Life After the Death of the Public Option

From the President on downward, the White House now seems resigned to losing the fight over the "public option", a government-run insurance plan that would complete against private plans. It's time to re-assess the playing field in light of this development.

Is the public option really dead? Probably.

Perhaps the better question is whether the public option was ever really 'alive', meaning that it ever had enough votes to pass both the House and the Senate. We estimated based on committee votes that a bill containing a fairly weak public option -- like the one approved by the House's Energy and Commerce Committee -- would be a favorite to pass the House but probably only by a slim margin, with between 220-225 votes for passage (a minimum of 218 are required). And arguably, the conditions have worsened somewhat for health care reform since the Commerce Committee's compromise passed on July 31st.

It's the Senate side, though, where the public option was encountering most of its difficulties. Only 37** Senators, according to the whip count at Howard Dean's website, were firmly on board with the public option, whereas at least a few Democrats (Mary Landrieu, Joe Lieberman, Kent Conrad) had stipulated their opposition to it. (** EDIT: The information at the Dean website appears to be somewhat out of date. More recent counts show something like 43-45 Dems in favor.) There were nevertheless a number of scenarios under which one can imagine a bill with a public option having passed -- Lieberman, Landrieu, et. al. might be nominally opposed to a public option, but is their opposition so firm that they would vote to filibuster any bill that contained one?

The White House has evidently concluded that this is a real threat. I don't see any real obvious reason to doubt their assessment. For those who have come to a different conclusion, I'm all ears -- give me a detailed, practical (not theoretical) scenario by which a bill containing a public option passes both chambers and gets the President's signature. But I don't see it.

Keep in mind that, even if a bill with a public option made it to the Senate floor, it would be subject to an amendment that could strip that provision. Considering that virtually all of the 40 Republicans would vote for such an amendment, it would only need perhaps 10-12 Democratic votes to pass, something which it could quite possibly achieve. Now, progressives could try to filibuster that amendment. But if they did so, senators like Landrieu and Ben Nelson could then filibuster the overall bill with a clear conscience (or at least a good excuse).

Why doesn't the public option have the votes for passage? You'd think that a provision that is both fairly popular and money-saving was a good bet for passage. But the insurance industry really, really does not like the public option. We'd previously estimated that its lobbying influence has cost the public option something like nine (9) votes in the Senate.

This is an unpleasant truth. But just because it's an unpleasant truth doesn't mean that it's not the truth.

Is a bill without a public option worth passing (if you're a Democrat)? From a near-term political standpoint, almost certainly yes. Bill Clinton suggested on Thursday that the President's approval rating would get a five-point boost the moment that health care legislation passed with his signature. I don't know if that's exactly right, but this is certainly a better scenario for Democrats than the world in which health care reform fails and they're getting blamed by pretty much everybody and have nothing much to run on in 2010.

From a long-term political standpoint, some of the less effective versions of the House and Senate bills could create problems for Democrats down the road. For example, I've argued that the compromise floated by Max Baucus's Senate Finance Committee could wind up making quite a few folks upset, since it contains rather ungenerous subsidies and an individual mandate but no public option and no true employer mandate. If your employer drops your health coverage a few years hence and you have to buy an expensive plan on your own without much help from the government, you're probably going to be fairly peeved about the country having spent $900 billion to put you in this predicament. Hopefully, if the Democrats are giving up on the public option, they're at least getting something for their willingness to compromise, such as a stronger employer mandate and more aggressive regulations on insurance premiums.

Forget politics for a moment -- what about from a policy standpoint? The fundamental accomplishments of a public option-less bill would be to (1) ensure that no American could be denied coverage because of a pre-existing condition or because they became sick; (2) subsidize health insurance coverage for millions of poor and middle-class Americans.

These are major, major accomplishments. Arguably, they are accomplished at too great a cost. But let's look at it like this. The CBO estimates that the public option would save about $150 billion over the next ten years -- that's roughly $1,100 for every taxpayer. I'm certainly not thrilled to have to pay an additional $1,100 in taxes because some Blue Dog Democrats want to placate their friends in the insurance industry. But I think the good in this health care bill -- the move toward universal-ish coverage, the cost-control provisions -- is worth a heck of a lot more than $1,100.

Can progressive Democrats in the House block a bill without a public option from passing? If they want to, they probably can. We estimated earlier that a bill with a weak public option would garner about 220-225 votes in the House, assuming no liberal objections. Perhaps a bill with no public option at all could do a bit better -- maybe 230 to 240 votes, gaining some ground among Blue Dogs and a maybe a very few moderate Republicans. That would mean that you'd only need between about 15-25 progressives voting against such a bill to block passage; FireDogLake reports that they've already found 12 who are willing to do so.

But I'm not sure where that would leave progressives. If you re-inserted a public option, you might lose as many Blue Dog votes as you gained back from progressives. Even if you managed to avoid that, the public option would probably get killed by the Senate. Maybe you could gamble on a bill with a public option passing the House, a bill without one passing the Senate, and then the House bill winning the floor fight on the conference report. But this is usually not what happens. Instead, the Senate tends to win floor fights over conference reports, since they can filibuster them.

But don't progressives need to draw a line in the sand somewhere? I'm sympathetic to this argument from a game-theory standpoint. But (1) lines in the sand won't mean anything if they're washed to sea by a wave-like 2010 election; and (2) I'm not persuaded that the lack of progressive willpower is responsible for compromises on bills like health care, climate, and the stimulus package. The stimulus package passed the House with only 26 more votes than were required for passage and had just one vote to spare in the Senate. The cap-and-trade bill passed with just one extra vote in the House and has yet to pass the Senate (and probably won't). A health care bill, even under somewhat best-case scenarios and even without a public option, is unlikely to gather more than about 230-240 votes in the House and perhaps 62-64 in the Senate.

It doesn't seem to me as though the Democratic leadership (including President Obama) is unnecessarily watering down bills for the sake of achieving a "bipartisan" outcome. It seems, rather, that they're calibrating things relatively well, and squeezing about the most juice they can out of these initiatives given the institutional imperatives of the Congress.

By all means, try to change those institutional imperatives. Organize primary challenges against Senators and Representatives who are too conservative relative to their districts; these can have somewhat dramatic -- if probably somewhat temporary -- effects on Congressional behavior. Try to build some momentum against the filibuster. Expose Senators and Representatives who are voting against the best interests of their district because of special-interest money. Push Democrats to end the seniority system in its selection of committee chairs and floor leaders. And work on shifting the Overton window where you can. But I don't think the problem is that progressives are disempowered. It's simply that they don't constitute a majority. Non-Blue Dog Democrats make up 47 percent of the House. They probably do make up a majority of the Senate (although this is arbitrary; the Blue Dogs aren't formally active in the upper chamber), but in the Senate, a mere majority isn't good enough -- you need a supermajority.

How much of this is Obama's fault? I've never been particularly sanguine about the prospects for the public option's inclusion in a health care reform bill. I thought it was going to require a major rhetorical commitment from Obama back in June to get it passed, and even then that it would take some luck on top of that. In practice, Obama sort of dipped his toes in the water on the public option but never really took the plunge. You can make the case that this was a mistake. And certainly, I've been underwhelmed with the President's messaging on health care, although it's been better of late. But the point is, there is a lot of path dependence here: given the decisions he made earlier, the failure of the public option was probably inevitable and to have continued to press for it might have harmed the chances for health care's passage overall. If you want to blame Obama for this, go right ahead -- one thing I worry about with this President is that he tends to hedge his decisions too much. I would say, though, that this is almost certainly a tactical, rather than a strategic, mistake.

Incrementalism seems to be a popular meme these days -- could the public option do better as a standalone provision? While bearing in mind that bargaining is the third stage of grief, this seems to me to be a somewhat realistic hope, especially if Barack Obama is elected to a second term. If a health care reform bill passes, then the government will paying for private insurance coverage for some low-to-middle income individuals. This will tend to give everyone a more direct interest in cost containment: if a low-income family's insurance coverage is costing more than it should because of the absence of competition from a public option, it will be the taxpayers making up the difference. Of course, there would be some people arguing to blow the whole thing up entirely for this reason. But if someone then proposed a public option -- a provision that would spare $150 billion from the public dole and which would give consumers more choices -- it would seem to have a fairly compelling case. Part of the problem the public option faces is that it's a somewhat popular, cost-reducing measure which is mired in a somewhat unpopular, thousand-page, $900 billion bill. When taken as a standalone measure, its cost savings would be more transparent and its opponents would have less ability to confuse the public about its costs and benefits.