Blue Defend Spent Years Cultivating a Relationship with Newsom. It Acquired the State Vaccine Contract.

SACRAMENTO — Gavin Newsom was simply making a reputation for himself as mayor of San Francisco in 2005 when Blue Defend of California wrote him its first main verify.


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The younger, business-friendly Democrat had exploded onto the nationwide scene the 12 months earlier than by issuing same-sex marriage licenses in San Francisco, and he was pushing his subsequent large concept, referred to as Venture Homeless Join. The initiative would host bazaar-style occasions in neighborhoods throughout the town, linking homeless folks to companies like meals help and well being care.

Newsom wanted monetary help from companies, and Blue Defend answered with a $25,000 contribution.

Over the subsequent 16 years, as Newsom’s political profession flourished, the medical insurance behemoth turned one in every of his most beneficiant and trusted supporters. It contributed practically $23 million to Newsom’s campaigns and particular causes, in keeping with a California Healthline evaluation of political and charitable contributions. Of that, practically 90% has funded the homelessness initiatives that critics and allies say are dearest to Newsom’s coronary heart.

Newsom, elected governor in 2018, in flip has rewarded Blue Defend and its executives with positions of energy in the course of the coronavirus pandemic, which has claimed practically 56,000 Californians’ lives.

Dealing with mounting criticism early this 12 months over the chaotic covid-19 vaccination rollout and a rising recall effort to take away him from workplace, Newsom gave the insurer a $15 million, no-bid contract to take over California’s life-or-death effort to rapidly vaccinate its 40 million residents. Final spring, Newsom additionally enlisted Blue Defend’s CEO, Paul Markovich, to assist steer the state’s covid testing technique, one other part of the state’s pandemic response that had faltered.

“Blue Defend responded early and responded typically,” and it was among the many first to spend money on Newsom’s controversial homelessness concepts, stated Philip Mangano, who led homelessness coverage beneath former President George W. Bush and now informally advises Newsom. “Gavin understood they might be trusted through the years.”

However Newsom’s determination to depend on Blue Defend is backfiring. A rising variety of public well being officers and lawmakers say Blue Defend isn’t the precise option to coordinate the state’s vaccine distribution. And California’s counties, that are implementing the state’s coronavirus response, merely refuse to signal on with the insurer.

Newsom’s political future now hinges, partially, on how rapidly Blue Defend — which continues to be charged with main how vaccines are allotted — can get photographs into Californians’ arms. The Republican-driven recall marketing campaign slams him for his response to the pandemic and for violating his personal public well being suggestions when he dined final fall on the unique French Laundry restaurant in Napa Valley with folks from outdoors his family.

Recall organizers say they’ve submitted 2.1 million signatures, and county election officers have till April 29 to certify that a minimum of 1.5 million are legitimate to ensure that the state to set a recall election this fall.

Newsom didn’t reply to interview requests.

Blue Defend, which has already contributed $269,000 to a political account that Newsom might faucet to combat a recall election, additionally declined a number of interview requests. However in an e mail, spokesperson Don Campbell stated the Oakland-based firm repeatedly helps candidates who share its mission of bettering well being care entry and affordability.

“There is no such thing as a monetary or different profit being bestowed upon, or accrued by, Blue Defend,” Campbell stated. “Blue Defend was requested by the state to assist with vaccines. Our reward is to assist save lives.”


Blue Defend isn’t alone in donating to the governor and his initiatives. Different curiosity teams have given extra, reminiscent of Silicon Valley’s Fb and the well being care large Kaiser Permanente, which covers about one-quarter of the state’s inhabitants. (KHN shouldn’t be affiliated with Kaiser Permanente.)

Kaiser Permanente is advising Blue Defend on vaccine distribution and has a particular settlement with the state to vaccinate Californians — together with sufferers outdoors its system. Kaiser Permanente additionally invested in homelessness initiatives in San Francisco after Newsom acquired them off the bottom, and twice final 12 months responded to Newsom’s pleas for company {dollars} to fight the state’s hardest crises: It gave $25 million to a state homelessness fund arrange by Newsom and $9.75 million to an immigrant covid reduction fund.

However not like Blue Defend, which gave $20 million to the homelessness fund, Kaiser Permanente has by no means donated to Newsom as a politician, in keeping with native and state marketing campaign data. Blue Defend has given to Newsom in each elected workplace he has held over the previous 20 years.

“That’s how the sport works. It’s nearly customary affect peddling,” stated David McCuan, a Sonoma State College political scientist. “What’s completely different right here is the diploma, or the depth of what [Blue Shield] has finished beneath this governor.”

Over time, the corporate has funded Newsom and his coverage initiatives in a approach it hasn’t contributed to different politicians on the native or state stage, data present, serving to elevate him to increased workplace.

Blue Defend wrote its first verify to Newsom for $500 in 2002, when the corporate was primarily based in San Francisco and he was a metropolis supervisor pushing an formidable social welfare agenda to assist each poor folks and companies that had been rising impatient with the explosion of homeless folks sleeping in entrance of their institutions and crowding hospital emergency rooms. It was Blue Defend’s solely donation to a neighborhood political race in California that 12 months, in keeping with data with the secretary of state’s workplace.

After he had ascended to the mayor’s workplace, 14 of Blue Defend’s prime executives, together with Markovich, contributed a mixed $5,150 — on a single day, Aug. 22, 2007 — in keeping with marketing campaign statements filed with the San Francisco Ethics Fee. The corporate’s contributions continued when he served as lieutenant governor from 2011 to 2019.

However the firm’s funding in Newsom soared in the course of the 2018 gubernatorial race. Blue Defend and its executives contributed $71,550 to Newsom’s marketing campaign, and the corporate partnered with highly effective labor unions to kind a particular committee that allowed them to spend limitless quantities of cash on Newsom’s behalf. Blue Defend chipped in practically $1 million to that effort, and likewise gave $1 million to a committee shaped by well being trade teams to defeat one in every of Newsom’s major opponents, then-state treasurer John Chiang.

After Newsom gained the election, Blue Defend contributed $100,000 to his inauguration celebration and minimize a $50,000 verify in his title to a charity supporting firefighters.

With Newsom in workplace, Blue Defend centered on once more giving to the governor’s deepest ardour: homelessness. In January 2020, the identical month Newsom promised to dedicate unprecedented sources to combating homelessness, Blue Defend introduced its $20 million donation to his homelessness fund, which later reworked into “Venture Homekey.” That initiative is meant to finance the conversion of greater than 6,000 resort rooms throughout the state into housing items.

“Nobody sector can clear up the homelessness disaster alone,” Blue Defend quoted Newsom as saying in its Jan. 17, 2020, press launch asserting its donation. “It’s our collective duty to fulfill this second with daring motion and intentional management — and that’s precisely what Blue Defend’s management is doing.”

Behind the scenes in our assembly with @BlueShieldCA CEO Paul Markovich. We can not clear up our homelessness disaster alone in California, and we’re so thrilled for Blue Defend’s $20mm funding in our statewide homelessness fund. #CaliforniaForAll @CAgovernor @GavinNewsom

— Kathleen Kelly Janus (@kkellyjanus) January 28, 2020

The donation to Venture Homekey got here shortly earlier than covid derailed Newsom’s sweeping well being and homelessness agenda. However Newsom’s confidants say the connection he solid with Blue Defend assured him that the corporate might rapidly flip across the state’s troubled vaccination program.

“Due to their early funding, there was a stage of belief — I’d even say camaraderie — established going ahead,” Mangano stated. “Blue Defend took a danger approach again when Gavin was turning into mayor. There are different organizations like Kaiser Permanente who’ve since staked out positions in help, however they weren’t there early and so they weren’t those taking the best danger.”


When Newsom introduced that Blue Defend would take over California’s vaccine distribution, he emphasised the job could be within the palms of a nonprofit with an expansive supplier community geared up to rapidly get vaccines into arms. Whereas it stays a nonprofit, the state stripped Blue Defend of its tax-exempt standing in 2014, alleging it operated very similar to a for-profit insurance coverage firm.

The insurer, which covers about 4 million Californians, took in $21 billion in income in 2019, the newest 12 months for which knowledge is out there, with web revenue of barely greater than $573 million. The identical 12 months, it paid Markovich $7.5 million, plus advantages.

The Nationwide Committee for High quality Assurance has given Blue Defend a poor score for environment friendly affected person care. And on the chief job Newsom is asking it to do — getting vaccines to sufferers — Blue Defend is common, rating 3 out of 5 within the nationwide rating on flu photographs.

No different state seems to have delegated the vaccination job to an insurer, stated Dr. Georges Benjamin, government director of the American Public Well being Affiliation. And since counties refuse to contract with Blue Defend, the Newsom administration is scrambling to provide counties the choice to work with the state authorities as an alternative.

A rising variety of state and native lawmakers are calling the deal a waste of taxpayer cash.

“I don’t assume having Blue Defend step in goes to get lecturers vaccinated any faster. I don’t assume it’s going to get the 70-year-old Black people vaccinated any faster,” stated state Sen. Sydney Kamlager (D-Los Angeles), including that she has “extra religion” in her native public well being consultants than in Blue Defend. “And so they’re not doing it without spending a dime.”

Newsom has insisted that the insurer gained’t be allowed to revenue.

However critics of the deal argue that although Blue Defend isn’t technically allowed to earn cash off vaccinating Californians, the corporate stands to realize monumental status.

Since taking up this system on March 1, Markovich has appeared in press conferences and the corporate has produced slick promoting urging Californians to get vaccinated. In a single advert, viewers are left with the picture of the corporate’s blue brand on a black display.

“This isn’t about creating wealth. That is concerning the advertising and marketing alternative it represents. It’s enormous,” stated Michael Johnson, a Blue Defend whistleblower who left his put up as director of public coverage in 2015. “The explanation Blue Defend has been chosen for this isn’t due to its capabilities, however due to its relationship with Newsom.”


How California Healthline compiled knowledge about political and charitable spending by Blue Defend of California and Kaiser Permanente

Political contributions: Blue Defend of California made direct contributions to Gavin Newsom’s private marketing campaign accounts for each political workplace he has held since 2002, when he served as a San Francisco supervisor. These contributions could be discovered on the California secretary of state’s web site or the San Francisco Ethics Fee web site.

Moreover, Blue Defend has given giant contributions to a poll measure account run by the governor referred to as “Newsom’s Poll Measure Committee,” which might settle for limitless quantities of cash. These contributions could be discovered on the California secretary of state’s web site. And Blue Defend made sizable contributions, often called “impartial expenditures,” to 2 poll measure committees that benefited Newsom’s 2018 gubernatorial bid. One, “Newsom for Governor 2018, Sponsored by Labor Organizations and Blue Defend of California,” was additionally supported by the Service Staff Worldwide Union and lecturers, police and firefighters unions. The opposite, “Chiang for Governor 2018; Well being Care Suppliers for Fiscal Accountability Against John,” additionally acquired contributions from the California Medical Affiliation and California Dental Affiliation.

Charitable contributions: Blue Defend and Kaiser Permanente have made “behested funds,” that are donations to charities and different nonprofit organizations in elected officers’ names. Blue Defend gave in Newsom’s title to “Venture Homeless Join” whereas he was mayor and “Venture Homekey” as governor.

Kaiser Permanente gave to Venture Homekey and a state covid immigrant reduction fund in Newsom’s title. Behested funds to state elected officers are disclosed on the California Honest Political Practices Fee web site, and behested funds to Newsom when he was mayor are on the San Francisco Ethics Fee web site.

This story was produced by KHN, which publishes California Healthline, an editorially impartial service of the California Well being Care Basis.

KHN (Kaiser Well being Information) is a nationwide newsroom that produces in-depth journalism about well being points. Along with Coverage Evaluation and Polling, KHN is among the three main working applications at KFF (Kaiser Household Basis). KFF is an endowed nonprofit group offering info on well being points to the nation.


This story could be republished without spending a dime (particulars).

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