for violations that are harmful to society in general.”)
There are realistic policy arguments about this. Insurers (and the top funders of the campaign against R-67 include such familiars as State Farm, SafeCo, Allstate, Fireman’s Fund and that cute little gecko company) warn that treble damages could encourage frivolous or fraud-based lawsuits, thereby driving up insurance premiums. Their critics point to cases where insurers slip out of paying in cases where premiums were paid up and compensation was reasonable expected. We find fairly persuasive the take of Insurance Commission Mike Kriedler, who supports R-67. From a KING-TV report:
“Your problem is going to be that you’re going to find it very difficult to find an attorney, because so little money is involved, that will choose to represent you,” said Mike Kreidler, Washington state insurance commissioner.
“If you have a claim and you can’t get an attorney to take your claim, then perhaps your claim doesn’t have merit. The other way to look a that is that if you have a small claim and you don’t want to take the time, money, resources and your energy to go to an attorney, then go to the Insurance Commissioner and use his advocacy services,” said Childress.
As for what the insurance industry says – that this will lead to a lot of frivolous lawsuits, and it’s going to drive up the rates, Kreidler says “Baloney, because, if the company lives up to their own advertising, to deal with you as their policy holder in good faith, and they all advertise that way, then it’s not going to cost them one dime more,” said Kreidler.
The campaign against R-67 (which includes an array of businesses and chambers, but little – its name notwithstanding – by way of consumer advocacy) mentions some of these points, but they aren’t its focus. What is, is trial lawyers. The Reject R-67 web site’s Myths and Facts page starts out with this: “Washington trial lawyers think they have found another way to fatten their wallets at the expense of consumers. Referendum 67 would allow lawyers to demand outrageous settlements—even if the claim isn’t legitimate! The result? Excessive fees for lawyers, soaring insurance premiums for consumers, and higher prices for goods and services. Do you think the personal injury lawyers are looking out for your interests? Think again.” And the phrase “trial lawyers” seems to pop up about once a sentence thereafter. (Trial lawyers are among the players in favor of R-67, but only alongside plenty of others, including an array of labor organizations, senior associations like AARP, and others.)
Strategy: Set this up as one bad guy (trial lawyers) against another (ulp, insurers), and fund a big-money campaign (somewhere around $8.7 million to date, with plenty more coming) against the first bad guy.
For that reason, we’d disagree somewhat with the critics – like the Horse’s Ass blog – of the insurance campaign, who are describing the anti-67 campaign as one of obfuscation. We’d describe it rather as a carefully targeted reframing, a clear attempt to move discussion away from the insurance industry practices the referendum addresses.
South of the river, the Measure 50 opposition campaign, funded to a similarly high level – now around $7 million (overwhelmingly from R.J Reynolds and Philip Morris companies), the highest ever on an Oregon ballot issue – almost entirely by major tobacco companies, has a different approach.
Measure 50, sent to voters by the legislature as a constitutional amendment, would raise cigarette taxes by 84.5 cents a pack, to a total of $2.025, exactly matching the rate in Washington state. (Still lower as a purchase price, though, since Oregon has no general sales tax.) The money would go into several funds, most of it aimed at providing health insurance and care for children; about 117,000 Oregon children are not covered by health insurance. The measure has gotten a broad range of support, and the case – “support health care for kids not covered by insurance” – is powerful.
The legislative analysis of the use of the money breaks it down this way: “Healthy Kids [the children health insurance program as such] (72.34% for 07-09), (68.47% for 09-11); Kids Safety Net (3.04% for 07-09), (2.88% for 09-11) [a sort of rainy day fund for the same purpose]; Rural Health (1.16% for 07-09), (1.10% for 09-11) [general rural health care]; TURA (4.918% for 07-09), (10% for 09-11) [the “tobacco use reduction account’]; Oregon Heath Plan (OHP) (18.54% for 07-09), (17.55% for 09-11) [low income adult health care].”
There are several arguments against.
One simply is in imposing a big tax increase, which this is. But it isn’t out of line. The current cigarette tax in Oregon is $1.18, a little above the national average of about $1 a pack, but almost exactly at the non-tobacco state tax level. However, it is far below the rate in Washington state, the most relevant border area. The rates are going up nationally. Tobacco interests dumped $60 million to turn back a big increase in California last year.
Another is a policy argument that cigarette smokers, many of low income, shouldn’t be singled out to pay for larger social needs (we’ll acknowledge a reasonable philosophical argument here) – or, alternatively, that if you’re going to tax cigarettes as being health-harmful, soft drinks and french fries may be next. Hmm . . . well, why not, if links as clear as those in the case of tobacco can be established? For the moment, we’ll note that the U.S. Centers for Disease Control & Prevention link smoking-related health costs in this country to tobacco at a rate of $10.28 per pack sold.
There’s also the argument, especially on a number of blogs, that not all the money is going to the Healthy Kids program – that significant chunks are going elsewhere. But that’s not really valid either. Three-quarters of the money would go to either that program or its backup fund, and about half the rest would go for a traditional tobacco tax purpose, tobacco use reduction.
Politically, perhaps recognizing that smokers are only about a fifth of the Oregon population and a small minority of the voting base, the tobacco companies have not focused hard on this. They’ve gone after something else we do think is a problem: The inclusion of the tax in the state constitution, something different from past practice.
(Why Measure 50 advocates haven’t yet taken the obvious responsive step to this isn’t clear. The obvious step: Publicly declaring, and pledge with signature, that they will support removal of the provision from the state constitution at the next available election – provided that the tax is by then incorporated in the state code.)
The vagaries of what does and doesn’t belong in the constitution doesn’t seem to be something that gives voters nightmares. (They passed Measure 36, the same-sex marriage amendment, in 2004 despite similar concerns.) So this seems an improbable argument for the tobacco guys to focus on in their mega-million television campaign. That they have suggests they’ve decided to do more closely what the R-67 advocates in Washington have charged of their opposition – to obfuscate, to stir up worry and doubt: “If they’re making such a big deal about this change I don’t fully understand, then maybe there’s some fire behind the smoke . . .”
So we won’t offer any flat predictions on the future of either of these ballot measures. The pro-measure campaigns in each case have only begin to kick in; each have a strong chance of doing their job, even if heavily overfunded, provided their messages do get out.
But it’ll be a fight indeed. And worth watching to see what wads of money can do.Share on Facebook