Senate Likely to Move Forward with Health Care Reform Absent a Public Option

Liberal Democratic Senators appear to be sliding down a slippery slope, but one that will likely move health care reform to a conference committee.

In the beginning was a robust public option: a government-run health care program to compete with private carriers that would pay doctors, hospitals and other providers a small percentage above Medicare’s reimbursement levels (which for many services are below those medical providers’ actual cost). Moderate and conservative Democrats balked, claiming a public option paying Medicare-like rates would decimate the private market.

So liberal Democrats offered a compromise: the public health insurance plan would negotiate with medical providers as private carriers do. Never mind that this approach undermines the rationale for a public option – driving down health care costs. At least it preserved a government-run plan. Still no love. Moderate and conservative Democrats balked, claiming the government-plan would still have an unfair competitive advantage in the market, driving private health plans out of business.

So a group of Senators negotiated another health care reform compromise. The Gang of 10 (five liberals and five moderates) proposed turning to the Office of Personnel Management to administer a health care program involving private carriers in a manner modeled after the Federal Employee Health Benefit Plan (which is the program that covers members of Congress). They also proposed allowing individuals 55 through 64 to buy into the Medicare program. At first the Gang of 10’s compromise seemed to have some wind at its back. But Senator Joe Lieberman announced his opposition to the Medicare buy-in concept (a proposal he previously had supported). And on Monday, after a caucus of Democratic Senators concluded, the party’s leadership in the chamber all but announced the Gang of 10’s compromise proposal was off the table. Which means liberals face an uncomfortable choice: see health care reform fail or remove the public option and push legislation through the Senate – then hope they can improve it in the conference committee.

While this result was far from certain, it isn’t much of surprise either. The fate of health care reform has long been in the hands of moderate and conservative Democratic Senators. Republicans have been united and vocal in their opposition. Announcing early in the debate that they could never support any health care reform plan that contained provisions core to the Democratic platform is not a high percentage approach to being invited to negotiate on the legislation. So their 40 votes have long been off the table. That meant that the discussion would take place exclusively among the 58 Democrats and the two Independent Senators who caucus with them.

And that’s what’s happening. And that’s why the Senate is likely to pass a health care reform bill before Christmas leaving it up to a House-Senate conference committee to come up with the final version of the reform bill. Liberals won’t be happy with the process. There will be a lot of complaining by their supporters that Democrats are failing to deliver on meaningful reform. But the reality is that moderates like Senators Tom Carper and Blanche Lincoln are as much a part of the Democratic party as Senators Jay Rockefeller and Charles Schumer. Whatever emerges from Congress will need to be acceptable to all Democrats. not just the most liberal. Or the loudest.

What all this also means is that the real work of drafting comprehensive health care reform legislation is about to get underway. It’s been a long strange trip, but that’s American politics in 2009 – and 2010, too.

New Elements Added to Health Care Reform Debate

I haven’t been writing much of late. The Senate debate has simply been too predictable to merit much comment. The partisan attacks could have been scripted months ago. The votes unsurprising, and the difficulty Democratic Leaders face in fashioning a 60-vote majority is to be expected.

Consider: Republicans charge the Democrats will destroy Medicare. The fact that not long ago it was the GOP wanting to eliminate waste and abuse from the program seems to be forgotten. Democrats, meanwhile, seem incapable of understanding the relationship between medical costs and insurance costs. Listening to their claims that cracking down on evil insurance companies will lower health care spending is disappointing. It would be nice if now and then a Senator would acknowledge that medical costs drives up premiums and not vice versa – a wish not likely to be realized any time soon.  I heard on the radio last week (sorry, not sure what station) a lawmaker complaining that health insurance companies use actuaries, an unfair advantage they wield to the detriment of consumers.

But in the past few days some ideas seem to be gaining traction that could mix things up considerably. One proposal is to allow 55 through 64 year olds to buy into Medicare. The Washington Post’s Ezra Klein seems to be the first blogger to report the Medicare buy-in proposal is “attracting the most interest” as an alternative to creating a new government-run health plan to compete with private carriers. The under 65 cohort would not get basic Medicare coverage for free nor does it look like this approach includes subsidies not already on the table. It simply is a way to create access for some Americans to a public health plan without creating a new public health plan. And as with the public option, participation by 55 year olds would be voluntary.

That the idea of a Medicare buy-in option is gaining traction would seem to indicate that chances for a “true public option” are diminishing. Even liberal bloggers like AntonRobb at Benzinga.com are reaching this conclusion. “… proponents of the public option may be compelled to get behind this plan as an alternative. The severeley (sic) comprised … versions of the public option that have any chance of passing … would probably be worthless and probably do more damage politically to the Dems than good,” he writes.

The other interesting idea to emerge is to, as CBS News describes it, “establish national health insurance options, which would be administered by the Office of Personnel Management (OPM) but operated by private, nonprofit insurers ….” Since the OPM already administers the Federal Employees Health Benefit Program (FEHBP), which insures members of Congress and their staffs among others, this alternative to a public option is being viewed as the equivalent of opening up the FEHBP to non-government workers. (Incidentally, although the CBS reports implies the plans would be administered only by nonprofit carriers, this is far from certain. None of the other news reports mentioned this restriction – and there are for-profit carriers participating in the FEHBP.)

The “what’s good for Congress is good for the public” approach seems to appeal to moderate and conservative Democrats who have been objecting to the creation of a new government-run health plan run by the Department of Health and Human Services. As CBS notes, Senators like Ben Nelson describes this proposal as an alternative to, not a version of, a public option.

The import of these proposals go beyond the fact that new ideas are on the table. It also shows the influence likely to be wielded by the “gang of 10” Senators formed over the weekend. These 10 Senators, five liberals and five moderates, are charged with hammering out a compromise on the public option, according to MSNBC. While focused on the public option, it is likely this group of lawmakers will be called on to bridge the chasm that separates liberal Democratic Senators from their moderate and conservative colleagues. Remember, liberals have long claimed that health care reform without a public option is no reform at all. So if the gang of 10 manages to find a way to remove a government-run health plan from the legislation while still keeping liberals on board, they will position themselves to fashion compromises on other divisive issues as well.

(For those interested, the gang of 10 is comprised of Senators Sherrod Brown, Russ Feingold, Tom Harkin, Jay Rockefeller, and Charles Schumer from the liberal wing of the party and moderate Democratic Senators Tom Carper, Mary Landrieu, Blanche Lincoln, Ben Nelson and Mark Pryor).

As noted above, the momentum building behind the Medicare buy-in and an FEHBP-type proposal is that the public option is not going to make it into the Senate bill. Not with a trigger. Not with an opt-out. Instead it appears the public option won’t be in the legislation at all. This should mollify Senator Joe Lieberman who has promised to vote with Republicans against bringing a health care reform bill to the floor if it contains a public option.

All of this also makes clear the strong desire of Democrats, regardless of their ideology, to pass health care reform. The New York Times reports on various lawmakers’ description of President Barack Obama’s message to Senate Democrats on Sunday. “He reminded us why we are here. He reminded us why we run for office. And he reminded us how many people are counting on us to come through.” “Decades from now this will be the kind of vote you remember. It will be written in the faces of children and families who are relieved of the burden of anxiety and sorrow.”

Democrats consider this a historic moment. While grasping it carries political risk in the upcoming 2010 elections, failing to seize the opportunity poses even greater dangers. And the crushing of a dream many of these lawmakers have held for decades.

There are still controversies that could scuttle health care reform. And there will enough political charges and counter-charges bandied about to satiate even the most verbose pundits. But Senators are serious about finding a path to passage and it is increasingly likely they will pass some version of health care reform before years-end. Of course, this will only set the stage for the real work to begin: the House-Senate Conference Committee likely to convene shortly after New Year’s Day.

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.

 

Cantwell Amendment Another Handoff to States

As the Senate Finance Committee concludes its mark-up of health care reform legislation an interesting dynamic is emerging: Senators are increasingly turning to the states to address some of the more pressing challenges the reform effort is designed to address.

Yesterday I wrote about a compromise being circulated by moderate Senator Tom Carper. The Carper Compromise would allow states to create government-run insurance programs, networks of co-ops or the like. That proposal has yet to be brought to the Senate Finance Committee and may not be. Instead, it could be offered later in the process as the Senate seeks to bridge the gap between the Finance Committee’s bill and legislation passed by the Senate Health, Education, Labor and Pensions Committee – which calls for a robust government-run plan.

Meanwhile, the Senate Finance Committee has adopted a proposal offered by Senator Maria Cantwell. which gives states the option “to negotiate with insurance companies for lower rates on health coverage policies for those living barely above the poverty line and provides federal dollars to pay for it,” according to the McClatchy news service. The Cantwell Amendment is modeled after a program currently in operation in Senator Cantwell’s home state of Washington and would benefit families between 133 percent and 200 percent of the Federal Poverty Level (up to $21,660 for individuals and $44,100 for a family of four). Senator Cantwell staff claims such plans could cover up to 30 million of the nation’s uninsured according to the Associated Press. This, of course, assumes that state’s out-reach efforts are successful in bringing those eligible for such a program into the system. There are millions of individuals eligible for existing programs like Medicaid and children health programs who remain unenrolled across the country.

Senator Cantwell’s amendment is not an alternative to the public option, the issue most dramatically dividing Democratic liberals from their moderate and conservative colleagues in Congress. Bridging that gap will require something along the lines of the Carper Compromise. (This doesn’t mean Senator Cantwell’s proposal wasn’t controversial. It was adopted on a 12-11 vote with Democrat Blanche Lincoln joining all 10 Republican members of the panel in voting against it).  What inclusion of the Cantwell Amendment in the Senate Finance Committee’s legislation does underscore is the likelihood Congress will be giving states a central role to play in making health care reform real.

The benefits of this approach include keeping health care decisions closer to consumers and allowing for different approaches to meet the differing needs of the states. One of the downsides to relying on states, however, is that it eliminates savings that might have been achieved by more uniform, national standards and regulations.

Another outcome of shifting responsibility and power to the states under health care reform: even after Congress completes its work, intense legislative battles will remain. Only the venue will move from Washington, D.C. to a state capital near you.

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.

Politico.com 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 Politico.com 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 Politico.com 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.

Health Care Reform is Coming, But it Won’t Be Easy

Personally, I think health care reform is inevitable. The need for change is simply too great. Too many people go without coverage, too many are insecure about the coverage they have. Controlling medical costs is a critical part of fixing the economy: businesses and state and local governments need relief. Political pressure for a solution — from across the ideological spectrum — has reached critical mass.

The reform process is well underway. President Barack Obama held a health care summit at the White House earlier this month. Several proposals are making the rounds. Senate Finance Committee Chair Max Baucus has one.  Senate Health, Education, Labor and Pensions Committee Chair Ted Kennedy and his staff have been actively meeting with stakeholders. Democratic Senator Ron Wyden and Republican Senator Bob Bennett have introduced the Health Americans Act, which is supported by several colleagues from both sides of the aisle. There’s the proposal put forward by President Obama during the campaign and embellished somewhat since his inauguration. Republicans have their plans and think tanks have theirs.

We’ve seen this before. In 1993 it looked like President Bill Clinton’s spent enormous political capital seeking health care reform. He failed. A recent Newsweek article by Katie Connolly outlined several reasons why the health care reform debate now is likely to be much different than the battles in 1993. The Clinton Administration failed in large part because their efforts were politically inept and inflexible. President Obama’s approach is much more open, inclusive and savvy.

Of course, at this stage we’re still dealing with generalities. The specifics, which is where the devil receives his mail, have yet to emerge.  When they do the hard part of the process begins. And that could be any week now.   The Washington Post’s Lori Montgomery and Ceci Connolly reported today that “House Democrats, in consultation with the White House, will give Republican lawmakers until September to reach a compromise on president Obama’s signature health-care initiative ….”  Currently, several committees in both houses of Congress are holding hearings on health care reform. These, however, are more educational in nature, allowing interested parties to provide input and begin staking out positions. With little legislation before them the hard negotiations have yet to begin. Those discussions will have to start sooner than later if Congress is to meet the House Leadership’s September deadline. Given the complexity of health care reform it will require months of negotiations to find common ground. 

Finding that common ground won’t be easy. Already Republican Leaders are identifying deal killers. A National Association of Health Underwriters’ newsletter quotes Senator Chuck Grassley, the ranking Republican on the Senate Finance Committee as identifying the Obama Administration’s call for a national health coverage exchange to compete with the private market as extremely problematic. The GOP won’t accept such a program, according to Senator Grassley, and Democrats are likely to insist on one. There may be a way to create an exchange that satisfies both parties, but that requires a lot more specifics than have emerged yet. 

(Note added 3/20/09 at 7:45 pm: the rift between Senator Grassley’s position and those favoring a government insurance plan is growing wider — and nastier. Carrie Budoff Brown, writing in Politico today, reports on “a four-day ad buy aimed at Iowa Sen. Charles Grassley, the ranking Republican on the Senate Finance Committee who is increasingly vocal in his opposition to the government insurance option.” Health Care for America Now is leading the charge against Senator Grassley. At the White House Forum on Health Care the ranking Republican on the Senate Finance Committee told President Obama that such exchanges were “‘an unfair competitor’ and could run private insurers out of business,” according to the Politico story. The article also notes that Senator Wyden found no Republican Senators willing support his bipartisan legislation if it included a government run health plan. “From a raw political standpoint, having talked to a lot of senators, I wouldn’t have any Republicans on the Health Americans Act as cosponsors if we had a public option,” he told Politico.)

There is a way for Democrats to pass health care reform without Republican votes. If a compromise fails to emerge by September, the House Leadership is pushing for a legislative process that would allow passage with simple majorities in both chambers. This would be accomplished through a process called “budget reconciliation.” Under the reconciliation rules, filibusters are not permitted enabling the Senate to move legislation forward with a simple majority of 51 votes instead of the 60 needed to end a filibuster. Democrats currently hold 58 seats in the Senate (including those of two independents who caucus with them) with one more likely to arrive from Minnesota. (Filibusters don’t exist in the House, making passage by majority vote the norm in that chamber).

But Democrats may have a tough time pulling together even 51 votes in the Senate. Senator Evan Bayh announced on MSNBC on Wednesdaythat 16 moderates in the Senate (15 Democrats and one independent who caucuses with the party) have come together to provide a united, centrist voice to issues such as health care reform. As noted in the press release announcing the group’s formation, their goal is “to pursue pragmatic, fiscally sustainable policies across a range of issues, such as deficit containment, health care reform …” and others. With 16 members, this caucus, currently dubbed the “Moderate Dems Working Group” represents more than a quarter of the Democrats serving in the Senate. If even 10 0f these centrists stick together they’ll need to be a part of any deal struck on health care reform.  (A list of the 16 Senators in the group is below).

At the same time there are liberals in Congress who would just assume have government take over the health insurance industry and create a single payer system similar to that in place in Canada and many Western European countries. At the very least they look to a greater role for the government in providing health care coverage to middle class Americans (the government is already the primary insurer for older and low income citizens).  They won’t go quietly along with a solution they feel fails to assure universal and comprehensive  coverage.

What this means is that while health care reform is coming, getting there won’t be easy. But there is a way. President Obama has long talked of the need to focus on core principles and the desired outcome instead of on how we get there. He has even said that his campaign proposal for a federal health insurance exchange (the deal breaker identified by Senator Grassley) is negotiable. As noted in the Newsweek article, the president said at  the White House summit, “If all Americans could be insured at ‘an affordable rate and have choice of doctor, have flexibility in terms of their plans, and do that entirely through market, I’d be happy to do it that way.'”

This is the approach all lawmakers and interest groups — whether liberal, moderate and conservative — need to bring to the table. The health care reform debate will be heated, passionate and difficult. But if all participants focus on the goals, the means of getting there can be found.  Given the need, it better be.

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The 16 members of the Moderate Dems Working Group (who, hopefully, will work on coming up with a better name) are:

  • Evan Bayh (Indiana) – co-chair
  • Mark Begich (Alaska)
  • Michael Bennet (Colorado)
  • Tom Carper (Delaware) – co-chiar and a member of the Senate Finance Committee*
  • Kay Hagan (North Carolina) — a member of the Senate H.E.L.P. Committee*
  • Herb Kohl (Wisconsin)
  • Mary Landrieu (Louisiana)
  • Joe Lieberman (Connecticut)
  • Blanche Lincoln (Arkansas) – co-chair and a member of the Senate Finance Committee*
  • Clare McCaskill (Missouri)
  • Ben Nelson (Nebraska)
  • Bill Nelson (Florida) — a member of the Senate Finance Committee*
  • Mark Pryor (Arkansas)
  • Jeanne Shaheen (New Hampshire)
  • Mark Udall (Colorado)
  • Mark Warner (Virginia)

* The Senate Finance Committee and the Senate Health, Education, Labor, and Pensions (H.E.L.P.) Committee have primary jurisdiction over health care reform legislation.