Public Option Nears Finance Committee Vote

The public option debate in the Senate Finance Committee was originally scheduled for a vote today, but it was pushed back to Tuesday. While the chief cheerleaders on the committee are not entirely hopeful about its prospects in the committee, they certainly sounded confident about it overall.

"The health care bill that is signed into law by the President will have a good, strong, robust public option," (Chuck) Schumer said.

How that will happen remains an open question. But the Senators assured reporters on the call that we're all going to get a taste of their passion and persuasiveness on this issue at the ongoing Senate Finance Committee hearings on Friday.

"I think it's a great idea," (Jay) Rockefeller said of the public option. "Chuck Schumer thinks it's a great idea. And we're going to be all over it tomorrow." [...]

Schumer said that "a large majority of Democrats are for a public option" -- but that the ratio is higher in the House than the Senate, and higher in the Senate than in the Senate Finance Committee.

"I think we have a real good chance on the Senate floor," he said.

Schumer and Rockefeller have a lot of weapons at their disposal. First off, there's the pure popularity of the measure, which has ticked up in recent weeks, at 65/26 in the latest New York Times poll. This is also true in the case of swing district Democratic seats, who not only express a fundamental desire for health care reform this year, but support a public option and reject a trigger. This is also a crucially important piece from that polling:

It's wrong to think about the public option in isolation from other elements of reform. Forcing an individual mandate without a public option is a clear political loser (34% Favor / 60% Oppose), and only becomes more palatable when a public option is offered in competition with the private sector (50% Favor / 46% Oppose)

And swing district voters have already decided the private sector has failed to keep healthcare affordable, and want a public option now (48%) instead of waiting for a trigger (36%).

A mandate without a public option will be extremely unpopular because people can sense that the idea of a forced market for private insurers is designed in the interests of those insurers, not them. This is really elementary stuff.

I don't know if whether this report about Blue Dogs fading in their opposition to the public option relative to other health care goals is a sign that they're learning from these reports or not. They seem to be more interested in the regional disparities in Medicare reimbursement rates, which is really a payoff, but if those rates were adjusted, opposition to a public option tied to Medicare rates in some fashion would probably fade away. Especially considering that it's the fiscally responsible thing to do, per the CBO.

The original House bill required the public plan to pay providers 5 percent more than Medicare reimbursement rates. But as part of a package of concessions to Blue Dogs, the House Energy and Commerce Committee accepted an amendment that requires the HHS Secretary to negotiate rates with providers. That version of the plan will save only $25 billion.

In total, a public plan based on Medicare rates would save $110 billion over 10 years. That is $20 billion more than earlier estimates, a spokesman for House Speaker Pelosi said.

We'll see if this arsenal of evidence can convince Senators who really just want to protect the status quo, and more important, protect industry profits. We're finally going to see where they stand when the Finance Committee votes. We'll be watching.

Showdown In The House

There's an important meeting today in the House of Representatives, where progressives and Blue Dogs will likely show their cards on health care reform.

The Blue Dog Coalition is engaged in a member-to-member whip operation in the House, beginning with a survey of its 52 lawmakers, to find out where they stand on critical health care issues. The principal focus is the public insurance option, but the canvass also touches on various tax and revenue increase proposals to pay for reform.

For the first time since they formed in 1995, the Blue Dogs have been out-organized by their liberal counterparts. The Congressional Progressive Caucus completed its first survey and began whipping back in the spring. They launched a final whip count last week that will be finished by Wednesday evening.

The whip count builds on an earlier letter that 60 members of the progressive caucus signed, pledging to oppose any health care bill without a "robust public option."

"We're going back to those people and saying, 'Hey, are you still with the letter?'" said Rep. Raul Grijalva (D-Ariz.), co-chair of the CPC. "And if there's been slippage, how much? And if we have a committed core, how many?"

Grijalva is asking members to back the public option all the way through the process, not simply on the first vote on the House floor.

The count comes in advance of a critical House Democratic caucus meeting Thursday morning in the Capitol, where leadership will take their own whip count. The fate of the public option in the House will be largely determined by the parallel whip efforts -- and how aggressive each bloc is in pushing for its priorities. In other words, it comes down to which pack wants it more, the Blue Dogs or the progressives.

So far, Grijalva has intimated that he still has the votes, although he hasn't delivered an exact count. Blue Dogs are trying to bait Pelosi by claiming she doesn't have the votes for the bill as currently constructed, but we'll probably know that by tonight. For Pelosi's part, she has a plan to start finalizing the bill after the meeting, with a possible floor debate on the public option. However, she shot down the trigger today as "an excuse for not doing anything."

The Blue Dogs are also whining about not being protected from tough votes, because the mission of public service is to come up with the most bland, inoffensive legislation possible and not to do anything that might make anyone mad. That's the picture of leadership. These ConservaDems either don't understand politics very well or are just being opaque about their true feelings.

Politically vulnerable Democrats say Speaker Nancy Pelosi and other House leaders aren’t offering them the protection from tough votes that they did in the last Congress.

Conservative Democrats fear that dozens of members could be swept out of their districts in the midterm election next year, and that fear has been intensifying in recent weeks.

Between a tough vote on a climate change bill that many don’t expect to become law and a leftward push on healthcare legislation, Pelosi’s (D-Calif.) critics within her caucus say she’s left the so-called “majority makers” exposed.

“She keeps trying to push an unpopular package,” said Rep. Gene Taylor (D-Miss.), a centrist Blue Dog Democrat, referring to healthcare. “I think it’s fair to say they were better at it before.”

Another Blue Dog lawmaker put it more bluntly.

“They’re seriously endangering their majority,” said the Blue Dog, who requested anonymity. “With the increased margin and a [Democratic] president, there seems to be a different feeling.”

What would endanger the majority are two things - no health care bill, or a health care package without a public option, which translates into a health care package that nobody in the country would like. What you would have left is an individual mandate to force people to shell out money to private insurers only, without the price controls to make that insurance affordable, a recipe for a continued skyrocketing of premiums. People interface the health care market primarily through those premiums as long as they remain healthy, and without competition in the insurance market it's going to be hard to dial them downward. There is currently no provision forcing insurers to lower premiums as a function of lowered overall health care delivery system costs. Only competition will provide that.

As I've said, the insistence on the public option is a self-preservation strategy. Rahm Emanuel might want to throw up his hands and pretend that only Congress decides on it, but he may want to get involved. As someone who claims to have brought the Democrats the House and Senate, he should know a thing or two about losing a majority. He could also recall 1994, when he worked in the Clinton White House and pushed NAFTA on the Congress, and watched as conservative Democrats from rural districts, who lost the trust of the people through selling out their jobs, were the first in line to fall from the Gingrichites. Failure to energize the base and provide something tangible for people could produce a similar result.

Financial Reform Already Takes A Hit

The Obama Administration has begun the agonizing process of scaling back their financial regulatory reform package to please bankers. This one's going to be so ugly I'll have trouble looking at how the sausage is made.

In a step toward overhauling the nation’s financial regulation, a senior Democrat on Wednesday announced a plan that preserved the core of the White House’s proposal for a new consumer financial protection agency, while jettisoning a smaller though symbolically significant provision that had posed political obstacles [...]

An Obama proposal that Mr. Frank rejected would have required banks and other financial services companies to offer so-called plain vanilla products, like 30-year fixed mortgages and low-interest, low-fee credit cards.

That proposal set off criticism by Democrats and Republicans, some with close ties to the banking industry, that it was the first step toward having government bureaucrats approve and disapprove an array of products.

At a hearing on Wednesday before the financial services committee, Treasury Secretary Timothy F. Geithner said: “There has been a lot of concern that if you invest the government with the ability to decide what’s appropriate here and there, that will lead to less competition and choice. The chairman’s proposals, which I’ve had a chance to read quickly, provide a better balance of choice and protection.”

Consumer groups are hanging their hats on the fact that the Consumer Financial Protection Agency hasn't been eliminated completely... yet. But Frank would exempt merchants, retailers, accountants, real estate brokers and IRA providers from any of its laws, and I would expect that list to grow. Banksters remain unconvinced that the CFPA needs to exist, and I'm fairly confident that they'll continue to advocate aggressively against it.

"We are pleased that a number of the issues we raised have been addressed," said Edward L. Yingling, president of the American Bankers Association. "At the same time, there are some very significant issues that still need to be addressed."

Among those issues, Yingling said, is that under the current proposal, states could go beyond the federal guidelines for consumer protection set by the new agency, an approach that financial firms say could lead to burdensome and conflicting regulation. A separate agency for consumer protection "still will have conflicts with the safety and soundness regulators," Yingling said. He and others also argue that the new regulator would be too powerful. "The agency still will have very, very broad, legislative-like powers. It can basically do anything it wants," he said. "We think that's a problem."

Also Tuesday, at an event outlining the chamber's objections to the CFPA, David Hirschmann, head of the organization's Center for Capital Markets, described the proposed new agency as an "overly broad, overly sweeping, big government solution."

It's good news that Frank pushed back hard against an alternate proposal floated by the Blue Dogs, but I fear we're seeing a slow walk toward something right in the wheelhouse of that alternative.

...Felix Salmon calls it the beginning of the end of meaningful reform:

There’s no good reason for this capitulation, except for the financial lobby has so effectively captured Congress that no reform would be able to get through with such a common-sense provision in place. This has nothing to do with the government “approving and disapproving a wide array of financial products”, it just says that anybody who wants to call themselves a bank should provide simple, basic banking products which aren’t prone to hidden fees and lucrative opacity. I fear that by the time Congress is done, the Consumer Financial Protection Agency won’t be able to protect consumers at all — and that’s assuming it’ll even exist.

Making Blue Dogs Blue

The Hill reports that the Speaker will respond to pressure from progressives and move the health care bill back to the left when she merges the competing measures from committee:

Speaker Pelosi is nixing a deal she cut with centrists to advance health reform, said a source familiar with negotiations.

Pelosi’s decision to abandon the agreement that was made with a group of Blue Dogs to get the bill out of committee would steer the healthcare legislation back to the left as she prepares for a floor vote.

Pelosi is planning to include a government-run public option in the House version of the healthcare bill. She wants to model it on Medicare, with providers getting reimbursed on a scale pegged to Medicare rates.

"The speaker is full-steam-ahead," said a senior Democratic aide.

Let's be clear who broke the agreement. The Blue Dogs and Waxman negotiated a deal to water down the public option but still include it in a final bill. Mike Ross came back from recess and said he could not support a public option whatsoever. At that point, the deal ended. And Ross, secure with his payoff from a pharmacy chain from a couple years back, has nobody to blame but himself.

This puts the House bill in the best negotiating position for the inevitable conference committee. Obviously the public option is a compromise in itself, but further grinding it into nothing would have made it nearly impossible to defend its inclusion in conference. Pelosi is determined to have the House be an equal player in this debate, and that starts by her passing the best bill possible from her chamber.

In other good news, the single-payer bill, HR 676, will finally get a score from the Congressional Budget Office. This score could be an excellent tool for advocates down the road, and it's sad that it's taken this long for such a score to be calculated.

Tea-Leaf Reading On Health Care

I'm going to play against type for a second.

I'm going to be an optimist.

There are actually lots of signs out there that health care reform will get done, and even a few that it won't be totally awful.

On the "getting done" part, this is uncontroversial. Without a bill that Democrats can sell to the public as a victory, they will get wiped out in 2010. They cannot live with failure. Dems in the House all have to face the voters, while some Senate moderates can hide this cycle. But regardless, the pressure from the White House and those vulnerable members of Congress to get something done will be intense. Furthermore, Blue Dogs are resigned to a bill.

Even after the tough town-hall-style meetings, unrelenting Republican assaults and a steady stream of questions from anxious voters, interviews with more than a dozen Blue Dogs and their top aides indicate that many of the lawmakers still believe approval of some form of health care plan is achievable and far preferable to not acting at all.

“I can’t tell you how comprehensive it will be, but I do believe something will get passed,” said Representative Michael Arcuri, a second-term Blue Dog Democrat from New York.

The political temperature of the Blue Dogs — and their ideological counterparts in the Senate — after the five-week recess is crucial. As representatives of some of the nation’s most conservative territory represented by Democrats, they potentially have the most to lose if a Democratic bill spurs a backlash. Even with healthy majorities in Congress, every Democratic vote is critical given the reluctance by some Democrats to consider a major overhaul and near blanket Republican opposition.

One lawmaker in the group, Representative David Scott of Georgia, said his determination to enact a health care overhaul had been increased over the recess because of what he called the spread of misinformation and other unfair tactics engaged in by the opposition.

“I think now more than ever we must get strong in our resolve to pass health care insurance reform legislation,” Mr. Scott said.

Scott is the Rep. who had a swastika painted on a sign in front of his office.

The Blue Dogs know that they will be first in line to go down if health care fails. They can try to claim in their districts that they saved the world from the eee-vul intentions of Hussein X, but that won't work. After a failed effort, anyone with a D in front of their name will be toast. And the Blue Dogs will be first up to the sacrifice pit.

Meanwhile, there are actual, definable signs that the public option will have to be a part of whatever comes out of a must-pass bill. For one, labor supports it strongly. Few interest groups in the Democratic Party hold more influence. House Dems would be dead without labor. Second, members of Congress are putting their own pressure on the President. Like Ohio's Sherrod Brown.

"I think the president needs to step forward," Sen. Sherrod Brown, D-Ohio, said this week, "be more specific, more aggressively fight for a strong health reform bill with a strong public option. I think he's going to do that."

Then you have Blanche Lincoln setting up for what I actually think is a way to support a public option and claim that she stopped the liberals from doing their worst:

Sen. Blanche Lincoln (D-AR) has been tepidly supportive of a public option in the past, so her comments to reporters today come as a bit of a head-scratcher. "I would not support a solely government-funded public option. We can't afford that," Lincoln said.

Nobody has called for a government-funded public option. The House bills have it paid for through consumer premiums, with a modicum of start-up money. She appears to be girding herself for a premium-supported public option.

Now, this could all be completely off base, as you have to practically read hieroglyphics to understand what's coming out of politicians in Washington these days. But we know with a fair degree of certainty that:

1) there has to be a health care bill
2) conservative Dems know it and won't stand in the way
3) liberal Dems sound confident that the President will push for a strong public option
4) conservative Senate Dems seem to be playing a kabuki game about it

Sure, you have ConservaDems not up for re-election next year like Ben Nelson arguing for more bipartisanship (although even the examples he gives are already addressed by the House bills). But in general, the momentum is actually pushing in favor of a bill, and maybe even a good one. You can base your beliefs on that, or unnamed sources in the White House. We'll see.

Using Stark Language

Leave it to Pete Stark to tell it exactly like it is.

Moderate Blue Dog Democrats ''just want to cause trouble,'' said Rep. Pete Stark, D-Calif., who heads the health subcommittee on the tax-writing Ways and Means Committee.

''They're for the most part, I hate to say, brain dead, but they're just looking to raise money from insurance companies and promote a right-wing agenda that is not really very useful in this whole process,'' Stark told reporters on a conference call.

Most of the legislative process involves posturing. The Blue Dogs want something for their districts, liberals want to represent their constituents, et cetera. When someone like Stark cuts through the posturing and lays out its consequences, it's quite revealing. He's one of the few people who can say this. He also in the same interview called co-ops the equivalent of a "medical unicorn".

The Single Payer Vote

I think it's great that single payer will get a vote on the House floor. It's important to set a marker for the future and separate friends from enemies (although, it being a free vote, you'll have more support than probably exists - see the Employee Free Choice Act free votes in 2007-2008). But this line troubles me:

In another part of the deal, the House bill would allow the federal government to negotiate prescription drug prices and use the savings to lower insurance premiums in the health exchanges that would be established in the bill, according to a copy of the agreement obtained by The Hill.

Another provision calls for finding additional savings through other methods by simplifying Medicare and Medicaid administrative costs.

The cuts sought by the Blue Dogs would remain in place unless the drug negotiation and other initiatives yield savings. But any savings would be used to lower premiums.

I believe that negotiations on drug prices will yield savings. So this could work out fine. But there's a strong implication there that the single payer vote was traded in exchange for keeping the Blue Dog-Waxman deal intact. That would be a mistake and a shame, with real-world implications for the middle class and the poor. We'll know when Nancy Pelosi merges the bills, at any rate.

Given the reality of this vote, the biggest thing single payer advocates could get out of it is a full analysis of HR 676 from the Congressional Budget Office. Incredibly, despite the amount of sponsors and the fact that it's been around for years, there has been no CBO analysis of the bill yet, and I think that a score showing that single payer would cost less than the Rube Goldberg plan under discussion and cover more people definitively would be fairly powerful and useful. In a perfect world we would pay a portion of taxes and get insurance coverage, period, end sentence. It appears we're going the route of unwinding an inefficient system slowly. The more information gleaned about the better option, the faster that unraveling can take place.

But if subsidies are more meager as a result of getting a vote, I'm against punishing those who can't afford insurance for the sake of symbol. Especially when Democrats are trying to foreground a message of taking on the insurance companies. Lawmakers are in broad agreement on regulating the insurance market and providing subsidies to those who can't afford insurance. Those also happen to be the two most popular and tangible elements of any bill. They shouldn't be messed with.

Under The Wire

The House Energy and Commerce Committee passed out their health care bill by a bare margin, 31-28, as the Blue Dog deal held and the set of amended amendments that progressives demanded return to the bill got put in place as well.

In an unusual move before the final vote, Waxman halted the markup to have a closed-door meeting with Democrats on his panel – presumably to make sure he had the votes to pass the bill.

The final vote was 31-28, with five Democrats opposing the measure. Democrats who voted no were Reps. Rick Boucher (Va.), Bart Stupak (Mich.), Jim Matheson (Utah), John Barrow (Ga.) and Charles Melancon (La.). All Republicans rejected the bill [...]

Speaker Nancy Pelosi (D-Calif.) indicated on Friday that some of the most hard-fought provisions of the healthcare bill -- including parts meant to appease conservative Democrats -- could change by the time the final measure reaches the House floor.

"I have three chairmen to deal with," Pelosi said. "We have three committees that have to look at it."

As it turns out, the committee has about 60 or so amendments left to deal with, but they couldn't eat one day into their summer break, so they'll clean that up when they get back, apparently. How the Speaker can merge the bills together while 60 amendments sit in one committee before a vote is tricky, but fortunately nobody understands the details of this stuff anyway. The best practice would actually be for one large committee, perhaps an ad hoc committee, to deal with legislation of this type, even if it's big.

Anyway, it looks like progress, and I have no doubts that the House will vote on a decent enough bill when they get back from the recess. The success of it will be determined by the resolve of the Democratic caucus and the success of efforts to convince lawmakers when they are home in their districts.

...Amendments and roll call votes available here.

A Compromise In The Other Direction

While the deal reached between Henry Waxman and a core group of Blue Dog Democrats on the health care bill in the House Energy and Commerce Committee was reported as offering modest concessions, in truth the subsidies would have really dried up for families making between 300-400% of federal poverty level. Progressives revolted, mainly because the subsidy climb-downs attack the larger idea of offering affordable health insurance for everyone, the central goal of the program. So they revolted, and Waxman had to re-bargain with everyone to get a decent compromise of the compromise.

Liberals and a small core of conservative Democrats set aside long-standing ideological differences early Friday to cut a deal that should allow the House Energy and Commerce Committee to approve a sweeping health care bill, breaking a two-week deadlock that threatened President Barack Obama’s top domestic priority.

Blue Dog Democrats on the committee, who are the linchpin in the House health care debate, agreed to allow their liberal colleagues to cut billions from existing government-funded health care programs in order to restore some $50 billion to $65 billion in subsidies set aside in the bill to help middle-income families purchase coverage.

This final agreement should clear the way for committee passage later today. Energy and Commerce is the last of the three House committees to consider the bill, so passage will put the package in the hands of party leaders for a titanic fight when Congress returns in the fall over the government's role in health care [...]

The Blue Dogs preserved one of their main objectives: de-coupling the so-called public plans from Medicare, a change that gives health care providers the right to negotiate payments with the government.

Those rates were only scheduled for the first three years anyhow. My guess is that will be returned when the House bills get merged from all three committees in September, especially if progressives keep up the pressure. What's important now is to get the Energy and Commerce bill out of committee.

Let's understand how this happened. Blue Dogs held out for a deal. Progressives, instead of taking it to get the larger goal, revolted and got 57 names on a letter vowing not to support any Blue Dog compromise. The Blue Dogs, who came into this wanting to kill the public plan option, ending up voting it out of committee in Energy and Commerce and allowing for expanded subsidies. And progressives are STILL not satisfied, as it should be, because Medicare rates and providers should be tied to the public plan over its entire lifespan, and the plan (and the insurance exchange) should be available to everyone regardless of employer.

Moreover, the liberals also expressed a political concern, saying House leaders had compromised too early. “Under the agreement, private insurers are coming off unscathed,” said Representative Peter Welch, Democrat of Vermont.

He added, “They do quite well — too well, frankly.”

Representative Eliot L. Engel, Democrat of New York, said, “The public plan was eviscerated” under the deal announced Wednesday to get the bill moving again in the Energy and Commerce Committee.

Mr. Engel was less than enthusiastic about the resulting legislation. “It’s not a terrible bill,” he said, “but it’s not what I had hoped for.”

There was an abortion policy amendment in the committee that tries to split the difference by affirming that insurers "would not be required or forbidden to cover abortion." I'd prefer that the public plan be accorded the same benefits toward the most widely used outpatient procedure in America that 90% of all private plans cover, and we'll see where that debate goes.

Also hurting the Blue Dogs' cause is this WaPo front-pager, almost unquestionably meant to coincide with progressive discontent over the compromise, showing the amount of health industry money these so-called fiscal conservatives are swimming in.

The roiling debate about health-care reform has been a boon to the political fortunes of Ross and 51 other members of the Blue Dog Coalition, who have become key brokers in shaping legislation in the House. Objections from the group resulted in a compromise bill announced this week that includes higher payments for rural providers and softens a public insurance option that industry groups object to. The deal also would allow states to set up nonprofit cooperatives to offer coverage, a Republican-generated idea that insurers favor as an alternative to a public insurance option.

At the same time, the group has set a record pace for fundraising this year through its political action committee, surpassing other congressional leadership PACs in collecting more than $1.1 million through June. More than half the money came from the health-care, insurance and financial services industries, marking a notable surge in donations from those sectors compared with earlier years, according to an analysis by the Center for Public Integrity.

A look at career contribution patterns also shows that typical Blue Dogs receive significantly more money -- about 25 percent -- from the health-care and insurance sectors than other Democrats, putting them closer to Republicans in attracting industry support.

Most of the major corporations and trade groups in those sectors are regular contributors to the Blue Dog PAC. They include drugmakers such as Pfizer and Novartis; insurers such as WellPoint and Northwestern Mutual Life; and industry organizations such as America's Health Insurance Plans. The American Medical Association also has been one of the top contributors to individual Blue Dog members over the past 20 years.

Progressives are running the absolute right game in the House, forcing compromises in their direction and making sure they will be heard in this debate. Unfortunately, on the other side of the Capitol, you have health care policy literally in the hands of Chuck Grassley, who is promising his party he won't strike a deal on any bill with Democrats while SITTING IN ON MEETINGS AIMED AT STRIKING A DEAL in the Senate Finance Committee. The unicameral legislature concept is looking better and better every day.

We're Here, We're Progressive, Get Used To It

House progressives have really tried to throw their weight around on the deal put together between Henry Waxman and the Blue Dogs. They probably should get the full list of co-signers before releasing it, but still, this represents a rare step for the Progressive Caucus in taking a stand against compromise after compromise with the conservative wing of the party. I hear they got 53 members to add their names to this:

We write to voice our opposition to the negotiated health care reform agreement under consideration in the Energy and Commerce Committee.

We regard the agreement reached by Chairman Waxman and several Blue Dog members of the Committee as fundamentally unacceptable. This agreement is not a step forward toward a good health care bill, but a large step backwards. Any bill that does not provide, at a minimum, for a public option with reimbursement rates based on Medicare rates - not negotiated rates - is unacceptable. It would ensure higher costs for the public plan, and would do nothing to achieve the goal of "keeping insurance companies honest," and their rates down.

To offset the increased costs incurred by adopting the provisions advocated by the Blue Dog members of the Committee, the agreement would reduce subsidies to low- and middle-income families, requiring them to pay a larger portion of their income for insurance premiums, and would impose an unfunded mandate on the states to pay for what were to have been Federal costs.

In short, this agreement will result in the public, both as insurance purchasers and as taxpayers, paying ever higher rates to insurance companies.

We simply cannot vote for such a proposal.

At issue seems to be the reimbursement rates for the public option, which seems odd to me, because the Medicare +5% rates in the House Tri-Committee bill only exist for the first three years, and the negotiated rates from the Health and Human Services Secretary will presumably be improved over that of private industry. I agree about the lower coverage subsidies, but again, we're talking about 1% on those between 300 and 400% of the federal poverty level, which is not determinative. Finally, looping back to the public option, I agree that bargaining rates are important, but even if they are restored, the fact that relatively few people can access it because it's firewalled for people who get health insurance from their employers seems to be a MUCH bigger problem.

If you're interested in covering people, the primary questions are the subsidies, the employer mandate and the individual mandate. If you're interested in reforming the system, the primary question is the strength of the Health Insurance Exchanges. And if you're interested in the public plan? It's the Health Insurance Exchanges. Again.

In all the bills we've seen, the public option is on the exchange. It is only available to those who are able to buy into the exchange. But most Americans can't buy into the exchange. They're not allowed. To make this very clear, imagine that the House and the Senate both pass Henry Waxman's proposal tomorrow. Liberals would celebrate. That's got a good, strong public plan. And I can't use it. Not even if I want to pay for it out-of-pocket. I work at a large employer and thus I am not allowed to buy into the exchange.

A strong public plan on a weak exchange will fail because it won't attain sufficient market share. It's as simple as that. Conversely, even a weak public plan on a strong exchange could thrive, because it would have access to a lot of customers. Focusing on the public plan and ignoring the rules of the exchange is like focusing on engine power but ignoring whether people can buy the car.

And the one remedy for this problem, the Free Choice Act, which would give employees the choice to take employer coverage or use that money on the insurance exchange, is being pushed by Ron Wyden but virtually nobody else, certainly not House progressives or the larger progressive activist community.

(Now, I will say that Matt Yglesias' contention that the exchanges aren't the most important part of reform, but the insurance regulations are, when things like rescission and pre-existing conditions don't apply to the employer market either, is a little weird. An exchange that has all of those consumer protections on the insurance industry AND is available to anyone who wants to buy in would be a game-changer, particularly with a public plan providing competition inside the exchange.)

So, if progressives are vowing not to vote for deals that don't even contain the kinds of reforms they'd want, what's going on here? I think Ezra Klein has it right.

House liberals are afraid of the dynamic in which good bills face Blue Dog opposition in the final mile and are aggressively watered down. Senate liberals are afraid of the same. And throwing this final compromise with the Blue Dogs into doubt is a show of strength. After all, House liberals feel they've already compromised plenty: Coming down from single-payer is a compromise. Cordoning the public plan off on the Health Insurance Exchange is a compromise. The whole bill is one big compromise, and every subsequent iteration is a compromise stacked atop a compromise placed upon a compromise. At some point, the compromises have to stop. Or, better yet, they have to go in the other direction.

Yep. This is not about the specifics of the bill as much as it is about changing the general dynamic. It shows me that progressive lawmakers are learning from the mood of the grassroots, who have been demanding this for a while. Furthermore, they can add that, if health care goes down, the people on the front lines will be the ones who wouldn't deliver what the people wanted and are in the kind of districts most likely to flip to Republicans. I'm sure that progressives are mindful that a half a loaf bill will open them up to challenges from the left, too.

Enzi Invents New Six-Member Unicameral Parliament, Appoints Self Prime Minister

Steve Benen hit this yesterday, but I just noticed it. Mike Enzi, like most Senators, finds himself very, very important. So much so that he believes the November election leading to 60 Democratic Senators, 258 Democratic House members and a Democratic President sent the message that his word must be law.

With liberal Democrats on and off the Finance Committee already angling to pull the measure to the left when it is combined with a rival passed by the Health Committee, Enzi indicated his support is contingent on Democratic leaders leaving any Finance Committee agreement intact.

“I also need commitments from Sen. [Harry] Reid [D-Nev.] and Speaker Pelosi, as well as the administration, that the bipartisan agreements reached in the Finance Committee will survive in a final bill that goes to the president,” Enzi said.

There are six Senators involved in the Baucus caucus in the Senate Finance Committee. Together they represent about 2.8% of the total US population.

Let's add in some additional facts. Five Congressional Committees are working on health care legislation. The legislative process works like this: the bills coming out of the committees in the respective chambers are merged into single bills for a floor vote. Senators and House members have the opportunity to offer amendments. Those amendments are voted up or down, then there are final votes on passage of the bill in the House and the Senate. The bills coming out of the respective chambers go to a conference committee, where they are merged, with the details ironed out, and then returned to each chamber for a final vote.

That's how government works.

Mike Enzi's conception of government is this: Mike Enzi agrees to a compromise with 6% of the total Senate representing 2.8% of the population, and it becomes law.

I will say that his version has speed on its side.

The bill Enzi wants to fast track has a favorable CBO score going for it, reportedly costing under $1 trillion over 10 years and covering 95% of all Americans. But the only way to do that is to cut subsidies to the bone, making coverage unaffordable; or to phase in the program later in the ten-year budget window, maintaining the current broken, crappy system for as long as possible. It also apparently eliminates the successful Children's Health Insurance Program.

And by the way, they can't get it done until after the August recess.

Sen. Charles Grassley, R-Iowa, and Sen. Michael Enzi, R-Wyoming, dropped the bombshell news to CNN and two other reporters in Capitol hallways Wednesday night. They have spent weeks behind closed doors, trying to hammer out an agreement with their Democratic counterparts on the Senate Finance Committee but said too many issues remain unresolved, making it virtually impossible for them to sign on to a deal before the break.

“There are a lot of tough decisions to make and they aren’t going to be made real quickly,” Grassley said late Wednesday when asked whether negotiators should kick their talks over to September.

Senate Majority Leader Harry Reid, D-Nevada, had already postponed Senate floor action on health care legislation until the fall, but Democrats had hoped the Senate Finance Committee could finish its work before the summer break. In fact, one senior Democratic source said meeting that deadline was the central thrust of the president’s meeting with Reid and Finance Committee Chairman Max Baucus, D-Montana, last Friday [...]

Enzi, a soft-spoken conservative, was furious about headlines Wednesday morning that suggested he was close to reaching a deal with the Democrats.

“I felt my reputation was in danger,” he said.

In Enzi's world, signing on to a compromise with Democrats would ruin his reputation. So obviously we should just let him set the policy by himself. After all, 189,046 voted for him last year.

The silver lining here is that liberal Democrats in the House are resisting going along with this nonsense. From CongressDaily (sub. req.):

A trumpeted healthcare reform agreement with conservative House Democrats set off a firestorm of criticism from the party's liberal wing Wednesday, pushing back proceedings in a key committee and casting doubt on the strength of the leadership-backed accord.

Leaders and White House officials worked for days to reach an agreement with Blue Dogs, who had been holding up the legislation in the Energy and Commerce Committee because of concerns about cost, burdens on small business and a public insurance option [...]

"There's angst; there's questions; there's some anger," Rep. Eliot Engel, D-N.Y., a member of the Energy and Commerce Committee, said of the meetings with Waxman. "The question is, have we given up too much for the goals that we need?" he said of the agreement. "I don't want to see the insurance companies subsidized by middle-income taxpayers."

The Progressive Caucus called the Waxman/Blue Dog deal "unacceptable" and vowed to defeat such a compromise on the House floor.

Meanwhile, in the best news I've heard in years, Senate Democrats are making threats to Max Baucus' committee chair.

In an apparent warning to Senate Finance Committee Chairman Max Baucus (D-Mont.), some liberal Democrats have suggested a secret-ballot vote every two years on whether or not to strip committee chairmen of their gavels [...]

"Every two years the caucus could have a secret ballot on whether a chairman should continue, yes or no," said Sen. Tom Harkin (D-Iowa), the chairman of the Senate Agriculture Committee. "If the ‘no’s win, [the chairman’s] out [...]

Some senators suggest privately that Baucus might be more open to persuasion if his chairmanship is subject to regular votes.

Another senior Democratic senator endorsed Harkin’s suggestion but declined to speak on the record for fear of angering Baucus.

"Put me down as a yes, but if you use my name I’ll send a SWAT team after you," said the lawmaker when asked about a biennial referendum on chairmen.

Civil rights legislation in the 1960s didn't move forward until the House Rules Committee chair, a segregationist Southern Democrat, saw his power neutered by an expansion of the committee. Process changes often precede policy changes. Sen. Baucus, take note.

Hold Everything

Progressives on the Energy and Commerce Committee shut down the markup scheduled for this afternoon while they look at the compromise made.

House Energy and Commerce Chairman Henry Waxman (D-Calif.) postponed the health bill markup that he planned to hold Wednesday afternoon amid a backlash from liberals to the deal that he cut earlier with four conservative Blue Dog Democrats.

Waxman told reporters that he intended to keep meeting with committee Democrats on Wednesday night, resume the markup Thursday and still finish the bill Friday.

“[Energy and Commerce Democrats] have a lot of questions about the legislation, and I think it’s more important that we sit in the Democratic Caucus and let people ask questions, get answers, hear each other out,” Waxman said.

Good. As long as we're slowing down the bill, at least progressives can force some changes to it instead of going along with whatever compromise gets hashed out by the Blue Dogs. They should also inform their counterparts, many of whom come from rural areas, that they'll never vote for their farm subsidies if they sabotage this bill. They won't vote for their pork barrel projects and will join with Republicans to take them out of appropriations. They will simply make it difficult for Blue Dogs to bring home the bacon in the way they currently do. The Blue Dogs exist through power in numbers. The Progressive Caucus has MORE numbers, and they can use them.

Energy And Commerce To Mark Up - HC Out Of All Committees By The Recess

After reports overnight of no deal with House Blue Dogs, now there are reports of a compromise being reached and a markup session in the Energy and Commerce Committee scheduled for just a couple hours from now.

Energy and Commerce Committee Chairman Henry Waxman (D-Calif.) has cut a deal to reconvene his committee and vote on the Democrats' sweeping health care bill, with a goal of completing work by the time lawmakers leave town for the summer on Friday.

There won’t be a vote before the full House before the August recess, but the committee breakthrough – after tense negotiations with Blue Dog Democrats – is a significant step for the Democrats.

"After two weeks of very long and intense negotiations, I'm proud to report that we've reached an agreement that will allow health care reform to move forward," said Arkansas Rep. Mike Ross, a top negotiator for Blue Dog Democrats on the Energy and Commerce Committee.

After all this, the Blue Dogs will only allow four of their members to vote on this package in committee.

And here's what they got for their troubles:

The Blue Dogs also succeeded in cutting $100 billion from the overall cost of the bill, bringing the total price tag under $1 trillion. The legislation will now exempt small businesses with a payroll less than $500,000 from paying for any government-sponsored health coverage - double the $250,000 in the initial draft. Doctors and other health care providers would also be allowed to negotiate their payment rates with the government-sponsored health care arm.

The new version of the bill also has a breakthrough on the concept of health care “co-ops,” seen by some as an alternative to a public plan. States would be allowed to create co-ops for residents to buy private insurance. But the Waxman-Ross deal will also keeps the "public option" of government-sponsored health care.

That first paragraph has internal contradictions all over it. The Blue Dogs "succeeded" in cutting costs from the bill - but the two subjects mentioned ADD to the bill's costs. Exempting more small businesses from the employer mandate means less money from small businesses that do not provide insurance for their employees. And allowing providers to negotiate payment rates with the public option, as well as opt out of the network, means higher costs and less choice for individuals who purchase their plans. It's not really fiscally responsible. It also doesn't explain where those cuts came from. I'm hearing that this comes through "enhanced delivery system reforms" and cutting the expansion of Medicaid as well as the "affordability credits" for those who lack insurance. I'm guessing that they lowered the subsidy level to 300% of the federal poverty line. Matt Yglesias argues that not many people in between 300-400% FPL lack insurance, but it would still provide an additional burden on their bank accounts.

Where would this compromise leave health care reform? All three committees in the House will have passed their bills, but members would go home for recess while those bills get merged by the leadership. That puts the House trajectory on line with the Senate, where the Finance Committee is making progress toward a goal of passing their bill out before the recess. So in that intervening month, while progressives and conservatives do hand-to-hand combat in town hall meetings and on the airwaves, Nancy Pelosi and Harry Reid have to figure out what to keep in and out of the various bills, for floor votes in September.

Meanwhile, the White House has released eight guarantees that would emerge from any health care bill, which all sound like insurance reform, the line they've been using recently, and which don't include anything to really transform the system.

* No Discrimination for Pre-Existing Conditions: Insurance companies will be prohibited from refusing you coverage because of your medical history.

* No Exorbitant Out-of-Pocket Expenses, Deductibles or Co-Pays: Insurance companies will have to abide by yearly caps on how much they can charge for out-of-pocket expenses.

* No Cost-Sharing for Preventive Care: Insurance companies must fully cover, without charge, regular checkups and tests that help you prevent illness, such as mammograms or eye and foot exams for diabetics.

* No Dropping of Coverage for Seriously Ill: Insurance companies will be prohibited from dropping or watering down insurance coverage for those who become seriously ill.

* No Gender Discrimination: Insurance companies will be prohibited from charging you more because of your gender.

* No Annual or Lifetime Caps on Coverage: Insurance companies will be prevented from placing annual or lifetime caps on the coverage you receive.

* Extended Coverage for Young Adults: Children would continue to be eligible for family coverage through the age of 26.

* Guaranteed Insurance Renewal: Insurance companies will be required to renew any policy as long as the policyholder pays their premium in full. Insurance companies won't be allowed to refuse renewal because someone became sick.

OK. These are all solid reforms that would help a lot of people. But they are incremental reforms at the edge of the policy. I understand the thinking - these are the consumer-based reforms people will actually see. But they'd see a public option in competition with an industry that currently denies coverage and does everything they can to get out of paying for treatment. I fear that nothing more fundamental is being attempted out of a fetishistic need for bipartisanship that trumps common sense and the actual prevailing political reality.

Over at Senate Finance, judging by the reports coming of the committee, a solonic gang of six -- three Democrats, including chairman Max Baucus of Montana, and three Republicans, including ranking member Charles Grassley of Iowa -- are turning out a bill whose resemblance to anything the president has championed is accidental and incidental. To secure Republican support, they oppose a public plan. To secure Republican support, they oppose employer mandates, even on the largest corporations. (And many of America's biggest employers are retailers with a proven record of not providing coverage to their workers: Wal-Mart, our largest, employs 1.4 million Americans, most of whom it does not cover.) The solonic six may end up requiring employers to fund subsidies for employees who need them, but that could create the bureaucratic nightmare to end all bureaucratic nightmares -- 700,000 Wal-Mart employees, say, bringing their tax returns to work so management can investigate ("You sure you reported all your income?") and stall ("Doesn't your spouse work at Home Depot? Why don't they pay the subsidy?") and investigate and stall.

Sounds like a plan to secure universal coverage by the middle of the next century [...]

Problem is, bipartisanship ain't what it used to be, and for one fundamental reason: Republicans ain't what they used to be. It's true that there was considerable Republican congressional support, back in the day, for Social Security and Medicare. But in the '30s, there were progressive Republicans who stood to the left of the Democrats. Nebraska Republican George Norris, who for decades called for establishing public power companies to compete with price-gouging private companies, was the father of the Tennessee Valley Authority. In the '60s, Rockefeller Republicans supported civil rights legislation and Medicare.

Today, no such Republicans exist. In New England and New York, historically the home of GOP moderates, Republicans occupy just two of 51 House seats. Nationally, the party is dominated by Southern neo-Dixiecrats. In their book "Off Center," political scientists Jacob Hacker and Paul Pierson compared congressional Republicans of different eras and concluded that a Republican House member in 2003 with a voting record that placed him at the median of his party was 73 percent more conservative than the median GOP member of the early '70s.

Max Baucus, then, isn't negotiating universal coverage with the party of Everett Dirksen, in which many members supported Medicare. He's negotiating it with the party of Barry Goldwater, who was dead set against Medicare. It's a fool's errand that is creating a plan that's a marvel of ineffectuality and self-negation -- a latter-day Missouri Compromise that reconciles opposites at the cost of good policy. Obama should thank the solonic six for their work, and, as much as is politically practicable, ignore it.

Exactly. You don't negotiate with crazy.

There's still a fight to be had on the public option, the design of the insurance exchanges in which a public option sits, and several other features. Ultimately the Blue Dogs appear more nervous than obstructionist, so August will be consequential. I hope OFA is ready.

...Really, negotiate with this?

This unidentified man decided he was doing the Tea Party-anti-reform effort a real solid by hanging freshman Maryland Democratic Rep. Frank Kratovil in effigy [note the creepily expert knotted noose] with a placard "Congress Traitors The American [and a word that looks like "idol"].

The event — a rally in Salisbury, Md. on the Eastern Shore — was attended by members of the business-funded Americans for Prosperity, a group that includes James Miller, a Federal Trade Commission chairman and budget director during the Reagan administration.

...More info on the Waxman-Blue Dog deal. They lowered the rate of the subsidy between 300-400% FPL, rather than eliminating it. And as stated above, the public option remains, albeit weakened because it can't use Medicare bargaining rates at all, but rates negotiated by the Health and Human Services Secretary.

The Dog Days Of Health Care Reform

Maxine Waters has basically had enough.

WATSON: Is the President and Rahm Emanuel -- former member of the House -- are they treading too lightly here, are they not bringing out the big stick against some of those Blue Dog Democrats and saying "we've got a once in a four-decade opportunity to get this passed, everyone knows how easy it is for momentum to dissipate, you guys have to get on board and we've got to go forward and make sure that everyone has better health care, is covered, and hopefully better quality of outcome?

WATERS: Well that may be difficult for Rahm Emanuel, because don't forget -- he recruited most of them. As when he was over in the Congress, in the leadership, Rahm Emanuel recruited more conservative members and based on some of the information I'm getting, they told them that they could vote the way they wanted to vote, that they would not interfere with what was considered their philosophy about some of these things. So, now the chickens have come home to roost.

I'm sure Emanuel would counter that, without his recruitment, those would be Republican seats right now, and how would that help us. Well, a good number of those Blue Dogs wouldn't be blocking Democratic bills in committee, for one thing.

Waters says she's holding strong on blocking a bill without a public option.

KERY ELEVELD: There are reports out of the Senate Finance Committee today that they may be dropping the public option in their negotiations. Do you think that's going to sell in the House?

WATERS: No. As a matter of fact, that's a kill for sure for the progressives. For the majority, I think, of our members a public option is a compromise -- we wanted single payer as you know, and we backed off because they said that was going to be impossible to do. Again they brought up the more conservative elements, etc. etc., and so we will not support any bill that does not have a public option in it.

We always hear about the tricky politics for the Blue Dogs or Democrats in moderate districts. In this case, the politics are tricky for progressives in safe seats. If they don't hold firm, I have little doubt that THEY will see primary challenges from the left. Whether or not they'll succeed is another matter, but you can see how a primary challenge has turned Arlen Specter into a progressive lefty. Progressives have political interests in getting something good done as well. And as George Miller says, the Baucus bill just doesn't cut it:

Part of the problem, as I suggested earlier, is that the news out of the Senate has widened a rift between House liberals and Blue Dogs. Rep. George MIller (D-CA), chairman of the House Education and Labor Committee, and an author of House health care legislation, isn't at all pleased with the watered down reform bill the Senate Finance Committee is set to propose.

"I don't think that adds up to health care reform. It doesn't add up to insurance reform. It doesn't add up to keeping costs down. I don't know what the hell that adds up to," Miller said.

Basically, this is a massive game of chicken between moderates and liberals. The moderates figure liberals will back down, based on past experience. The liberals think the moderates will do the same. What the liberals have going for them is the fact, plain fact, that a defeat of health care reform will drag down the party, and the most vulnerable seats, frankly, are occupied by those same moderates. If health care reform passes, certain lawmakers could lose seats in very particular circumstances. But if reform fails, only one group is certain to go down with it - the Blue Dogs.

Smiles On A Summer Night

Meet the men and women determined to deny you quality health care:

The fate of the health care overhaul largely rests on the shoulders of six senators who since June 17 have gathered — often twice a day, and for many hours at a stretch — in a conference room with burnt sienna walls, in the office of the Senate Finance Committee chairman, Max Baucus, Democrat of Montana.

Mr. Baucus says his group will produce the bill that best meets Mr. Obama’s top priorities, broadly expanding coverage to the uninsured and curtailing the steep rise in health care spending over the long term, what policy makers call “bending the cost curve.”

Still, if the three Democrats and three Republicans can pull off a grand bargain, it will have to be more conservative than the measures proposed by the House or the left-leaning Senate health committee. And that could force Mr. Obama to choose between backing the bipartisan deal or rank-and-file Democrats who want a bill that more closely reflects their liberal ideals.

Already, the group of six has tossed aside the idea of a government-run insurance plan that would compete with private insurers, which the president supports but Republicans said was a deal-breaker.

Instead, they are proposing a network of private, nonprofit cooperatives.

They have also dismissed the House Democratic plan to pay for the bill’s roughly $1 trillion, 10-year cost partly with an income surtax on high earners.

The three Republicans have insisted that any new taxes come from within the health care arena. As one option, Democrats have proposed taxing high-end insurance plans with values exceeding $25,000.

The Senate group also seems prepared to drop a requirement, included in other versions of the legislation, that employers offer coverage to their workers. “We don’t mandate employer coverage,” Senator Olympia J. Snowe, Republican of Maine and one of the six, said Monday. Employers that do not offer coverage may instead have to pay the cost of any government subsidies for which their workers qualify. In the House, centrist Democrats have temporarily stalled the health care bill, many lawmakers want to see what Mr. Baucus’s group produces before voting on tax increases in the House bill.

I'd just like to dial everybody back for a second and note that this is the Senate Finance Committee. In practice this hasn't been honored, but in theory the group has jurisdiction over the financing of Medicare and setting up the revenue stream for a health care bill. Since pretty much everything costs something, that mandate has expanded into writing an entire bill. But in an ideal world, the Health, Education, Labor and Pensions Committee would write the health care bill, and the Finance Committee would direct how to pay for it.

But that wouldn't sit well with Presidents Baucus and Grassley and their kitchen cabinet.

As for the merits of the policy, Jacob Hacker is talking about House Blue Dogs in this op-ed today, but the points are largely the same:

The main worry expressed by the Blue Dogs is that the Congressional Budget Office has predicted that leading bills on Capitol Hill won't bring down medical inflation. The irony is that the Blue Dogs' argument -- that a new public insurance plan designed to compete with private insurers should be smaller and less powerful, and that Medicare and this new plan should pay more generous rates to rural providers -- would make reform more expensive, not less. The further irony is that the federal premium assistance that the Blue Dogs worry is too costly is the reform that would make health-care affordable for a large share of their constituents.

The Blue Dogs are right to hold Obama and Democratic leaders to their commitment to real cost control. But they are wrong to see this goal as conflicting with a new national public health insurance plan for Americans younger than 65. In fact, such a plan, empowered to work with Medicare, is Congress's single most powerful lever for reforming the way care is paid for and delivered. With appropriate authority, it can encourage private plans to develop innovations in payment and care coordination that could spread through the private sector, as have past public-sector innovations [...]

Many Blue Dogs fret that a new public health insurance plan will become too large, despite the CBO's projection that the overwhelming majority of working people will have employer coverage and that the public plan will enroll less than 5 percent of the population. Their concern should be that a public plan will be too weak. A public health plan will be particularly vital for Americans in the rural areas that many Blue Dogs represent. These areas feature both limited insurance competition and shockingly large numbers of residents without adequate coverage. By providing a backup plan that competes with private insurers, the public plan will broaden coverage and encourage private plans to reduce their premiums. Perhaps that's why support for a public plan is virtually as high in generally conservative rural areas as it is nationwide, with 71 percent of voters expressing enthusiasm.

What's funny is that chucking the employer mandate will probably lead to employers dropping coverage if the costs become prohibitive, sending workers into the insurance exchange and, if it exists, the public plan. Under the Senate Finance proposal, however, the public plan is eliminated, and private markets make out like bandits. They force everyone to buy their insurance, and they get more individuals buying coverage, who have less bargaining power than group employers. And because of the obsession that the bill cost no more than $100 billion annually over ten years, that coverage may lack proper subsidies, have lower benefits or increased out-of-pocket costs for the individual.

It's good to see these Senators so happy, however.

...Angry Bear:

"Officials also said a bipartisan compromise would not subject companies to a penalty if they declined to offer coverage to their workers. Instead, these businesses would be required to reimburse the government for part or all of any federal subsidies designed to help lower-income employees obtain insurance on their own."

This would be the most regressive tax ever. If I am an employer and I don't provide health insurance then my tax liability is higher if the family income of my employee is lower. More regressive than a poll tax (Baroness Thatcher must be put out that she didn't think of it). What's worse it depends on family income.

Let's say I don't provide insurance and have two job applicants, one who is a single mother and the other a man with a low salary but a high income wife (say Bill Clinton when he was working as governor of Arkansas for $30,000 per year). I hire the guy, because he can't get subsidized health insurance, so I don't have to give him insurance or pay him a dime.

This is the Baucus Grassley jobs only for people who don't need jobs preliminary draft bill of 2009.

...This is also worth noting:

[I]t does strike me as worth noting that when you read a puff piece in The New York Times about the Gang of Six bipartisan dealmakers in the Senate that vast power is being wielded by people who, in a democratic system of government, would have almost no power. We’re talking, after all, about Max Baucus of Montana, Kent Conrad of North Dakota, Jeff Bingaman of New Mexico, Susan Collins of Maine, Mike Enzi of Wyoming, and Chuck Grassley of Iowa. Collectively those six states contain about 2.74 percent of the population, less than New Jersey, or about one fifth the population of California. The six largest states, by contrast, contain about 40 percent of Americans.

In The Hands Of President Baucus

Jon Chait gets at something I've been noticing for a while, which is that the Blue Dogs in the House don't necessarily want to stop health care reform at this stage so much as they want to stop having to vote on health care reform before the Senate Finance Committee releases their bill. The House went first on climate change, and these moderate Dems think it's better for their political futures if the Senate goes first on health care. That's why I believe Nancy Pelosi when she says a health care bill will pass the House without question: if the Senate goes ahead and passes, a lot of that opposition from the Blue Dogs will melt away. They just want to avoid a tough vote, like all politicians.

Which means that the action on health care has shifted to that Finance Committee in the Senate, which remains on lockdown:

No one knows what Sen. Max Baucus is doing right now. Well, that's not quite true. Chuck Grassley probably knows. And Olympia Snowe probably knows. And Kent Conrad. And a few other senators and staff members. But that's about it. The Finance Committee, in recent months, has entered total lockdown -- even from itself. Sen. Jay Rockefeller, who chairs Finance's health subcommittee, has been totally shut out of the process. So too have a number of other Democrats on the Committee.

That's created a huge amount of uncertainty at the center of health-care reform. Baucus is the key senator on the key committee. And very few know what he's doing, or why it's taking this long, or what the sticking points are. House Democrats are terrified that they'll take a tough vote on an aggressive health-care reform bill only to see their legs cut out from underneath them when Baucus emerges with a tepid -- but bipartisan -- alternative. Senate Democrats are furious that Chuck Grassley and Olympia Snowe have had more of a role in the process than they have. And above all, everybody is confused.

My semi-informed guess is that if you want to see where Finance is going, look at what Doug Elmendorf, the director of the Congressional Budget Office, is doing. He is systematically, and fairly explicitly, closing off every door to control costs save for reforming the employer tax exclusion. He has dismissed any serious savings from the Independent Medicare Advisory Council proposal and the public plan and comparative effectiveness and general efficiencies. He has said that in the House bill, "the curve is being raised." This prompted Grassley to say that Finance is working to "overcome the shortcomings" of the House's effort.

Doing away with the employer deduction has no political support on the Hill. But capping it, and particularly through taxing the insurers who distribute Cadillac policies to executives, could potentially have lots of support. I love how Goldman Sachs' health care benefits has entered the discussion today.

Goldman’s 400 or so managing directors and its top executive officers participate in the bank’s executive medical and dental program as part of their benefits, according to documents filed with the Securities and Exchange Commission. The program generally costs the bank $40,543 in premiums annually for each participant’s family.

Those taking part in the plan include the company’s chief executive, Lloyd C. Blankfein, and four other top officers, as well as managing directors, whose base salary is $600,000.

Goldman’s medical coverage entered the health care discussion on Sunday when David Axelrod, senior adviser to President Obama, cited the Goldman program as an example of the expensive benefits the administration might consider taxing to help pay for its health care program.

“The president actually was asked this the other day by Jim Lehrer, and what he said was that this was an intriguing idea to put an excise tax on high-end health care policies like the ones that the executives at Goldman Sachs have, the $40,000 policies,” Mr. Axelrod said.

However, this is not the only thing that the Senate Finance Committee has up its sleeve. They're also looking to lower the subsidies available in the bill to people who cannot afford health insurance. This is one of those elements that will tangibly impact millions of Americans, and should be among the first order of importance. But Baucus and his gang want to keep the subsidies down to keep the cost of the bill down to an arbitrary number.

Under the legislation, insurers generally must accept all applicants and could not deny coverage because of a person’s medical history.

But Senator Ron Wyden, Democrat of Oregon, acknowledged that “there are some questions” about whether insurance would be affordable. “People who are making $50,000 or $60,000 a year and are spending $13,000 on health insurance may not get much of a subsidy,” said Mr. Wyden, a member of the Finance Committee. “Those people will ask, ‘How am I going to make this work for me and my family?’ “ [...]

The Senate Finance Committee is considering proposals to limit eligibility for subsidies, a move favored by some fiscally conservative Democrats in the House Blue Dog Coalition. One proposal would bar subsidies for people with incomes over 300 percent of the poverty level ($66,150 for a family of four.)

Richard J. Kirsch, the national campaign manager of Health Care for America Now, a consumer group, expressed concern. “If Congress sets the limit at 300 percent of the poverty level,” Mr. Kirsch said, “millions of middle-income families would not be able to buy insurance because they could not afford the premiums on their own.”

A similar reform concerns limiting out-of-pocket expenses for individuals and families.

As Krugman says today, complaining about subsidies while working to expand federal outlays for health care in other areas makes no sense whatsoever, but that's essentially what a lot of Blue Dogs have been arguing for many weeks. I really think that's because they don't want to move first on the bill, so they're throwing up every objection possible and inventing impossible hoops for House leaders to jump through.

Always Darkest Sausage-Making Before The Dawn

Ezra gives the 10,000-foot view of today's health care crackup in the House, and Henry Waxman's dicey choice on how to resolve it:

The central issue here is simple enough: The Blue Dogs want Waxman to make concessions he doesn't want to make. The sticking points, according to sources close to the process, are the public plan -- Blue Dogs still want a trigger option -- and the administration's proposal, which the Blue Dogs support, to create an independent commission able to set Medicare payment rates and make reforms. Waxman and others worry that a Republican administration and Congress could use this panel to undermine the Medicare program.

You can take Waxman's statements one of a couple ways. His willingness to bring the bill directly to the floor undermines the bargaining power of the Blue Dogs: It means they don't have veto power over the bill. This could, in other words, be a negotiating tactic on Waxman's part to soften the Blue Dogs' position. But if that doesn't work, it could also mean exactly what it says: That he's going to push the bill straight to the floor.

That would ensure some bad headlines, and an angry Blue Dog caucus. But versions of this bill have passed two other committees. Energy and Commerce isn't strictly necessary. Waxman's threat to bring the bill to the floor means that Pelosi and Waxman think they have the votes whether or not Energy and Commerce approves the legislation. And that may not be such a bad outcome, either for the Democrats or the Blue Dogs.

But Blue Dogs might balk, because they don't want to walk the plank on a bill if the Senate Finance Committee won't walk it either. We're basically seeing a game of chicken, between Waxman and the Blue Dogs as well as between the House and the Senate. Nobody wants to take the tough vote first. But somebody has to, in order to get the ball rolling.

Brian Beutler discerns tension and chaos on the Hill, but I've heard different. I heard Waxman and Mike Ross have stated that talks are ongoing and that a markup could be held as early as Tuesday. And that Steny Hoyer said publicly at a press conference that votes could happen next week. So we don't really know what's going on quite yet. It's hard not to despair just as a reflex, but I wouldn't just yet.

The End Around The Blue Dogs

One of my co-guests on NPR today was Henry Cuellar, a Blue Dog. And 30 minutes goes fast with three guests, so I didn't get to confront him and his arguments as much as I wanted. For instance, McAllen, TX, is in his district, and that was the subject of the widely touted Atul Gawande piece in The New Yorker about disparities in health care delivery and effectiveness. But Cuellar pretty much harped on costs, costs, costs as an impediment to getting something done. I countered that cost control and expanding access, in many cases, are complementary. This makes the Blue Dog argument incoherent. They want to cut costs, but they are reluctant to enact the reforms that actually would do it. Not to mention the fact that they talk of fiscal responsibility while trying to carve out funding for rural health care, for example, which is the exact opposite of cost-cutting. And Steven Pearlstein picks up on this today.

The challenge for the Blue Dogs is that they want an America where everyone has insurance but are reluctant to force workers to buy it or employers to help pay for it.

They understand that achieving universal coverage will require subsidies for low-income workers and small businesses, but they insist that none of those changes add to the federal deficit or raise anyone's taxes.

They want to introduce more competition into the private insurance market, but not if it comes from a government-run insurance plan.

They complain constantly about the need to rein in runaway Medicare costs while at the same time demanding higher Medicare reimbursement rates for doctors and hospitals in rural areas.

You see what I mean about mushy centrism?

Yes. Yes I do.

The truth is that the Blue Dogs are slaves to entrenched power, serving the interests of powerful lobbies rather than the middle-income voters in their districts. Cutting subsidies to 300% of poverty level from 400% would make health care less affordable to working people - and it's only being considered in the House because Blue Dogs want to protect those making half a million a year from a surtax.

Henry Waxman refuses to let the Blue Dogs make chicken salad out of the House plan. He's talking about bypassing his committee entirely and bringing the bill already voted out of two other committees to the floor.

Chairman Henry Waxman (D-Calif.) says there is "no alternative" but to have healthcare legislation bypass his Energy and Commerce Committee if Blue Dog Democrats don't accept a deal worked out Friday.

Waxman is now playing a game of legislative chicken with the Blue Dogs. He's hoping the inclusion of a study on Medicare reimbursement rates in the healthcare overhaul will be enough to placate the centrist Democrats, who say the government program short-changes hospitals and physicians in their rural districts.

If that’s not, the seven Blue Dogs could join with the committee's Republicans to "eviscerate" healthcare reform, and that’s something Waxman will not tolerate.

"I won't allow them to hand over control of our committee to Republicans," Waxman told reporters.

Just like that, this morning, word leaked that Democrats in the House have agreed to include President Obama's "MedPAC on steroids" proposal to assemble a team of health care policy experts to make annual recommendations about Medicare, including reimbursement rates and delivery changes, that would face an up or down vote in Congress. This deal was the result of late night negotiations between Rahm Emanuel and the Blue Dogs. But they do not seem to have fully satisfied them.

At some point, I think you do have to pull the trigger. Matt Yglesias makes the moral case, that good legislation matters more than good process.

Something a lot of progressive legislative leaders seem to have forgotten until this Congress actually got under way is that historically congressional procedure is a challenge to be surmounted when you want big change to happen. It’s not actually a fixed feature of the landscape that people “have to” accommodate themselves to. For years you couldn’t get a decent Civil Rights bill because segregationists controlled the Judiciary Committee that had jurisdiction. This problem was “solved” by just deciding to bypass the Judiciary Committee. When you decide you want to get things done, you find a way to get them done. Even the allegedly sacrosanct filibuster rule has been changed repeatedly over the years. The law is the law and the constitution is the constitution, but the rules of congressional procedure are not law. They’re internally made rules, they’re subject to change, and the criteria for a good set of rules is that you want rules that produce good legislation and good governance.

If the internal rules are in place you should work to change them if they obstruct a change both the majority of Americans and the majority of the Congress clearly want.

...by the way, I agree with Pearlstein that Medicare might not be the best program to use for reforming the system:

The problem with using Medicare to serve as the leading edge of reform, however, is that it relies on a patient population, the elderly, that is least able and willing to embrace change. A better vehicle would be the new government-run insurance option that has become a political must-have for House leaders and President Obama. In return for dropping their opposition to such a "public option," the Blue Dogs could have insisted that it not be structured as a fee-for-service plan along the lines of Medicare but rather offer services through a network of high-quality, lower-cost hospitals and clinics that use teams of salaried doctors to provide coordinated care, along the lines of the Mayo and Cleveland clinics that Obama is always touting. In a competitive market, the success of such a government-run plan would force other insurers to follow suit.

...so the Blue Dogs claim that talks broke down today to resolve differences with Waxman, and I have to say he appears to be full of it. He says that Waxman took things off the table that, an hour before, Waxman was hailing in public as part of a breakthrough agreement? Doesn't pass the smell test. Someone's lying.

Transfer Of Power

The remaining House committee to finish work on the health care bill, the Energy and Commerce Committee, has repeatedly delayed their markup sessions this week, as Henry Waxman negotiated with the several Blue Dogs on the committee over changes to the bill. Talks seemed to reach a breakthrough when Waxman agreed to add expanded power for MedPAC, an independent board that could make recommendations on public medical spending and face an up or down vote in Congress. But despite that, there's been delay.

And that's because the Blue Dogs want to sequence the votes. They want the Senate to go first with whatever comes out of the Finance Committee over there rather than take a vote on something that won't be part of the final bill. Nancy Pelosi said as much yesterday:

House Speaker Nancy Pelosi has been pretty adamant: She would prefer to pass a health care bill by early August, and would be willing to hold the House in session past a scheduled recess to get there. But she's also unwilling to move unless the Senate does...something.

'[I]f we're done, and they're not done and they're gone, what is the point?" Pelosi said in a meeting with reporters yesterday. "It's interesting to me that people are saying, 'Don't leave until it's done.' I don't know how much more we can do if the Senate is not going to move."

This reflects a general frustration with the holdup in the Finance Committee, particularly the secrecy of them and how long they have played out. As far back as February, Max Baucus talked about a markup session in June. And he consistently agreed to that throughout the next several months. Now he hasn't only help up the process, but he doesn't even plan to run it by the Democratic caucus once he introduces it:

However, the level of consultation with Democrats stands in contrast with how Republican negotiators are briefing their Members. Senators said Enzi, who is the ranking member on the Health, Education, Labor and Pensions Committee, briefs leaders every day on the talks. And all three of the GOP negotiators have agreed to brief the entire GOP Conference before they sign on to any deal with Baucus.

But Democrats said Baucus is unlikely to run any deal by his caucus before he shakes hands on an agreement with Republicans.

On the stimulus bill, we had Presidents Nelson and Collins dictating the size and scope of the bill. Now there's been a transfer of power. Presidents Baucus and Grassley are large and in charge. And virtually nobody in the Democratic leadership has challenged this hijacking of the process, outside of off-the-record grumbles. In particular, nobody has mentioned that they've gone well outside the confines of their mandate:

I would have thought that the role of the Senate Finance Committee was to figure out how to finance necessary health care reforms in a responsible fashion. It wasn't their job to make the major "policy" calls about what reform entails. That's the job of the Senate Health, Education, Labor and Pensions Committtee, and the respective House Committees, and they've already defined what they want and are in basic agreement.

No, Finance's job was to look at the range of financing options -- some from Tax A, some from Tax B, a bit from Tax C, plus Savings X, Savings Y, etc. -- and then choose. Put together a package that's fair and that does the job. But apparently, the entire Congressional leadership is waiting for President Baucus and President Grassley to tell them what the substance of reform will be.

So, what have the two Co-Presidents produced so far? Zero. Nada. Zilch. Unless you count delay.

Did you know that last November, you all voted for Max Baucus and Charles Grassley to become Presidents of the United States of Health Care?

UPDATE: Jane reports that a deal is coming from the Finance Committee shortly, and that it'll use John Kerry's suggestion to tax insurance companies for their most expensive plans, and that it won't have a public plan. As Scarecrow said, since when does the Finance Committee dictate policy provisions?

Jane believes that the Senate bill could come together quickly, and that when Harry Reid reconciles the Finance bill with the HELP Committee bill, that he will drop the public plan. I would say that, since it's completely at Reid's discretion, the pressure is on him to include that in the merged package or not. Either way there will be an amendment to either strip it or add it back in. If Reid includes it, that amendment may need a 60-vote threshold to strip it, and if he doesn't, it may need 60 votes to put it back in. So Reid has every opportunity to advance the prospects of a public option. Jane also says:

Anyway, as was always going to be the case, the only hope for the public plan is coming out of the House. And the only hope of forcing the Senate's hand is if there is a roadblock in the House that can't pass a health care bill without one. It puts them in the position of tanking health care because they petulantly insist on refusing to give in on something that 76% of Americans want, and the public pressure becomes enormous.

So please tell members of the House to stick around and fight, because with 50 million people in this country uninsured, it isn't All About Them.

The best way to stop the delay tactics from the Finance Committee is to refuse them an out by putting passage of a bill ahead of the August recess.

...and Harry Reid abdicates his responsibility as a leader of the caucus...

Senate Majority Leader Harry Reid said today that the Senate would not attempt to pass sweeping health care reform until after returning from the August recess.

“It’s better to get a product that’s based on quality and thoughtfulness than on trying to just get something through,” Reid told reporters.

Reid said the Senate would try to complete a package in the fall.

The article makes it sound like Republicans asked for a delay, and Reid AGREED to it.

Should we just let Mitch McConnell be Majority Leader at this point?

...I should mention that I haven't seen reports of that Baucus/Finance Committee/public option deal anywhere else. Things are very fluid and I still feel that most stakeholders in the debate are resigned to something called "public option" in the final bill. Whether it's good or not remains to be seen. But conceding the recess and allowing the Finance Committee to delay and dictate the terms is unconscionable.