Facing mounting criticism early this year over the chaotic COVID-19 vaccination rollout and a growing recall effort to remove him from office, Newsom gave the insurer a $15 million, no-bid contract to take over California’s life-or-death effort to quickly vaccinate its 40 million residents. Last spring, Newsom also enlisted Blue Shield’s CEO, Paul Markovich, to help steer the state’s coronavirus testing strategy, another component of the state’s pandemic response that had faltered.
“Blue Shield responded early and responded often,” and it was among the first to invest in Newsom’s controversial homelessness ideas, said Philip Mangano, who led homelessness policy under former President George W. Bush and now informally advises Newsom. “Gavin understood they could be depended on over the years.”
But Newsom’s decision to rely on Blue Shield is backfiring. A growing number of public health officials and lawmakers say Blue Shield isn’t the right choice to coordinate the state’s vaccine distribution. And California’s counties, which are implementing the state’s coronavirus response, simply refuse to sign on with the insurer.
Newsom’s political future now hinges, in part, on how quickly Blue Shield — which is still charged with leading how vaccines are allocated — can get shots into Californians’ arms. The Republican-driven recall campaign slams him for his response to the pandemic and for violating his own public health recommendations when he dined last fall at the exclusive French Laundry restaurant in Napa Valley with people from outside his household.
Recall organizers say they have submitted 2.1 million signatures, and county election officials have until April 29 to certify that at least 1.5 million are valid in order for the state to set a recall election this fall.
Newsom did not respond to interview requests.
Blue Shield, which has already contributed $269,000 to a political account that Newsom could tap to fight a recall election, also declined multiple interview requests. But in an email, spokesperson Don Campbell said the Oakland-based company regularly supports candidates who share its mission of improving health care access and affordability.
“There is no financial or other benefit being bestowed upon, or accrued by, Blue Shield,” Campbell said. “Blue Shield was asked by the state to help with vaccines. Our reward is to help save lives.”
Blue Shield Invested in Newsom's Political Career Early
Blue Shield isn’t alone in donating to the governor and his projects. Other interest groups have given more, such as Silicon Valley’s Facebook and the health care giant Kaiser Permanente, which covers about one-quarter of the state’s population. (KHN is not affiliated with Kaiser Permanente.)
Kaiser Permanente is advising Blue Shield on vaccine distribution and has a special agreement with the state to vaccinate Californians — including patients outside its system. Kaiser Permanente also invested in homelessness projects in San Francisco after Newsom got them off the ground, and twice last year responded to Newsom’s pleas for corporate dollars to combat the state’s toughest crises: It gave $25 million to a state homelessness fund set up by Newsom and $9.75 million to an immigrant COVID relief fund.
But unlike Blue Shield, which gave $20 million to the homelessness fund, Kaiser Permanente has never donated to Newsom as a political candidate, according to local and state campaign records. Blue Shield has given to Newsom in every elected office he has held over the past 20 years.
“That’s how the game works. It’s just about standard influence peddling,” said David McCuan, a Sonoma State University political scientist. “What’s different here is the degree, or the depth of what [Blue Shield] has done under this governor.”
Over time, the company has funded Newsom and his policy initiatives in a way it hasn’t contributed to other politicians at the local or state level, records show, helping elevate him to higher office.
Blue Shield wrote its first check to Newsom for $500 in 2002, when the company was based in San Francisco and he was a city supervisor pushing an ambitious social welfare agenda to help both poor people and businesses that were growing impatient with the explosion of homeless people sleeping in front of their establishments and crowding hospital emergency rooms. It was Blue Shield’s only donation to a local political race in California that year, according to records with the secretary of state’s office.
After he had ascended to the mayor’s office, 14 of Blue Shield’s top executives, including Markovich, contributed a combined $5,150 — on a single day, Aug. 22, 2007 — according to campaign statements filed with the San Francisco Ethics Commission. The company’s contributions continued when he served as lieutenant governor from 2011 to 2019.
But the company’s investment in Newsom soared during the 2018 gubernatorial race. Blue Shield and its executives contributed $71,550 to Newsom’s campaign, and the company partnered with powerful labor unions to form a special committee that allowed them to spend unlimited amounts of money on Newsom’s behalf. Blue Shield chipped in nearly $1 million to that effort, and also gave $1 million to a committee formed by health industry groups to defeat one of Newsom’s primary opponents, then-state Treasurer John Chiang.
After Newsom won the election, Blue Shield contributed $100,000 to his inauguration celebration and cut a $50,000 check in his name to a charity supporting firefighters.
With Newsom in office, Blue Shield focused on again giving to the governor’s deepest passion: homelessness. In January 2020, the same month Newsom promised to dedicate unprecedented resources to combating homelessness, Blue Shield announced its $20 million donation to his homelessness fund, which later transformed into “Project Homekey.” That initiative is intended to finance the conversion of more than 6,000 hotel rooms across the state into housing units.
“No one sector can solve the homelessness crisis alone,” Blue Shield quoted Newsom as saying in its Jan. 17, 2020, press release announcing its donation. “It’s our collective responsibility to meet this moment with bold action and intentional leadership — and that’s exactly what Blue Shield’s leadership is doing."