Democrats Could Win With a Truly Bi-Partisan Health Care Reform Strategy

Hopefully the cottage industry in health care reform paranoia can calm down now. No one in Washington is talking about strategies to short circuit the election results in Massachusetts this week in which state Senator Scott Brown, soon to be the Republican’s “41st vote,” upset the Democratic candidate in a special election. While some dismayed Democrats did consider ways of passing legislation before Senator Brown is sworn into office, there was never really a chance that would happen.

One reason Senator Brown won was a reaction to the hubris Democrats in Congress displayed over the past 12 months concerning health care reform. Favors were dealt out to key lawmakers party favors at a kid’s birthday if that’s what it took to secure their votes. A temporary exemption from an excise tax on expensive health insurance policies was crafted for unions to get their support. Deals were brokered with large pharmaceutical companies and others to get them on-board. This is politics as usual, practiced by Democrats and Republicans alike.

Engaging in politics as usual, however, was the problem: voters in 2008 expressed their desire for change. Politics as usual is exactly what the public did not want.

Given this reality, Democrats passing a health care reform bill by jamming something through would be political malpractice of the highest order. Besides, there were never enough rank-and-file lawmakers in the caucus willing to go along with such silliness. So, not surprisingly, instead of passing health care reform by manipulating the rules, Democrats are now taking a breather, gathering their thoughts and developing a strategy for moving forward.

After some reflection, Democratic leaders will realize the scope of health care reform they can pass is extremely limited. Expensive, intrusive reforms are no longer an option. This doesn’t mean they can’t pass some version of reform. It just means that the reform they can pass will need to be less expensive, less comprehensive, and less intrusive than they had hoped.

What health care reform can be passed, and how long it will take, will depend in large part on which of two strategies the White House and Congressional Leaders choose to take.

President Barack Obama, Senate Majority Leader Harry Reid and House Speaker Nancy Pelosi can either pursue health care reform that gains the vote of the fewest number of Republican lawmakers necessary or legislation that can earns support from a meaningful percentage of Congressional Republicans. Following the former strategy would see them negotiate almost exclusively with Senators Olympia Snowe and Susan Collins. Seeking truly bi-partisan reform would require negotiating with a far larger group.

The bare minimum strategy will be tempting. It requires the least amount of compromise. As I wrote the other day, they could bare the current legislation down to its cost containment provisions, health insurance reforms, and some of the less expensive ideas to expand coverage to more Americans. Such a scaled-back bill might get the support of either Senator Snowe or Senator Collins – or both. (Who knows, even Senator Brown might be supportive. He does have to run for re-election in Massachusetts in 2012. He won the special election by positioning himself as an independent and downplaying his Republican affiliation. Showing his independence from hard-line Republicans is a reasonable political strategy for him.)

The problem with the bare minimum strategy is its what got Democrats into their current mess. By pursuing health care reform that never had a chance of gaining broad support, President Obama, Senator Reid and Speaker Pelosi assured a long, politically ugly legislative process – one that required the kind of deal making that voters, especially independent voters, had voted to change in 2008.

Instead, Democrats could take the advice of House Majority Whip Jim Clyburn, who observed, “Medicare wasn’t done in one fell swoop. You lay a foundation and you get this thing done over time.” If Democrats had taken this approach from the beginning health care reform might have been enacted already. Instead months were spent battling over issues like a government-run health plan that neither Republicans nor enough moderate Democrats could support. While hanging tough for a liberal wish list pleased their base (for awhile), it was inevitable moderate Democrats would determine the final health care reform package.

To gain sufficient Republican votes, Democrats will have to be willing to accept fairly limited reforms for now. They will need to include some meaningful malpractice reform. Democrats needs not include every and any provision Republican demand. Their goal is not to pass a bill by unanimous consent. Democrats just need to offer enough to peel off a significant number of Republicans – say 12 in the Senate and 35 or so in the House. Legislation with meaningful malpractice reform and a low sticker price could do that. Is this realistic? Well, there are a number of Republicans running in moderate seats, too. Running for re-election as a candidate who “opposed President Obama at every turn” is not a recipe for job security in such seats.

If Democrats succeed in passing bi-partisan reform they’ll have laid the foundation for future health care reform efforts. But what if Republicans unify behind a strategy of blocking reform of any kind, regardless of how moderate that reform might be? Such a strategy would just confirm that the GOP is the party of politics as usual. And in 2010 that’s not an image voters are likely to reward.

Health Care Reform 2009 Style

When it comes to health care reform 2009 has been an interesting year. And while comprehensive health care reform legislation will not be arriving on President Barack Obama’s desk this year, it is all but certain that will happen early in 2010. Getting to this penultimate moment has, to put it mildly, taken some doing. And the process says a lot about America and its leaders.

Health Care Reform Activity

President Obama had made clear throughout his campaign for the presidency that health care reform would be a top priority of his new administration. He lost no time making his promise real after his inauguration. Expansion of the State Children’s Health Insurance Plan, a proposal twice vetoed by then President George Bush, along with significant funding for medical technology, were a part of Administration’s economic stimulus package.

President Obama’s health care reform efforts took a serious blow in February when former Senate Majority Leader Tom Daschle was forced to withdraw his nomination as Secretary of Health and Human Services and as Director of the White House Office on Health Reform due to problems with his past tax returns. Senator Daschle is a political pragmatist who is highly regarded by lawmakers from both parties. Would the health care reform debate have been more civil had Senator Daschle led the White House reform effort? We’ll never know. What we do know is that civility quickly left the room as the House and Senate Committees with jurisdiction on the matter began their deliberations. The health care reform debate was passionate, raucous and partisan to the extreme. Neither party and no ideology is blameless for this descent into the dark side of politics. Both have benefited from it (although none as much as the 24 hour cable news channels) and both have sullied their standing with the public as a result.

Given what’s at stake when 1/6th of the nation’s economy is subjected to the legislative process, there may have been no avoiding an ugly health care reform debate. President Obama made clear in a speech in February that he wanted health care reform passed quickly. Many Republicans (and their talk show host allies) made it clear they’d rather see no health care reform rather than anything along the lines being proposed by – or that would politically benefit – President Obama. Meanwhile, the House Ways and Means, House Education and Labor and the Senate Health, Education, Labor and Pensions Committees pushed through liberal bills; anchors on the left in anticipation of the negotiations to follow. The resulting climate promoted intense partisanship.

Eventually more conservative Democrats forced the House Energy and Commerce Committee to slow done and moderate the legislation, although what they passed would still be considered “liberal” by most definitions.  All the House bills passed out of the committees without a single Republican vote. Meanwhile Senator Max Baucus was trying to fashion legislation that might gain the support of at least three GOP members of the Senate Finance Committee. (He would eventually manage to get the support of only one GOP Senator).

The difficulty of finding common ground between liberals and conservatives on health care reform was made abundantly clear during the summer of 2009. The disruption of lawmaker’s town hall meetings were reminiscent of the anti-Viet Nam War protests of the 1960’s. (I suppose it’s ironic that many of those shutting down the town hall meetings had participated in the anti-war protests more than 40 years earlier). The passion and concern of the health care reform protests were as sincere as some of the rhetoric and actions were unfortunate and despicable (death threats and swastikas are inherently contemptible and disgraceful). The protests did assure, however, that Republicans would remain united against the kind of reforms being pushed by the Administration.

Reform was being pushed by the White House even if the Administration was declining to define reform. Instead the White House broadly described the key elements they’d like to see in a reform bill. President Obama’s three core principles for health care reform called for reducing costs, guaranteeing choice and ensuring quality care for all. He would later add other conditions (e.g., reform could not add to the deficit), but the details of the bill were being hashed out in Congress by Democratic lawmakers. The result, much to the chagrin of liberals, was that over time the legislation became increasingly moderate culminating in the legislation passed out of the Senate Finance Committee with the support of only one Republican, Senator Olympia Snowe.

With all the committees of jurisdiction having staked out their positions it was time for Speaker Nancy Pelosi and Senate Majority Leader Harry Reid to pull together the pieces into bills that could pass their respective chambers. Speaker Pelosi succeeded first with the House passing a health care reform in November. The price of passage was high: liberals had to accept language dealing with abortions that sparked outrage in the pro-choice community.  It took the Senate more than a month to follow suit, but eventually they did. Now it’s up to a conference committee to pull the pieces together into one bill that can pass both the House and the Senate. Not an easy task, but with the finish line in sight it’s very doubtful lawmakers will falter now.

The Public Policy Dimension

While the activity swirling around health care reform has been … interesting, the evolution of the substance of the legislation has been even more fascinating. Not all that long ago liberal lawmakers were claiming a health care reform bill lacking a government-run health plan was no health care reform at all. They seemed to believe that a public health plan was the magic wand that would remake America’s health care system into something fair, competitive and wonderful. Or maybe they just thought the public option was a way station on the path to their promised land: a single payer system. While the House bill would create a new government health plan, the Senate legislation rejected the public option. While liberals outside of Congress continue to attack reform without a public option, liberals lawmakers seem to accept the inevitable. What emerges from the conference committee will no doubt lack a public option and liberal lawmakers will still support the reform package.

While liberals were losing a public option an unlikely coalition of conservatives and liberals were also watering down a requirement that all Americans purchase coverage. Conservatives dislike the idea as a restriction on the freedom of people to have their health care reform subsidized by higher health insurance premiums for everyone else. Liberals don’t like it because, apparently, the result is a windfall for evil health insurance companies. (OK, they offer more substantive public policy arguments against the individual mandate, but the rhetoric focuses on freedom and windfalls). Never mind that requiring health plans to sell coverage without requiring individuals to buy coverage before they incur claims is a recipe for higher insurance costs or that many states require drivers to buy auto insurance. As the legislation has moved through Congress the penalty for failing to purchase coverage has drifted toward a slap on the wrist end of the spectrum.

Other issues have taken interesting turns as well. Reimbursing doctors for counseling to seniors concerning living wills and the like was removed from the bill once the discussions were labeled “death panels.” What taxes will be imposed to pay for health care reform is still uncertain. Anti-abortion advocates have done a masterful job of inserting abortion into the debate. Both the House and Senate bills contained provisions that could “bend the cost curve” (which is apparently the new articulation of what was once called cost containment). If all the cost cutting provisions in the current bills were moved into separate legislation it would actually look like a serious effort. Mixed in with the health insurance reform dominating the current versions, however, the provisions appear weak and almost an afterthought.

Health Care Reform 2009: The Human Factor

So what to make of health care reform 2009 style?

First, that the legislative process is messy and can be downright uninspiring. Second, that tackling an issue as important and complicated as health care reform cannot overcome the need for partisans of both parties to put aside the public good for their political stratagems. Third, that the health care reform package that finally passes will be far more moderate than might have been apparent earlier this year. Fourth, criticism that Congress is moving too fast on reform are really complaints that Congress is not doing what critics leveling this charge want them to do. The health care reform bill that will find its way to President Obama’s desk in 2010 will be over a year in the making. Longer if you count the debate on health care held during the 2008 presidential election. Longer still if you include the previous health care reform efforts undertaken over the past several decades.

We elect politicians to hold office because they promise to address problems. No one has ever won a campaign on the promise to do nothing if elected. In 2008 Democrats won, and won handily, in part on a promise to solve the problems posed by America’s current health care system. They are fulfilling that promise. In the process they will create new problems.

Because the fact is we humans rarely solve problems. Instead we tend to replace existing problems with new ones. And if the 2009 health care reform process has taught us anything, it’s that the people who make up the Administration and Congress (and the general public) are only human. Anyone looking at the health care reform package emerging from Congress would find evidence of that reality.

Medicare Buy-in Compromise Unraveling?

Nothing lasts forever … not even health care reform compromises. The Congressional Budget Office is expected to come out with its analysis of the latest proposal – replacing a the creation of a new government-run health plan (the controversial “public option”) with a program in which Americans 55-64 could buy Medicare coverage. However, it’s looking like even if the CBO determines the idea makes financial sense, the votes to go forward with the proposal there doesn’t seem to be enough votes around for it to move forward. Which means the public option remains the big make-or-break element of health care reform in the Senate.

Only a few days ago, along with the idea of empowering the Office of Personnel Management to organize a coverage program, the Medicare buy-in compromise  seemed to be the solution to breaking the public option impasse. Now the idea seems to be losing steam.

First, doctors and hospital groups came out in opposition to the Medicare buy-in compromise, with the Washington Post reporting them as claiming the approach “would be financially untenable and would jeopardize access to health-care services for millions of Americans.”  The medical and hospital groups are concerned, according to the Washington Post, “because the program pays providers at much lower rates than private insurers, and because older Americans are the greatest consumers of health-care services.”

And then two conservative members of the Democratic caucus indicated their disapproval of the Medicare buy-in. According to the Associated Press, Senator Joe Lieberman, who had originally sounded open to the idea, now considers it “a bad deal for taxpayers and the deficit.” And the AP quotes Senator Ben Nelson as saying “I’m concerned that it’s the forerunner of single-payer, maybe even more directly than the public option.”

So while, as the Washington Post and others are reporting, the President Barack Obama and many Democrats are praising the compromise, the fact is, the Democrat’s need 100 percent buy-in by their caucus to pass any bill. (Yes, it’s possible Senators Olympia Snowe and Susan Collins might cross party lines and vote for a bill, but it’s hard to see how these Republican Senators could support any legislation conservative Democrats like Senators Lieberman and Nelson could not).

Democrats are trying to dodge a nasty choice: dropping the public option from health care reform. Liberals have made inclusion of a public option their litmus test for meaningful reform. As the liberal blog Daily Kos put it this past summer, the public option is the compromise progressives are willing to make between a single payer system and the status quo.

In the end, however, liberals will need to decide whether the absence of a public option is enough to get them to walk away from reform. Because there does not seem to be any way they will obtain 60 votes in the Senate for a bill that includes a new government-run health plan. My guess? Liberals will complain bitterly, but ultimately vote for a bill without a public option. Health care reform has been on their agenda for decades and they have moved the issue further through Congress  than ever before. To abandon it now would set back health care reform for at least a decade if not longer. Failure would hand Republicans a huge stick to use against them in the 2010 elections.

Passing reform, even reform liberals perceive as too weak, provides a foundation for future efforts. This might seem like a hollow victory for many progressives, but it would be a victory for them nonetheless. And I just don’t see them trading even a hollow victory for a hard defeat.

Senate Health Care Reform Still Alive, But Likely to Change

The Senate has just spent most of today (Saturday) engaging in a debate on whether to allow a debate on comprehensive health care reform. Later this evening 58 Democrats and 2 Independents will vote to allow Majority Leader Harry Reid’s health care reform bill come to floor for debate and consideration of amendments. 40 Republican Senators will vote unanimously against allowing this to happen. Senator Reid’s Patient Protection and Affordable Care Act is still alive. It is unlikely to survive in its current form for long, however.

Don’t get me wrong. Tonight’s vote is significant, very significant.  The vote is a test of President Barack Obama’s and Senator Reid’s ability to line up enough votes to keep the bill alive.  The debate leading up to the vote has been an opportunity for Republican Senators to present their opposition to HR 3590. (Yes, the Senate has taken a bill passed by the House and moved to the Senate, gutted that language and substituted their health care reform package. Consequently, the Senate legislation has a House bill number.) And the vote to allow debate has served as an action forcing event, sort of, for Democratic moderates.

Those moderates could have sided with the Republicans killing the bill before it could be brought to the floor. Instead, they joined with their liberal colleagues and kept health care reform alive. While there are 18 moderate Democratic Senators (including Senator Joe Lieberman, who is an Independent), it eventually came down to three:  Senators Mary Landrieu, Blanche Lincoln and Ben Nelson. All three made clear they would seek amendments to the bill before voting for it. And all three are among those moderates making it clear further changes to the Patient Protection and Affordable Care Act is necessary before they’ll commit to voting for it.

We’ll learn more about the changes moderates will demand over the several weeks before a final vote on health care reform is held in the Senate.  Democratic leaders are hoping to hold that vote before the end of the year. The legislation would then move on to a conference committee that will attempt to reconcile it with legislation the House passed earlier this month.  More importantly, that conference committee, made up of an equal number of Senators and House members, will seek to fashion legislation they hope will earn the support of a majority of House members and 60% of Senators. As I’ve noted before, passage of legislation by the Senate is merely the final playoff game. The World Series — the conference committee — is yet to come.

Uniting the Democrats to allow debate on health care reform is a victory for the Obama Administration and for Senator Reid personally. That it took this much effort, however, demonstrates the challenges they yet face. Republicans appear to be uniting in opposition to the legislation. Even Senator Olympia Snowe, who voted for a health care reform bill in the Senate Finance Committee, is expected to vote against bringing HR 3590 to the floor.

I’ve written before about the power moderates have to determine if health care reform legislation will pass Congress and what the final bill will contain.  Now we’ll see that power put forward. Some of what they’ll ask for will be parochial. (That there’s a provision in Senator Reid’s bill that would send additional Medicaid money to Senator Landrieu’s state of Louisiana is neither a coincidence or accidental). But most of their demands wil concern public policy issues. Moderate Democrats tend to be more fiscally cautious than their more liberal colleagues, giving them pause to legislation that greatly expands governmental powers,  spends nearly a trillion dollars over the next decade and taxes corporations and individuals to pay for it. These are the issues on which they will focus.

Republicans will have their own pet issues, but those are unlikely to influence the outcome. Having already declared their unmoving opposition to any health care reform Democrats could claim keeps their campaign promises, the GOP has removed themselves from negotiations. (A couple of the Republicans, most notably Senator Snowe and her colleague from Maine, Susan Collins, might vote what moderate Democrats fashion. But whether they’ll be able to insert provisions without committing to voting for the bill if their amendments are accepted is unlikely. 

We don’t know yet what changes to HR 3950 moderate Democrats will demand, but the possibilities are extensive. They could eliminate a public option — or at least postpone its implementation until after other reforms have had a chance to take effect. They could  demand additional cost containment provisions. They could strengthen — or weaken — the requirement that all consumers obtain coverage. Certainly they will modify what taxes and fees are imposed to pay for health care reform.

What’s important to remember is that moderate Senators will have two shots at the bill. They’ll extract as much as they can during the current Senate debate. Then at least two or three of them are likely to agree to vote for the bill “in order to keep the process moving forward.” However, they’ll also make clear they want significant changes made to the legislation by the conference committee before they’ll commit to a vote that would place the legislation on the president’s desk. Liberals will insist they have compromised all they can, but in reality, the moderates (and the liberals) know that the progressives are likely to accept any legislation that can be called “health care reform” with a straight face. And as politicians, they have great skill in passing the straight face test.

Yes, Democrats have won the debate on whether to debate health care reform. What legislation eventually emerges from the Senate, if any, is still uncertain.

House Health Care Reform Passes, But It’s Far From the Last Word

History was made on November 7th when the House of Representatives passed HR 3962, the Affordable Health Care for America Act. Yes, it was a close vote (220 in favor versus 215 opposed). Yes, only one Republican voted for the bill. Yes, the legislation leaves a lot to be desired. At the end of the day, all that matters is that the legislation passed. President Barack Obama’s health care reform initiative remains alive and is closer to reality than the efforts of his predecessors. Given the complexity and controversy surrounding the issue, not to mention the competing demands of numerous, powerful stakeholders, this is a remarkable achievement.

While historic and remarkable, however, it’s important not to read too much, or too little, into what happened. Consider:

House Passage of Health Care Reform Puts Pressure on the Senate: It’s probably hard for Republicans to understand the importance of health care reform to Democrats. I suppose it’s the equivalent of a tax decrease to the GOP. It’s a defining issue, in the sense that the issue differentiates themselves from the other side. When Republicans controlled the White House and Congress they lowered taxes. They could have made a major push behind health care reform during their years in power, but that’s not where Republicans were willing to invest the political capital in health care reform, not when it could be put behind cutting taxes. Democrats now control the Executive and Legislative branches. And they are investing their political capital where their heart is: health care reform.

Which means if you’re a Democratic Senator you do not want to be the reason health care reform fails. No doubt some members of the Senate were quietly hoping the vote in the House would fall short, letting them off the hook. No such luck. Now it’s up to Senate Democrats to keep the dream of health care reform alive.

HR 3962 is Not on the President’s Desk: Nor is it likely to ever get there.  What the Senate will pass is not likely to look a lot like the Affordable Health Care for America Act, either. The politics in the Senate are far different from that in the House. Consider the idea of the government creating – and maintaining – a health plan to compete with private carriers. Senator Joe Lieberman reiterated his threat to vote against allowing a reform bill containing a government-run plan to come to a vote on the Senate floor, according to the Associated Press. Unless his 60th vote is replaced by a Republican (think Senator Olympia Snowe) Democrats will be unable to overcome a GOP filibuster with Senator Lieberman’s vote.

Of course, as noted in an earlier post, Senator Roland Burris is threatening to prevent a bill without a public insurance plan to come to a vote. So Senate Majority Leader Harry Reid has to craft a package that satisfies a diverse and divided caucus (Senator Lieberman is an Independent, but he caucuses with Democrats in order to hold on to his committee chairmanship). Senator Reid has already submitted a proposal to the Congressional Budget Office for review. (That the CBO has yet to issue an analysis is widely taken as evidence the cost of the legislation is higher than Senator Reid is counting on, meaning adjustments will be required). Meaning …

The Senate Will Pass a More Moderate Bill. Whatever Senator Reid puts before the Senate, it will be more moderate than HR 3962. Moderates hold more power in the Senate than they do in the House. Leaving aside Senator Lieberman, passage of health care reform in the Senate will need to satisfy 17 moderate and conservative Democrats. While several of these Senators have already pledged their support to the legislation outlined (but not published yet) by Senator Reid, there’s enough hold-outs to force concessions that will disappoint liberals. Yet those liberals are unlikely to vote against health care reform and accept blame for defeating this core Democratic issue. (Senator Burris is an exception for reasons discussed in the previous post).

When the Senate Acts Will Be When Democrats Have 60 Votes:  Warner Pacific, a general agency based in California, held a series of town hall meetings last week featuring former Senate Majority Leader Tom Daschle. John Nelson, co-CEO of Warner Pacific, interviewed Senator Daschle for roughly 90 minutes and the result were numerous, meaningful insights which I’ll try to write about in future posts. But one observation Senator Daschle offered is relevant here. When it comes to passing legislation, the Senator described the role of the Majority Leader and House Speaker as shoveling frogs onto a wheelbarrow. Why did the House vote on health care reform now instead of waiting to learn more details concerning the Senate legislation? Because Speaker Nancy Pelosi had finally managed to fill the wheelbarrow with at least 218 votes and the longer she waited the more likely it was one of them would jump out.

Speaker Pelosi had a somewhat easier task than the one facing Senator Reid’s. She needed to muster a simple majority and the rules of the House gives her more power than Senator Reid enjoys in the upper house. Plus he needs to shovel a super-majority of 60 frogs into his wheelbarrow.  Once he marshals the votes, however, expect the Senate to act relatively quickly. And don’t expect a vote to be scheduled until Senator Reid is reasonably confident he will prevail. Once that happens, however, the Senate will likely pass their health care reform legislation. Then …

It’s the Conference Committee That Matters: Getting health care reform this far has required a Herculean effort by lawmakers and the White House. And it’s all aimed at getting two bills to a Senate-House conference committee. That’s where the final deals will be struck, losers and winners defined, and the political calculation made as to what single bill can be passed by both chambers of Congress.

For brokers, one of the issues to watch will be related to the health insurance exchange reform will create. In the Senate bill, at least for now, there’s a provision to require those selling products in the exchange to be licensed by their state; the House bill permits unlicensed entities to sell the products. (Ironically, the House approach, which would let DMV clerks sell health insurance in the exchange is supported by some Republicans in the Senate).

The conference committee will determine the taxes implemented to finance reform, what mandates are in place and how they’re enforced, whether there’s a government-run health plan, what cost containment provisions are included, and whether reform addresses malpractice – among other items. In other words, while everything leading to the conference committee is important, it has all been prelude.

To use a baseball analogy, think of the general discussions and hearings earlier this year as Spring Training. The committee votes were the regular season. The vote in the House was a league playoff and now we await the outcome of one more playoff series. All of this leads to the World Series, known as the conference committee. So there’s still more to come. It’s what comes out of the conference committee that, if approved by both the Senate and House, will be signed into law by President Obama. And, assuming something is passed …

Health Care Reform Will Be Worse Than Hoped For, But Better Than Feared:  A  friend from college went to the same law school I did, but a year earlier. As I approached my first day of classes I asked him what to expect. “Worse than you hope it is; better than you fear it will be,” was his reply. (And he was right). Well, the same applies to health care reform.

For example, there’s far less medical cost containment in either the House or Senate bills than most observers believe is necessary to make coverage affordable. But as Senator Daschle noted at the Warner Pacific town hall meeting – and as reader JimK has pointed out – there are some potentially significant cost containment provisions tucked away in the bills. Yes, they call for studies and regulations as opposed to describing details, but perhaps that’s the only way cost containment can make it through the political labyrinth that is Congress. They hold the potential, however, to lead to a significant bending of the cost curve. Of course, for now, it’s only a potential, but still, it’s there.

Consider: When California passed its small group reforms in the early 1990s many brokers and industry insiders feared it would harm the market. Instead that legislation, AB 1672, has been a stabilizing influence that eliminated harmful industry practices without destroying the industry in the process. Yes, there were winners and losers (the dominance of Multiple Employer Trusts in the small group market soon ended), but most brokers and their clients will agree it was a net win.

I watched some of the debate on the Affordable Health Care for America Act on C-Span Saturday. To over-generalize, Democrats made the Superman argument: the status quo was leading the country to ruin and only HR 3926 could save the day. Republicans countered with the Hell and damnation offensive: passage of the Democrat’s health care reform legislation would lead to the destruction of all America stands for.

The reality is, the Democrats are overselling what the bill does. And Republicans are exaggerating the negatives. Many of the charges leveled against HR 3962 by GOP members were similar to those their counterparts made against Medicare 45 years ago. Now the GOP positions itself as the protector of Medicare. Apparently not all slippery slopes lead to damnation after all.

What the House accomplished on November 7th is historic. It is neither all good nor all bad. Nor, significantly, is it the final word.

Harry Reid’s Health Care Reform Dilemma: The Myth of the 60th Democratic Senator

If asked even two weeks ago I’d have said there was an 80 percent change or greater that meaningful health care reform would be signed into law this year. Now, however, I think the chances of such an outcome are far lower – still substantial – but much less likely.

One reason meaningful health care reform may not reach President Barack Obama’s desk this year is that Senate Majority Leader Harry Reid is having difficulties in lining up the 60 votes necessary to overcome the inevitable filibuster from Republicans. Senator Reid’s problem is that while there are 60 Senators in his caucus, there are really only 59 Democrats plus Senator Joe Lieberman.

Senator Lieberman caucuses with the Democrats because he used to be one (he won re-election as an Independent in 2006) and he wants to be a Committee Chair (he chairs the Homeland Security and Governmental Affairs Committee). However, he campaigned strongly for Senator John McCain in the 2008 presidential campaign, even addressing the Republican National Convention. Senator Lieberman also has said he expects to campaign for Republican candidates in 2010. It doesn’t take much insight to predict that, were Republicans to gain a majority in the Senate, Senator Lieberman would be knocking on their door for admittance.

Senator Lieberman has pledged to support a filibuster of a health care reform bill that includes a public option.  While he recently seems to have backed off this threat, as Timothy Noah on points out, the Senator’s position on health care reform has been … well, let’s call it a bit erratic. So let’s say Senator Reid puts forward a bill that Senator Lieberman can support, does that solve his problem?

Hardly. Remember Senator Roland Burris, he of the controversial appointment to the Senate by then-Governor Rod Blagojevich. Senator Burris is threatening to oppose any health care reform bill that does not include the public option. As Senator Rollins is a bit of pariah in the Senate (many of its members, including his fellow Senator from Illinois, having called for him to resign) the Democratic leadership has little influence over his actions. So Harry Reid is in a bit of a no-win situation. Go after Senator Lieberman’s vote and he risks losing Senator Burris’ support. Accommodate Senator Burris and there goes Senator Lieberman.

Meanwhile, Senator Reid is forced to wait for an analysis of his proposal by the Congressional Budget Office. What they have to say about his efforts to blend the Senate Finance Committee and Senate Health, Education, Labor and Pensions Committee’s differing versions of health care reform will greatly impact the votes of moderate Democrats. Since only one Republican vote, that of Senator Olympia Snowe, seems to be in play, those moderate Democrats hold the key to whether the Senate can muster the votes for health care reform.

Given that the debate in the Senate will be long, slogging through the legislation will take quite some time. While Senator Reid would like to get a bill on the president’s desk before Christmas, this is a present that may need to wait for the new year. That, of course, complicates matters considerably as 2010 is an election year. Lawmakers hate doing controversial things in an even numbered year. (Why the difference between December 2009 and January 2010 makes a difference is one of those unanswerable questions that seem to be especially common within the Beltway).

On paper, Democrats have a 60-vote majority in the Senate. That’s a myth. In reality they have a group of 60 Senators who caucus together, but don’t act together. That’s actually good for democracy (the unanimity within the Republican caucuses in Congress demonstrates stronger party unity, but a lack of individuality that is somewhat startling). But the diversity within the caucus makes being Majority Leader a lot harder.

Senator Reid Attempts to Find Middle Ground on Public Option

Senate Majority Leader Harry Reid’s challenge was to blend the liberal Senate Health, Education, Labor and Pensions health care reform legislation with the more moderate bill passed by the Senate Finance Committee. One of the most contentious issues concerned the creation of a public insurance plan to compete with private carriers — the Senate HELP Committee called for one; the Senate Finance Committee explicitly rejected the concept.

The problem for Senator Reid was that some members of his caucus were threatening to oppose a bill without a government-run plan while others were making the same threat if the legislation included such a provision. And Senator Reid’s number one priority was to find a compromise that could garner the 60 votes needed to pass a bill in the Senate.

His decision:  include a public option in the blended health care reform legislation he will be bringing to the Senate floor in the next few weeks, but include restrictions on it that, while appealing to moderates, are not enough to turn off liberals.

The legislation is being reviewed by the Congressional Budget Office and is not yet available online. But Senator Reid has announced he will allow states to opt out of participating in the public plan. This approach is very appealing to moderate Democrats such as Senator Tom Carper, who voted against one of the attempts to add a government plan to the Senate Finance bill. According to the National Underwriter, Senator Carper “has been a key advocate of letting states opt out of the public option health program and create their own alternatives to private plans.”

Not all moderates in the Senate are embracing the compromise yet. The Associated Press quote Senators Olympia Snowe, Ben Nelson and  Mary Landrieu as all expressing various levels of skepticism. But the White House is on-board with the compromise and will likely bring a great deal of pressure on these moderates to get at least vote in favor of ending the inevitable Republican filibuster on the health care reform legislation. By including an opt-out, these moderates can support the procedural movement and claim they were putting state rights above their opposition to the public option.

The other provision Senator Reid has apparently included in his compromise is that, in the words of Senate Charles Schumer as quoted in the National Underwriter article, “Any public option plan ought to operate on a level playing field with private insurers, and it ought to meet the same state requirements and use similar provider rates.”

How this limitation would be imposed on a government-run plan is, as yet, unknown. But if the public option must play by state-specific rules, it would be a step toward a more level playing field between the public option and private carriers — and certainly closer to the level playing field than is contemplated in the House version of health care reform.

What’s ironic is that, as I’ve written previously, a public option is likely to accomplish its primary public policy goal — reduce medical costs — only if it is allowed advantages in the marketplace such as the power to unilaterally impose reimbursement rates on providers. By restricting it to the same rules and pricing regulations as private carriers might meet, its effectiveness is reduced.

Whether a public health insurance option is part of the reform legislation eventually passed by Congress is far from certain. But Senator Reid’s proposed compromises keeps the possibility alive. At the same time, the restrictions he’s suggesting reduces the impact of the government plan. That’s a reality liberals will not accept willingly.

Senator Reid is doing what Majority Leaders have to do: find the middle ground that can garner the support of 60 Senators. It’s not an easy task. Nor will the result please everyone. It might even please no one.


Public Option Compromises Gain Traction

President Barack Obama wants a public insurance plan to compete with private carriers. Democrats in the House of Representatives want a government-run plan. Apparently so do a majority of Democrats in the Senate. However, as of now there’s enough Democrats in the Senate opposed to the idea to keep the support below the 60 votes needed to pass health care reform legislation. A compromise being considered in the Senate, however, could change the math, creating the potential government health plans will be part of the health care reform package ultimately enacted by lawmakers.

Advocates for public plans were set back when the Senate Finance Committee defeated amendments to add a government medical plan to the health care reform bill its writing. But liberals immediately pledged to keep pushing for the public option and many claim a public option is critical to meaningful reform. Whether progressives would defeat health care reform which doesn’t include a public health insurance plan is uncertain, but it is possible.

Enter Senator Tom Carper from Delaware. Senator Carper is a thoughtful moderate who voted against one of the public option amendments in the Senate Finance Committee, but voted for another. He is floating a compromise that not only may appeal to liberals, but to moderate Democrats and, conceivably, to Republican Senator Olympia Snowe, the only member of her party considered likely to support a Democratic version of health care reform. reports that Senator Carper proposal would give “states the option of creating a competitor to private insurers, (these competitors could be) a government plan, a network of co-ops, or a large purchasing pool modeled after the revered Federal Employees health Benefits Plan.” Unlike a compromise suggested by Senator Snowe which would create a national government-run plan only if private carriers failed to offer affordable coverage to at least 95 percent of the population, Senator Carper’s plan envisions only state (and, perhaps, regional) public plans and permits states to move forward, according to another posting, “if affordable insurance is not widely available or the insurance market is dominated by only one or two players.” (It should be noted Senator Snowe has not sought a vote on her idea by the Senate Finance Committee)

Brian Beutler, writing on the Talking Points Memo blog, predicts Senator Carper’s idea may fail to gain support from either liberals or conservatives. He writes, “Liberal critics will charge that, while the plan doesn’t involve triggers, it does lack the heft that a plan organized at the national level would have to bargain down prices with providers” while conservatives will reject it as the first step toward a single payer system. “

Mr. Beutler may be right, but I think a compromise along the lines of Senator Carper’s proposal will gain traction. According to a second posting, lawmakers, both public option supporters and opponents, are speaking positively about Senator Carper’s compromise.

The political reality is that there probably will not be enough votes to pass the “pure” public option desired by liberals. So they will face a choice: no government-run plan at all, a host of state-run insurance plans, or no health care reform. To reject health care reform because the public plans competing with private carriers are not controlled by the federal government is a political argument few liberals will want to make.

At the same time moderate Democrats may see the compromise as a way to push the entire public plan controversy to the states. This would allow them to escape the intense pressure they are under from party activists (and, perhaps soon, the White House) without personally voting for a government-run plan. State’s rights are usually championed by moderates and conservatives. It is certainly reasonable for a lawmaker to conclude that the public option is an appropriate decision for states and not the federal government. It is interesting to note that one of the three Democrats on the Senate Finance Committee to vote against both attempts to add a public option, Senator Kent Conrad described Senator Carper’s plan as a “very constructive option,” according to Politico.

What the effort to construct a workable public health insurance option overlooks is that it is virtually impossible to create a government-run plan that will both lower medical costs and compete fairly with the private marketplace. A public plan can lower health care spending only by imposing (not negotiating) low reimbursement rates on doctors and hospitals, most likely by tying them to other government programs such as Medicare. (It is important to note that Medicare often pays providers less than their actual costs). But imposing rates, something only monopolies and governments can do, is unfair competition (which is why we have laws against monopolies). But a public plan that merely negotiates rates with doctors and hospitals like any other health plan does is unlikely to be effective in reducing costs.

I’ve long predicted the health care reform legislation eventually enacted this year will not include a government-run health plan. Now, however, I have to recognize the possibility that a compromise along the lines of those proposed by Senator Carper or Senator Snowe might make it into the final package. It’s far from certain, but it is a possibility.

Senator Baucus Reaches Out to Liberals and Moderates on Health Care Reform

The Senate Finance Committee has embarked on its long journey to amend and refine the Chairman’s Mark of America’s Healthy Future Act of 2009. While there’s a lot of attention being given to the fact that committee members have submitted over 500 amendments that number is less impressive than it may seem. Many of these proposed changes are technical in nature while others are duplicative. Besides, it’s not the number of amendments that matter, it’s the substance of them that determines the scope of the task facing the committee.

The task is great. Three ideologies are at play on the committee: conservative, moderate and liberal. While conservatives will have their say and no doubt get a few of their proposals added to the bill, it is moderates and conservatives – most all of them Democrats – who will truly shape the final outcome. Most Republicans have made it clear they will vote against any bill that resembles the Chairman’s Mark. This effectively removes them from the mix, leaving the shaping of the legislation to a tug-of-war between moderates and liberals.

Senator Max Baucus modified his Chairman’s Mark to address criticism from liberals and to reach out to some moderates.

For example, Senator Baucus’ health care reform plan requires all individuals to obtain medical insurance and provides a premium subsidy to help make the coverage affordable for lower-income households. Originally, those subsidies were designed to cap premium costs at three percent of a household income for those making 100 percent of the Federal Poverty Level rising to thirteen percent of household income for those households earning 300 percent of the FPL. Senator Baucus modified his original proposal to “lower the maximum amount of income that families would contribute to their health insurance premiums to two percent of income for those at 100 percent of the Federal Poverty Level …” He also increased the number of Americans eligible for those subsidies to households earning 400 percent of the FPL ($43,320 for an individual; $88,200 for a family of four) and capped their premium costs at 12 percent of income — $10,584 for a family at 400 percent of FPL. (Page 6 of the Modifications to the Chairman’s Mark). To illustrate how the subsidies under various health care reform bills work, including the modified version of Senator Baucus’ proposal, take a look at the nifty subsidy calculator on Kaiser Family Foundation site.

Senator Baucus also reduced out-of-pocket maximums for households between 200 and 300 of the poverty level to two-thirds of the HSA out-of-pocket limit ($3,987 for an individual; $7,073 for a family in 2010). (Page 6 of the Modifications).

A change requested by Senator Olympia Snowe, the Republican most likely to support the bill in committee, was accepted by Senator Baucus. It would require small employers to provide a plan with a deductible of no more than $2,000 for individuals and $4,000 for families unless higher amounts are offset by HSAs, HRAs or the like. (This requirement would not impact the “young invincible” catastrophic coverage medical plan (that also cover preventive care) available to those 25 years old and younger. (Page 6 of the Modifications).

Speaking of the young invincible bill, Senator Baucus accepted another proposal by Senator Snow, opening up eligibility for these plans to those who would otherwise have been eligible for a hardship exemption from the requirement to obtain coverage. The exemption was available to those for whom premiums exceed 10 percent of their income. (Page 6 of the Modifications).

As originally proposed, workers receiving coverage from their employers that met certain conditions would be ineligible to receive tax credits to enable them to purchase coverage on their own through a health insurance exchange. Senator Baucus accepted yet another amendment from Senator Snowe that lowers this threshold, permitting employees whose share of premiums through their employer-sponsored coverage exceeds 10 percent of their income to qualify for the tax credit. (Page 7 of the Modifications).

There are other significant changes, too. For example, the threshold for plans on which insurance companies would be subject to a tax (so-called “Cadillac plans) had not been indexed to inflation in the original proposal. Over time this meant these plans (costing $8,000 for individual coverage and $21,000 for family coverage in 2013) would likely look more like Chevrolets. Senator Baucus now indexes the threshold for these plans. He also increased the excise tax from 35 percent to 40 percent.

The amendments accepted by Senator Baucus without a debate highlights his desire to placate Senator Snowe and other moderates on one hand while addressing some of the concerns of liberals on the other. The political calculus is simple: the more these Senators can claim that they improved the bill, the greater their political cover to vote for it.

Put another way, it is unlikely any of the changes accepted by Senator Baucus reduces the chances of the bills passage and many increase its chances. With hours of debate and dozens of sustentative changes to consider, this journey is far from over.

Baucus Introduces America’s Healthy Future Act of 2009

Senate Finance Committee Chair Max Baucus has unveiled his health care reform proposal, the “America’s Healthy Future Act of 2009” in the form of a “Chairman’s Mark.”  This means instead of publishing legislative language, the plan is presented in a “here’s the current law and here’s how we should it” format. While specific legislative language would be nice, there’s enough detail in the 223 page document to get a good understanding of what Senator Baucus proposes. And we won’t have long to wait for the legislative language: the Committee will begin debating the bill on September 22, 2009.

No Republican members of the Senate Finance Committee have signed onto the plan, but I don’t think the lack of GOP support at this point dooms the Baucus proposal. As noted in my previous post, at least one of the three Republicans who has been negotiating with Senator Baucus towards a bi-partisan bill, Senator Olympia Snowe, has indicated she’s waiting to see how the bill is amended in committee before committing her vote. Further, the audience Senator Baucus is directing his health care reform plan to are moderate Democrats.

By directing his plan at moderates, Senator Baucus, not surprisingly, infuriates liberal Democrats. Senator Jay Rockefeller has already announced his opposition to the Chairman’s Mark and claims four-to-six other Democrats on the Finance Committee share his views. There are 23 members of the Senate Finance Committee: 13 Democrats and 10 Republicans. So Senator Baucus can afford to lose only one Democrat and still move his proposal out of the committee in the face of unanimous GOP opposition.

My expectation, however, is that neither President Barack Obama nor Senate Majority Leader Harry Reid will let liberals bottle-up the bill in the Finance Committee. If needed, they’ll arrange for some progressive Democrats to speak against the bill, while voting to move it out of committee in order to “let the process proceed.” Of course, if Senator Snowe or any of the other Republicans on the committee vote for the amended bill, fewer Democrats will be needed.

A quick review of the Chairman’s Mark indicates there have been no substantive changes from what was expected. There’s no government-run health plan, it requires individuals to purchase coverage, it establishes state health insurance exchanges. What has been firmed up is it’s price tag: $856 billion over 10 years.

I hope to post more detailed analysis of the America’s Healthy Future Act of 2009 over the next few days, but in the meantime, below are a few articles that summarize the proposal. Senator Baucus describes his proposal in an opinion piece published in the Wall Street Journal today. In reading these keep in mind that what Senator Baucus introduced today is only the beginning. On September 22nd the Senate Finance Committee will convene to debate and amend the bill. The mark-up, as it’s called, will be civil but robust. What emerges from the committee will be different than the Chairman’s Mark.

And that’s just the beginning. The Senate will need to reconcile the Senate Finance Committee’s bill with the legislation put forward by the Senate Health, Education, Labor and Pensions Committee. The result of that mash-up will then need to be reconciled with whatever health care reform legislation the House approves by a conference committee made up Senators and House members. Then both chambers must approve the resulting compromise legislation.

In other words, there’s a long journey ahead for health care reform. There will be plenty of noise and controversy along the way. The path to reform will be subjected to a multitude of twists and turns. We won’t know how it turns out for another two-to-three months. But with the introduction of the America’s Healthy Future Act of 2009, the health care reform debate takes a big step forward.


Here’s some articles describing Senator Baucus’ health care reform proposal:

Baucus Unveils $856 Billion Health-Care Legislation” from the Wall Street Journal.

Baucus unveils health care bill” from the Boston Globe.

Baucus Offers Health Plan With No Republican Backing” from

“Baucus Introduces $856 Billion Health Care Bill” from the Washington Post.

Baucus Puts Bill In Play” from National Underwriter (my thanks to Dwight Mazonne for identifying this article)