Requiem For A Dream

White House spinners tried to keep the home fires burning on the public option today, but it's quite clear they're putting a stake in it. They're letting Olympia Snowe, who supports a trigger, where a public option would only be authorized if the insurance industry failed to meet certain benchmarks, basically write the bill. And telegraphing desperation is not exactly the way to hold firm to principle, even if Obama "favors" a competition mechanism for private industry.

“It’s so important to get a deal,” a White House official said, speaking on the condition of anonymity in order to be candid about strategy. “He will do almost anything it takes to get one.”

That's a recipe for success.

The only specifics in the Robert Pear article include the White House following that same tactic of cutting out whatever the small minority of screamers have determined to be outrageous, like the end-of-life care provisions (death panels!), or the health disparity data provisions (taking our personal information!), as if that will somehow placate people who don't want government, let alone reform. And then, since he's telegraphed weakness, there's even down to this:

If Mr. Obama does not gain traction by making these concessions, his allies on Capitol Hill said, they may have to consider bigger changes. For example, they said, rather than requiring all Americans to carry health insurance, Congress might start by requiring coverage of children, or families with children.

Giving up on universal health care? Great, he's bargaining back to John Kerry's 2004 platform. Fantastic.

Quietly, Progressive Caucus members are being told that the public option is a dead letter. But it sounds to me like the whole thing will wither away as well. Olympia Snowe is going to offer a bill with a few insurance reforms, a smaller price tag that would cut either coverage subsidies or Medicaid expansion, and... that's it. Insurance companies, if there's an individual market, would get a bailout, essentially, a license to print money by making refusal to buy their product a crime. Jerry Nadler put it best:

"Without a public option, this bill will do a lot of nice things but only by throwing a couple hundred billion dollars at insurance companies," says Nadler, adding that a public option is necessary to hold down the cost of health insurance. "What is the point of passing a bill that mandates people to buy insurance that is going to be unaffordable?" he says [...]

What of the argument that the House Dems should not permit the perfect to be the enemy of the good? Isn't half a loaf better than none? "I am convinced," Nadler remarks, "that you can't take a loaf without the public option because that's not sustainable, with the costs going up. If we did this, what will we accomplish in the end?"

This is going to start a major split in the party. Just what we need to put things back together!

The Good, The Bad and The Ugly On The Health Care State Of Play

I've now offered heaps of negative and a dash of positive with respect to the leaks and grumbles from the White House on health care. I hate to chase the media scuttlebutt so hard, but we're starting to see something that looks really bad, tempered by the fact that it could all be bullshit.

First, the bad. Ezra Klein, recipient of a few WH trial balloons before, gets another talking about the "two camps" in the White House on health care, with no decision yet made, and both of which sound like pretty horrendous compromises.

Both camps agree that the cost of the bill has to come down. The question is how much, and what can be sacrificed.

The first camp could be called "universal-lite." They're focused on preserving the basic shape of the bill. They think a universal plan is necessary for a number of reasons: For one thing, the insurance market regulations don't work without universality, as you can't really ask insurers to offer standard prices if the healthy and the young don't have to enter the system. For another, it will be easier to change subsidies or improve the benefit package down the road if the initial offerings prove inadequate. New numbers are easier than new features. Creating a robust structure is the most important thing. This camp seems to be largely headed by the policy people.

The second camp is not universal at all. This camp believes the bill needs to be scaled back sharply in order to ensure passage. Covering 20 million people isn't as good as covering 40 million people, but it's a whole lot better than letting the bill fall apart and covering no one at all. It's also a success of some sort, and it gives you something to build on. What that sacrifices in terms of structure it gains in terms of political appeal. This camp is largely headed by members of the political team.

Both camps accept that the administration's proposal will be less generous than what has emerged from either the HELP or House Committees. The question, it seems, is how much less generous.

The linchpin for this approach appears to be Olympia Snowe. Ed Henry just said this on CNN:

HENRY: My colleague Dana Bash and I have learned from a source, each one of us, that this White House right now is very quietly in serious conversations with Republican Senator Olympia Snowe, a key moderate.

She is basically the last Republican out of those gang of six senators who have been negotiating, really the last Republican that has an open line to this White House right now.

What we're hearing that she's talking about with White House staff is sort of a scaled-back bill that would focus on insurance reforms that both sides could agree to, but would not have a full public option, instead, would have a so-called trigger. What that means in layman's terms is basically that the insurance companies would have a couple of years to make some dramatic changes.

If they do not make those changes, then a public option would be triggered. So, it would be used down the road. They would hope that this would appease liberals by saying it's not completely off the table. And the big hope is that this could bring along another moderate Republican, like maybe Susan Collins of Maine, some conservative Democrats, like Ben Nelson and Mary Landrieu in the Senate, who don't want a public option, but would sort of potentially be open to a trigger like this.

Suzy Khimm did a decent reporting job trying to understand Snowe's perspective on the health care debate. She's actually to the left of many moderate Democrats on the issue, but there's a lot that's clear. She wants triggers and not a public option (she calls it a "safety net plan"). She likes subsidies up to 300% of FPL and may even go to 400%, though with a smaller bill, that's impossible. She supports financing from "within the health care system," which is only possible with massive scale-backs, and certainly eliminates any talk of wealth taxes or limiting the employer deduction. She's open to reducing the minimum benefit floor, making an even higher profit margin available for insurance companies. She also wants to open the insurance exchange to more businesses, which isn't bad, wants to stop price discrimination for older consumers (limit the modified community rating so older people aren't gouged), and wants to avoid reconciliation because at the end, you'd wind up with a worse bill. So it's a mixed bag.

Snowe doesn't want to be alone on the bill, so she'll have to rope in someone to her right - probably Susan Collins or George Voinovich - bound to water down the final product even more. And if this is all true, we're at bad-bar-hiding-the-fact-they-have-no-liquor level right now. You're talking about a cheaper bill, and since all the money goes to coverage expansion that means more poor people left without coverage or forced into coverage they cannot afford. The "universal-lite" proposal would be compromised and clambering, but at least could be improved upon later. The scale-back approach will do nothing to control costs and put us in a terrible spot down the road. And I don't understand if Snowe supports universality. We know she supports triggers, which, based on past experience, will be created in such a way that they can never be attained.

Basically, a Snowe bill would be a big sloppy kiss to the insurance industry, at the expense of working people who cannot afford the coverage they may be forced into getting.

On the other hand....

I've seen enough signs that things are moving well to not be bowled over by random chatter. Mike Lux is right that we shouldn't freak out at every anonymous quote meant to demoralize the base, and we should continue to push for a strong bill, which is well within reach.

Other than occasional unnamed White House staffers who enjoy dissing their progressive friends for their own reasons, and the occasional progressive blogger who takes everything Politico and Ceci Connolly says seriously and is therefore convinced Obama is out to do us wrong, I see little evidence Obama and progressives are at war over health care. It is progressives, after all, who are actually fighting for the ideas Obama laid out or health care in his campaign and earlier this year, ideas Obama has not renounced or said he is giving up on. From what I can tell, Obama is doing everything he can to try to get a bill out of Senate Finance and then out of the Senate itself, while continuing to support Pelosi in her efforts to get the strongest possible bill out of the House.

Having fought this fight in 1993-94 and so far this year, I know how tough this is to pass, and how ugly the process is. I take nothing for granted, and take nothing on faith. Health care reform could still die; war over what goes to the floor could still tear the Democratic Party apart; politicians including Obama could still sell progressive activists down the river to get a bill, any bill, passed. But all of the above is conventional wisdom, not fact and not a done deal.

The White House has just announced that Obama has raised the stakes even higher, through the roof in fact, by doing an address to a joint session of Congress next Wednesday. That means this White House is determined to pass a bill on health care reform by hook or by crook, by any means necessary. I hope that also means that the White House realizes passing some meager, small compromise of a bill, with the stakes this high, would be a political nightmare. But one way or another, they will show their cards next Wednesday. Will the President, in front of a joint session of Congress, meekly give up fighting for anything big? Will he declare war on his progressive friends? Will he announce that he no longer cares about keeping insurance companies honest? We will know the answers after his speech, but I wouldn't be drawing any firm conclusions until after you listen to the speech.

I think this is generally good advice. Obama's been actually selling reform for weeks, and so whatever he's got prepared for this joint session had better be something new instead of a statement of broad principles. So we'll know when he lays out his cards.

Bill Bradley's Model Congress

In 2000, angered by the rightward, DLC-led turn of the Democratic Party, I became interested in Bill Bradley's candidacy for the Presidency and voted for him in the California primary. Needless to say, he didn't win that year, and he retreated to the world of speeches and occasional op-eds as an eminence grise of politics. During that 2000 campaign he would say very adamantly that all Americans should have access to quality, affordable health care. It was a pillar of his campaign. Now a member of the punditocracy, he can imagine some grand compromise between the left and right on the issue.

Since the days of Harry Truman, Democrats have wanted universal health coverage, believing that if other industrialized countries can achieve it, surely the United States can. For Democrats, universal coverage speaks to America’s sense of decency and compassion. Democrats also believe that it will lead to a healthier and more productive country.

Since the days of Ronald Reagan, Republicans have wanted legal reform, believing that our economic competitiveness is being shackled by the billions we spend annually on tort costs; an estimated 10 cents of every health care dollar paid by individuals and companies goes for litigation and defensive medicine. For Republicans, tort reform and its health care analogue, malpractice reform, speak to the goal of stronger economic growth and lower costs.

The bipartisan trade-off in a viable health care bill is obvious: Combine universal coverage with malpractice tort reform in health care.

On what planet does Bill Bradley spend most of his time? Let's grant him for a second the possibility that Republicans want to reach a compromise at all on health care reform, something they have not at all shown in every single day of this debate. Mike Enzi, one of the "bipartisan" negotiators, is still referring to death panels and has been quoted as saying he's only participating in talks to stop a bill from getting passed. So you have to waive a lot to get to Bradley's notion of a model Congress.

But tort reform, which is one of those conservative buzz words which has been drained of most of its meaning, has been a state issue, at the behest of Republicans, for many years, and 38 states have enacted it in one form or another. It would be curious for Republicans to compromise on universal health care in exchange for something most states already have. What's more, given that we have this evidence from over 75% of the country, we can pretty quickly determine that medical malpractice suits are at best tangential and more accurately completely meaningless to the health care debate. Josh Richman, a very good journalist in the SF Bay Area, rounds up that evidence:

From Bloomberg News:

"(A)nnual jury awards and legal settlements involving doctors amounts to “a drop in the bucket” in a country that spends $2.3 trillion annually on health care, said Amitabh Chandra, a Harvard University economist. Chandra estimated the cost at $12 per person in the U.S., or about $3.6 billion, in a 2005 study. Insurer WellPoint Inc. said last month that liability wasn’t driving premiums."

The Congressional Budget Office in 2004 concluded that medical malpractice tort reform wouldn’t have a significant effect on health care costs:

"Malpractice costs amounted to an estimated $24 billion in 2002, but that figure represents less than 2 percent of overall health care spending. Thus, even a reduction of 25 percent to 30 percent in malpractice costs would lower health care costs by only about 0.4 percent to 0.5 percent, and the likely effect on health insurance premiums would be comparably small."

And Americans for Insurance Reform, a coalition of nearly 100 consumer and public interest groups around the country, issued a report in July which found:

• Medical malpractice premiums, inflation-adjusted, are nearly the lowest they have been in over 30 years.
• Medical malpractice claims, inflation-adjusted, are dropping significantly, down 45 percent since 2000.
• Medical malpractice premiums are less than one-half of one percent of the country’s overall health care costs; medical malpractice claims are a mere one-fifth of one percent of health care costs. In over 30 years, premiums and claims have never been greater than 1% of our nation’s health care costs.

Democrats like Bill Bradley validate conservative claims on things like tort reform despite all evidence to the contrary, then decide that honest men can strike a wonderful compromise despite having no negotiating partner on the other side.

Just in case you were wondering why Democrats lose national debates.

Weathervane

In almost a real-time correction to today's column, Paul Krugman explains the view from 5,000 feet on the public option:

Look, it is possible to have universal care without a public option; Switzerland does. But there are some good reasons for the prominence of the public option in our debate.

One is substantive: to have a workable system without the public option, you need to have effective regulation of the insurers. Given the realities of our money-dominated politics, you really have to worry whether that can be done — which is a reason to have a more or less automatic mechanism for disciplining the industry.

The second is what the option debate says about Obama.

If progressives had real trust in Obama’s commitment to doing the right thing, the administration would have broad leeway to do deals. But the president doesn’t command that kind of trust [...]

So progressives have their backs up over one provision in health care reform that’s easy to monitor. The public option has become not so much a symbol as a signal, a test of whether Obama is really the progressive activists thought they were backing.

And I don't think he is a progressive. Nor did I at the time. But on health care, where he has positioned himself in the debate is with the most broadly popular provisions. He didn't support capping the employer deduction because people didn't want to see that happen. He put the focus on the insurance companies because they were hated more than anyone in health care reform. And he talked up the public option because it had 76% support.

Now that's waning because of the political pressure to pass a bill, and also because support of reform is waning generally. The popularity factor is coming up against the reality factor. But as long as a public option remains popular, I think Obama will support it. Therefore, progressives wanting to keep the public option in the bill really have to marshal that popular support.

The problem with this is the uncomfortable reality that the public option, as designed in pretty much every bill and as supported by House progressives, which would only impact the individual market and certain small businesses, and wouldn't have the bargaining power necessary to lower its own costs significantly, is indeed inessential in the larger scope of things. Look at this flowchart created to describe how people would get health insurance coverage in the framework offered, and notice the very minor role for the public option:



You can argue that a more robust public option would do better on the cost side, or that people making 4x of poverty should have access to subsidies. But that's what's basically on the table. It maintains a fairly efficient delivery system in the employer market, and might not provide the kind of subsidies needed to expand access to individuals or those without employer coverage. So I agree that the public option has become a weathervane for Barack Obama, to see which way he will blow. However, he knows - and even the people pushing the plan know - that the public option's existence doesn't really change much to the overall structure of reform that has been put out, therefore making it much easier for him to drop it.

Any public option can be improved down the road, of course, and access to it can be expanded. But it's hard for a lot of people to go to the mat over something that doesn't really need to fundamentally exist in the current reform.

Tri-Committee Bill Released

I should mention that the Tri-Committee health care reform bill from the House has been released, and rather than bend to the dictates of marginalized Blue Dogs who value their relationships with the health care industry over their constituents, they created a pretty darn good bill. It's not perfect, of course, but it represents a far better bill on the left flank than, say, the Waxman-Markey bill did.

I'll post the brief on what the reform bill does for consumers:

LOWER COSTS
• No more co-pays or deductibles for preventive care
• No more rate increases for pre-existing conditions, gender, or occupation
• An annual cap on your out-of-pocket expenses
• Group rates of a national pool if you buy your own plan
• Guaranteed, affordable oral, hearing, and vision care for your kids

GREATER CHOICE
• Keep your doctor, and your current plan, if you like them
• More choice, with a high quality public health insurance option competing with private insurers

HIGHER QUALITY
• You and your doctors make health care decisions — not insurance companies
• More family doctors and nurses will enter the workforce, helping guarantee access
• Mental health care must be covered

STABILITY & PEACE OF MIND
• No more coverage denials for pre-existing conditions
• No more lifetime limits on how much insurance companies will pay
• No reason to ever make a job or life decision again based on health care coverage

The "national pool" refers to the insurance exchange, which is a hard concept to put into bullet points, but this is a pretty good list of how the average Americans would benefit from this plan.

As to the specifics, here's Ezra Klein, Scarecrow, Mcjoan and Jon Cohn. You'll notice a consensus. 97% of the population would get covered in 10 years. The subsidies are 400% of poverty and Medicaid gets expanded to 133% of poverty - both more generous subsidies than the Senate bills. Insurers are regulated against denying coverage for pre-existing condition or rescission, and the benefits floor is pretty decent. There are caps on out-of-pocket expenses, and efforts at controlling costs. It includes an individual mandate and an employer mandate that gets exempted for certain-sized small businesses. About the worst thing you can say about the bill is that some of the good stuff doesn't happen fast enough (to keep the size of the cost down):

I do have one, not minor concern: It will be a while before people see the best stuff. Most of the major elements--the insurance exchange, the subsidies, the insurance regulations, the public plan--won't come online until 2013 or later. This is, I believe, also true of counterpart bills in the Senate.

There's a sound policy rationale for going slow; it takes a lot of work to set up exchanges, regulations, and the like. But four years is a long time. And I suspect money has a lot to do with the pace. Slower implementation makes it possible to keep the price tag to around $1 trillion.

On the bright side, some provisions--filling in the Medicare drug donut hole, bolsteirng the primary care workforce, among others--would start in the next two years.

The cost of the bill, scored by the CBO at around $1 trillion dollars over 10 years, gets paid with $500 billion in internal cost savings and around $500 billion in new revenues, mostly with a surtax on the wealthy. I prefer other methods, but let's get real about this:

The details haven't been released yet, but most (if not all) of the families that fall under Rangel's tax plan will also be in this 1% range.

These are families that paid a lower rate in 2006 (the last date of available data) than they did 15 years ago. That's not an argument for upping the taxes, of course. But it puts it in perspective. (Confession: If you go back to the Reagan years, the top effective rate is lower. But the current rate is still below the historical average.)

News reports have anticipated Rangel proposing a 1-3% surtax. Even a 3% increase across the board will leave an effective rate lower than it was in 1995.

The President approves of the general approach of the House bill, and the Education and Labor Committee will start markup this week. The bill text is here and a summary is here.

We're off and running.

...more on the surtax from Tim Foley.

The Change We Need?

The President held a health care town hall yesterday, and reporters are cooing about the staged nature of the questions, but the President was asked why we can't have a single-payer system, why Congress wants to "tax health care benefits," why the whole thing isn't just about tort reform, and a pretty broad cross-section of the full debate. I didn't rally see the press corps get much deeper than that in all of their queries on this subject.

On the single-payer question, the President basically announced the triumph of politics over policy in the health care debate.

THE PRESIDENT: Sure. Well, it's a terrific question. I'm not sure if everybody could hear it, but the gist of the question is, why have we not been looking at a single-payer plan as the way to go?

As many of you know, in many countries, most industrialized advanced countries, they have some version of what's called a single-payer plan. And what that means is essentially that the government is the insurer. The government may not necessarily hire the doctors or the hospitals -- a lot of those may still be privately operated -- but the government is the insurer for everybody. And Medicare is actually a single-payer plan that we have in place, but we only have it in place for our older Americans.

Now, in a lot of those countries, a single-payer plan works pretty well and you eliminate, as Scott, I think it was, said, you eliminate private insurers, you don't have the administrative costs and the bureaucracy and so forth.

Here's the problem, is that the way our health care system evolved in the United States, it evolved based on employers providing health insurance to their employees through private insurers. And so that's still the way that the vast majority of you get your insurance. And for us to transition completely from an employer-based system of private insurance to a single-payer system could be hugely disruptive. And my attitude has been that we should be able to find a way to create a uniquely American solution to this problem that controls costs but preserves the innovation that is introduced in part with a free market system.

I think that we can regulate the insurance companies effectively; make sure that they're not playing games with people because of preexisting conditions; that they're not charging wildly different rates to people based on where they live or what their age is; that they're not dropping people for coverage unnecessarily; that we have a public option that's available to provide competition and choice to the American people, and to keep the insurers honest; and that we can provide a system in which we are, over the long term, driving down administrative costs, and making sure that people are getting the best possible care at a lower price.

But I recognize that there are lot of people who are passionate -- they look at France or some of these other systems and they say, well, why can't we just do that? Well, the answer is, is that this is one-sixth of our economy, and we're not suddenly just going to completely upend the system. We want to build on what works about the system and fix what's broken about the system. And that's what I think Congress is committed to doing, and I'm committed to working with them to make it happen. Okay?

I'm not saying that the President is wrong - except about France, where 86% of the public actually has supplementary insurance, mostly through employers. But it's true that upending the employer-based system would be disruptive and politically unpalatable, and firing everyone in the insurance industry en masse would be chaotic, and so on. The problem is that this further entrenches a fairly inefficient way of delivering health care, namely the employer-based system. In fact the goal of a reform with an employer mandate would be to get more people covered by their employers. So we move forward with a comprehensive incrementalism, building on the historical accident that is the present system, and trying to plug every leak in it, by encouraging employers to cover their workers, providing a health insurance exchange for those who don't, adding an individual mandate, forcing insurers to accept everyone, using a public plan to bring down costs, instituting reforms to Medicare and Medicaid, trying to get doctors to stop ordering up so much treatments that are unnecessary, etc. You're doing forty things at once to band-aid the current system instead of adopting a new one.

I agree, that approach IS uniquely American. But that doesn't make it terribly bright. I do understand the rationale - large majorities like the health care they get, so they perpetuate the system, and it's easy to demonize reform by saying "you'll get kicked off your current coverage." But the politics and the policy are not well-aligned. And the result is an uneasy compromise.

I do think that the President and the DNC are doing the right thing on the politics - highlighting the health care horror stories that bring this home and make it real, and demanding change. It's just a question of whether the change that ultimately will result is significant enough.

Whittling It Down To Nothing

Unlike in 1994, when The New Republic allowed an abominable article by Betsy McCaughey to codify the Villager mindset on health care, this year they have one of the brightest wonks in the business, Jon Cohn, driving their coverage. And this article about the pitfalls of a "just pass any bill" strategy is required reading.

Notwithstanding the predictable fits-and-starts of the legislative process, it seems likely that Obama will have a bill to sign by year's end, thereby accomplishing what the Clintons famously could not. But then what? Having crafted a bill that can pass Congress, will Obama be signing a bill that people actually like? It's a question best answered by examining another episode of the past--one that, although a mere footnote in political history, is fraught with warnings for today's reformers.

The episode is the fight over the Medicare Catastrophic Coverage Act, which President Reagan signed in 1988. Its purpose was to plug some of the emerging gaps in the Medicare program: If you stayed in the hospital too long, Medicare just stopped paying the bills. The Act extended hospital coverage indefinitely, capped out-of-pocket spending for beneficiaries, and offered partial coverage of prescription drugs, among other things.

Or at least that's what the law was supposed to do. After the bill passed with overwhelming, bipartisan support, a backlash developed, memorably culminating in a "riot" of angry seniors who chased a beleaguered Dan Rostenkowski--then chairman of the House Ways and Means Committee--into his car after a Chicago meeting. Less than two years after passage, before the bill's implementation, Congress voted to repeal the act, again with sweeping margins.

Basically, the program only provided a catastrophic care benefit to a small amount of seniors who faced extended hospital stays, and because of a desire to keep the bill revenue-neutral, all seniors paid for the program in premiums and surcharges. Those charges were modest, but people got the perception that they were paying more for nothing. As Cohn explains, the parallels are eerie.

Fast forward two decades, take a closer look at what's happening on Capitol Hill, and you may notice some familiar storylines. In order to make sure reform can pay for itself, lawmakers are talking about slowing down implementation, so that the program is not fully on line until 2014. They're also talking about offering fewer subsidies to help people obtain insurance. In a nod to centrists who don't like the idea of too much government, there's a strong push to gut or even eliminate proposals for the public insurance plan, which was supposed to provide security for individuals and competition for private insurers [...]

Put aside, for a moment, the policy merits of these moves. The politics are lousy. Obama would be in danger of producing legislation that seems to offer little up-front benefit, particularly for the electorally vital middle class. And if some of these people end up paying even modestly higher taxes to help finance reform they're not likely to be happy about it. It's hard to imagine such legislation provoking a backlash that could produce total repeal. It's not so hard to imagine such legislation creating bad political feelings, the kind that linger around until the next Election Day and pave the way for legislative retrenchment later on.

Let's bring back the policy merits: they too are lousy. Smaller subsidies along with an individual mandate will strain individual budgets, and a lack of a check on the insurance companies with no public option and a weak national insurance exchange will allow that strain to worsen with ever-expanding premiums. Slowing implementation just keeps in place a broken system causing 18,000 Americans to die every year.

Whatever mash of policies that come out of Washington, in health care - unlike some other legislation - practically the entire population will be intimately familiar with the consequences. It would be nearly impossible to distort the benefits or demonize the negative effects. It will be what it will be. And so designing a policy based on bipartisanship rather than effectiveness is a complete folly. Democrats and the White House have basically put forward this health care reform as a signature accomplishment. If they design something where the benefits aren't readily apparent, and people's premiums remain high, the public will get the message.

If Harry Reid and Nancy Pelosi muscle health reform through Congress, if President Barack Obama signs a bill in the Rose Garden and hands the pen to an ailing Sen. Ted Kennedy, if health reform, in other words, passes with fanfare and attention, Democrats own it. This will not be a quiet accomplishment. They will have told the American people that on this historic day, under this historic administration, they have begun to bend the curve and and tame the insurers and guarantee coverage and generally fix this huge problem that so many before have promised action on but so few have succeeded in tackling.

And if, 10 years down the road, the plight of the middle class has worsened and cost growth hasn't slowed and the only real difference is that more tax dollars go towards low-income subsidies, Democrats will be blamed for that. Their arguments will have less credibility. Republicans will run ads about "the last time a Democrat told you he could reform American health care." [...] If Democrats pass a bill that gets the policy wrong, they run a real risk of losing trust on what's arguably their core issue. This is high-stakes stuff.

It's not that I disagree with Digby at all - now is a rare chance to enact universal health care, and we should not shy away from it because it doesn't meet every single proper contour. But there are undeniable consequences to a bad policy. And, I would add, needless consequences. For once, the most popular policies line up with what will likely be the most cost-effective ones that provide the greatest tangible benefits. I suspect that the CBO will score a public option that uses Medicare rates, like the one in the House, in such a way that proves it would save both the federal budget and ordinary Americans hundreds of billions of dollars. Heck, the studies have already been done. The same with adding subsidies, which would attract more people into compliance with the system and lower the hidden cost of treating the uninsured.

Considering the fact that Democrats need only 50 votes to enact this reform, a fact that even the White House acknowledges, and considering the statistical fact of 60 Democratic Senators, there is absolutely no reason to build the policy around bipartisan support in Washington, but bipartisan support in the COUNTRY. Not only will there be massive goodwill for enacting decent health care reform, but a massive political backlash if that reform is wanting. Bernie Sanders has this absolutely right.

Look, the Democrats said give us 60 votes so we can come up with something. They gave it to us! I'm not a Democrat, I'm an Independent, but I caucus with the Democrats. They gave us 60 votes. So how many do we need? Seventy? Eighty? I understand that there are some Democrats, without ascribing motives, who are not comfortable voting for a strong public plan period. But I think it is not asking too much that they vote against the Republican filibuster [...]

Look, I like Chuck Grassley. But people in the country are not sitting around saying, "We need a good bipartisan bill! That's what we need!'" They're saying we need good, universal coverage for every American, man, woman, and child. And it needs to be affordable. If Chuck Grassley and Olympia Snowe and these other nice people I know decide to vote against it, that's fine. People in America aren't sitting up nights worrying how they'll vote. The goal should not be bipartisanship. It's passing something that is strong and good.

There is good reason for short-term political optics to pass whatever can be passed. But limiting the possible, and sacrificing the long-term benefits of the policy, makes no sense. The Democratic leadership seems to have forgotten how to pressure its caucus, or at least the moderate members. They can withhold re-election funding. They can change committee assignments. They can deny legislation written by particular Senators to come to the floor. They can impose all sorts of hardships, and the threats can be wildly larger than the exchange - just vote against a Republican filibuster. Then you can vote against the bill if you like.

Capitulating to that moderate axis will mean a poor bill that will lose the support of the public. When life and death is at stake, we cannot afford an outcome, nor do we need to.

...a perfect example of what I'm talking about:

"Only 26 percent of likely voters in Massachusetts believe health care reform has been a success and just 21 percent believe reform has made health care more affordable, according to newly released poll results," The State House News Service/Boston Herald reports. "The Rasmussen Reports poll of 500 likely Massachusetts voters, taken in April, also found only 10 percent said the quality of health care is getting better under the reform law rules here."

Simply put, the poor can't afford the premiums and the subsidies are too low. Also, Massachusetts is too small a state to really impact costs. So an overhyped reform gets a negative connotation.

Health Care: Progressive Movement Must Push Back On This Week's Lapses

It's early, and given the clear attention the President is paying to health care reform I ultimately believe something will get done. But without question, this has been a bad week for those who want to see a legitimate reform of the system. This article in The Hill captures some of the movement:

Despite having a popular president in the White House and comfortable majorities in Congress, the Democratic rollout on healthcare reform has encountered significant bumps in the road.

A cost estimate hanging a $1 trillion price tag on an incomplete bill, salvos from powerful interest groups and great uncertainty among key Democrats on what will actually be in the legislation that moves through Congress have emboldened Republican critics.

The Senate Health, Education, Labor and Pensions (HELP) Committee postponed the markup of its healthcare reform bill by one day, to Wednesday. On the eve of that markup, the powerful U.S. Chamber of Commerce publicly ripped the bill.

Senate Finance Committee Chairman Max Baucus (D-Mont.) initially planned to release his bill Wednesday, but he has pushed back his timetable because of cost estimate concerns.

“Will we have something out tomorrow? Not sure,” Baucus said Tuesday. “Thursday or probably Friday,” he added.

Perhaps more importantly, the unity that Democrats touted earlier this year has cracked. As conservatives lambaste Democrats, liberal healthcare groups are not rushing to their defense because so many questions about the legislation have not been answered.

Since then, the Senate Finance Committee postponed their markup until after the July 4 recess. And all kinds of compromise plans and half-measures are swimming around Washington. Apparently, centrists in the House from both sides of the aisle are meeting in secret to hash out one of them. Kay Hagan and Jeff Bingaman are refusing to sign on to the public plan in the Senate HELP Committee, delaying its inclusion in the bill, which is worrying advocacy groups. I'm assuming they prefer a compromise like Kent Conrad's out-of-left-field "health co-ops" plan introduced into the debate and sending a thrill up the leg of centrists last week. And today, old warhorses Tom Daschle and Bob Dole unveiled yet ANOTHER compromise plan:

Daschle, Dole and Republican Howard Baker released a bipartisan plan today that would tax some employer-provided health-insurance premiums, require individuals and large employers to buy health insurance, and create public insurance pools run by states instead of the federal government.

The proposals were put together over 15 months by the Washington-based Bipartisan Policy Center, which was started by Daschle, Dole, Baker and former Democratic Senate leader George Mitchell. Congress is drafting a bill to revamp health care, which President Barack Obama calls “the single most important thing we can do for America’s long-term fiscal health.”

Dole said the U.S. has a rare opportunity this year to enact a comprehensive health-care bill. “Let’s do it now,” he urged, saying it may be five years before lawmakers have a similar political opening.

The state-run insurance pools may run into some trouble due to economies of scale. A state simply cannot bargain the way a single payer federal government can.

There are basically two issues that have bedeviled reformers this week. One is the CBO scoring, based on an incomplete document that should have never been given to them, but causing moderate Dems to simply run for cover. This failure came about largely by the HELP committee offering an incomplete bill to try and get some bipartisan cover.

You might ask what the HELP Committee was thinking, sending Swiss cheese legislation to CBO. Well, the HELP Committee's expectation was that the CBO, in crafting its preliminary score, would assume something similar to the outline it had seen months before. The CBO didn't. In fact, it did the opposite. CBO ran its estimates with no employer mandate and an individual mandate with a laughably small penalty.

Members of HELP were thus shocked by yesterday's score. The specific provisions of the bill that the CBO examined did not look like the bill HELP intends to write. Which means that the numbers aren't correct. If HELP is writing a bill with a strong employer and individual mandate, and CBO scores a bill with no employer mandate and a weak individual mandate, that's not a useful estimate.

By Monday night, members of the HELP Committee were scrambling to give the CBO something closer to the final legislation to examine -- this time including rough details of the employer mandate and the individual mandate. They're hoping to have a new set of estimates by Friday, though that's probably ambitious. Either way, I wouldn't put too much stock in these numbers.

Doesn't matter. The numbers are out there, and the Democrats are running away from them as fast as they can. OF COURSE the Republicans would use the CBO score as a permanent talking point no matter what was changed on the bill. Forevermore, it will be seen as costing a trillion dollars a year and not covering anyone - just check out this piece. Max Baucus essentially pulled his bill so he can cover costs and cut government subsidies.

The other problem has been this continued wrangling over the public plan, which I think a healthy bit of Democrats are simply desperate to torpedo. Hagan and Bingaman won't sign on to it in the HELP Committee, and now Kathleen Sebelius has, perhaps unwittingly, given a bad compromise oxygen:

"I think there is a lot of understanding that the private market has really failed to provide affordable coverage to Americans," Sebelius said. The industry has had "a lot of opportunities" to get rid of coverage restrictions and other unpopular policies, Sebelius said, and really "hasn't served Americans very well."

However, Sebelius stressed that Obama is open to compromise on the shape of the public plan, which doesn't have to be run by the government. She spoke positively of a compromise idea that envisions consumer-owned nonprofit cooperatives, like rural electricity or agriculture co-ops. They would get started with seed money from taxpayers but then compete without government control. The plan by Sen. Kent Conrad, D-N.D., may end up in a health overhaul bill to be unveiled by the Senate Finance Committee this week.

Obama did offer a pretty forceful defense of the public option to the AMA this week. And if he wants to throw his weight around, he could probably muscle something through. But will the desire to create a bipartisan solution, which is supposedly more "durable" than a successful solution, trump the public plan? Bill Clinton hopes not:

If he can’t get a good bill, I wouldn’t give away the store on that. If he can’t get a bill that’s genuine universal coverage, that genuinely is going to cut costs and make health insurers give up some of these unbelievable administrative burdens that they’ve put on people, and that really gets to the guts of the delivery system and does more primary preventive care and actually measures things that work, then I would go for the 51. But I would spend a little time trying to get to 60.

Nyceve has more on this meeting.

So we've had a bad couple weeks, with Democrats scurrying in fear from the cost and the public option clearly being used as a bargaining chip. Enough. Chris Bowers has a proposal:

For years, candidates for, and members of, Congress told us that we needed to elect and re-elect them in order to lower health care costs and provide universal coverage. And so, for years, we dutifully worked our collective asses off, delivering wide majorities for Democrats--who said they would lower health care costs and provide universal coverage--in both branches of Congress.
Now, when it comes time for them to deliver on health care by providing a public option--the care minimum required to reduce costs and provide universal coverage--what we are getting instead are backroom deals, flip-flops, and cop-outs.
Enough.

Today, along with Health Care for America Now, Democracy for America and numerous blogs, a campaign is being launched to put an end to the backroom deals on health care. We made and delivered on a commitment to bring about wide Democratic majorities in Congress. Now, instead of negotiating in secret, this Congress needs to make a public commitment to us on where it stands on health care.
No more dodges. No more vague, open-ended responses. We need every member of the Senate--main obstacle to reform--to answer four questions on the public option:

Do you support a public healthcare option as part of healthcare reform?
If so, do you support a public healthcare option that is available on day one?
Do you support a public healthcare option that is national, available everywhere, and accountable to Congress?
Do you support a public healthcare option that can bargain for rates from providers and big drug companies?

As activists and as constituents, answering these questions are the minimum they owe us. We are entitled to specific, clear, written responses to all of these questions.

Email--don't call, but email--these four questions to your Senators now. Make it clear that you want a written response to all four questions. There needs to be as little room for interpretation as possible. The Senate is going to be the biggest hurdle on health care, as it has proven to the biggest hurdle on all legislation in 2009. That is where we must focus our pressure.

Here's the form to post where your Senator stands. We need a citizen whip count on the public option so we know where everyone stands. Only with this kind of clarity can we embolden, for example, the Progressive Caucus to demand a public option in any reform bill.

This is clearly the biggest domestic policy that will be tackled this year. We MUST not fail.

The Cost Of Doing Nothing

I'll probably have a blizzard of health care stories up today, because there's a lot I want to highlight that I've seen over the last week. Most important, we're finally seeing some critical mass about the cost of inaction. That's always hard to quantify. The Congressional Budget Office doesn't score "do nothing" side-by-side with the policy at hand. But advocacy groups and even the media are starting to make noise about how the status quo would have real, definable costs.

First, Families USA today released a report about the hidden tax, the amount of money that insured Americans pay for uninsured Americans to receive emergency room treatment.

During 2007 and 2008, one out of every three non-elderly Americans—86.7 million people—went without health insurance for some period of time.1 When those who do not have health insurance get sick, their first response is often to avoid or delay seeking care due to the cost.

When the uninsured do obtain care, they struggle to pay as much as they can afford. Often, however, the uninsured cannot afford to pay the entire bill, and a portion of it goes uncompensated. To make up for these uncompensated care costs, doctors and hospitals charge insurers more for the services provided to patients who do have health coverage. In turn, the costs that are shifted to insurers are passed on in the form of higher premiums to consumers and businesses that purchase health coverage.

It turns out that American families pay about $1,017 each on this hidden tax, which would be mostly wiped away by reforms that would cover almost everyone. By the way, this is why I support extending coverage to everyone in America, because leaving any group out would keep the hidden tax in play. So-called "illegal immigrants" get sick too, and someone picks up the tab.

The Urban Institute did a study on cost increases over the next ten years in the absence of reform.

They find that, absent reform, individual and family spending on health care (the sum of insurance premiums and out-of-pocket costs) will rise approximately 40% per capita under a best case scenario of low unemployment and economic growth.

Under an intermediate or worst case scenario (in which fewer workers have jobs and comprehensive insurance, more uninsured burden the system, and health care costs continue to spiral upwards), they project individual and family spending on health care to increase 50% in an intermediate case scenario or almost 60% in their worst case scenario.

That would be just an enormous burden, especially on those making under the median income. But the costs borne by the individual are just as bad as the costs borne by the state. Without reform, 26% of total GDP, or $9 TRILLION dollars, would be spent by Americans and the government on health care alone. Now Mickey Kaus might think that's just swell, but he isn't much of a budgeter, since that expanse of funds devoted to health care would simply break the budget entirely. The government actually does other things, but if health care grows 10 times as large as defense, it would have no ability to do much else.

This is why, as Steven Pearlstein put it in an excellent column, those who use the budget to argue AGAINST health care reform are arguing in the opposite direction from reality.

The biggest threat from this budgetary obsession is likely to come up in the debate over health-care reform. Under pressure from budget scolds, Congress and the administration have agreed that any plan to extend health care to 47 million uninsured Americans and reform a $2.6 trillion industry will be "budget neutral" within the first five years after enactment.

There is, for example, general agreement that it will cost $100 billion to $150 billion a year to provide the subsidies necessary to allow all Americans to afford a basic health plan. But the Congressional Budget Office, the official scorekeeper on these matters, has been reluctant to certify the major cost savings that might come from various proposals to restructure the health delivery system, or reform the health insurance market to make it more competitive, or change the way doctors and hospitals are compensated so they have the incentive to use only the most cost-effective treatments.

It is, of course, the CBO's job to be skeptical, particularly after a number of past experiments in this area have yielded disappointing results. But it is also true that because nothing of this scale and complexity has been tried before, projecting the fiscal impact is next to impossible. This budgetary standoff will leave Congress with no choice but to try to finance its health-reform efforts by raising taxes or limiting payments to doctors and hospitals, possibly jeopardizing the entire project.

We can certainly applaud policymakers for their reluctance to enact another expensive and popular entitlement program without finding the money to pay for it. But it is folly for them to put themselves in a political and procedural straitjacket. In all of history, no revolution was ever made by budget analysts. Health reform requires leaders with the foresight and confidence to take a leap into the unknown.

There are ways to finance universal health care, though many have different beliefs on the most cost-effective or sensible. But one thing is clear - financing it 10 years from now would be a near-impossibility.

Health Care State Of Play

One problem with yesterday's "game changer" of an announcement on industry-wide health care cost reduction is that it will not improve prospects to pay for health care from the government's perspective. As long as the Congressional Budget Office cannot "score" the savings into their assessment of paying for the health care plan, you still need to find the same dollars. Igor Volsky thinks that the prospect of savings makes the prospect of health care more plausible, because it provides a counter-weight to the CBO gospel, but if you still have to find the dollars, I don't see how that matters. Ezra Klein offers the idea of "directed scoring," where the CBO is essentially forced to account for industry-wide cost savings, but it's not entirely likely.

Regardless, the Senate Finance Committee is moving forward with a game plan for how to get a bill to the floor.

In a document laying out health-care options, Senate Finance Committee Chairman Max Baucus, a Democrat, and Senator Charles Grassley, the panel’s top Republican, yesterday endorsed the idea of requiring everyone to have coverage. Insurers have sought such a requirement in exchange for agreeing to accept President Barack Obama’s demand that they enroll all applicants, regardless of medical condition.

The committee will discuss the options on May 14 with the goal of getting the measure to the Senate floor in July. Obama has said he wants Congress to create a plan that would reduce medical costs and extend coverage to the 46 million uninsured people in the U.S. They were 15 percent of the U.S. population in 2007, according to U.S. Census data released in August.

So we're seeing the AHIP-friendly individual mandate in exchange for guaranteed issue and modified community rating. People will be able to keep the health care they have if they choose. The government would provide subsidies to allow lower-income Americans to afford health insurance, and employers of large companies may have a mandate to cover their employees. And then there's the real sticking point, the public option:

Obama’s administration says competition from a government- backed health plan will improve quality and lower costs.

Last week, Health and Human Services Secretary Kathleen Sebelius told the House Ways and Means Committee that Obama has no wish to “undermine” private health-insurance companies by supporting a government-backed alternative. She also said Obama would be willing to consider a requirement that everyone have health coverage, a proposal he criticized during his presidential campaign.

The so-called public option to purchase government-provided health care is a central issue. House Speaker Nancy Pelosi has said the chamber will include such an approach in legislation it considers later this year. Republicans and some insurers, including Aetna Inc., have opposed the creation of a new program modeled on Medicare.

‘Medicare-Like’

Baucus and Grassley said one way to fashion a government plan would be to make it “Medicare-like” and have it administered by the Department of Health and Human Services. Alternatively, it could be run by the states or by private- sector, third-party administrators, they said.

Groups like Health Care For America Now are pushing hard from the outside to force inclusion of a public option, and they appear to be having an impact. Kirsten Gillibrand offered her support yesterday, and none other than Arlen Specter has signaled openness to a public plan. As Jon Cohn notes, "the nice thing about nakedly opportunistic politicians is that their ever-shifting positions are a leading indicator of changing political currents."

The President failed to mention the public plan in his statement yesterday, focusing on the matter at hand, the industry wide cost reduction. My personal view is that you need a public option, guaranteed issue, real community rating (where consumers pay the same baseline rate regardless of their medical condition), medical device reform, comparative effectiveness research, and stiffer penalties for non-compliance at a MINIMUM if you're going to go to this individual mandate/shared responsibility model. And all of these must be legitimate, particularly the public plan, which cannot just be a non-profit insurance option without monopsony bargaining power.

But we're moving toward a solution, and even if it passes, it will only be a step to an eventual single-payer system. That's my view on it.

The Health Care Showdown

Congress returns to work this week, and among the other items on their docket is constructing a workable health reform plan, bridging a wide divide between the parties on this issue, and a half-century of failure along these lines. The President has committed to reform in his first year, but obviously there are plenty of hurdles.

Lawmakers are far apart on some of the most important issues today, from the reach of government to the responsibilities of employers and individuals. And guaranteeing coverage for all could cost $1.5 trillion over 10 years, an eye-popping sum in a time of recession and mounting national debt.

Yet major constituencies often at odds are now clamoring for change. They range from consumer groups to insurers, from employers to doctors and hospitals. President Barack Obama has pledged to chip away at hardened ideological positions to find compromises.

"This is the toughest issue we have ever taken on — every part has got a chance of blowing up," said Iowa Sen. Charles Grassley. He is the top Republican on the Senate Finance Committee, which oversees government health programs and taxes, and plans to start work Tuesday.

The schedule is ambitious - we're talking about the full House and Senate passing a bill by the August recess.

One of the biggest points of contention is the public option - which Republicans obviously will seek to make a bright line, considering it a step toward "socialized medicine." The public generally supports having the option of a Medicare-like publicly run plan to fall back on. Insurers obviously want to corner the market. Consider me skeptical about this alleged compromise:

Nancy-Ann DeParle, director of the White House health reform office, said a public plan could be designed to address concerns about the federal government overreaching in its role.

"I'm actually very hopeful that we'll be able to reach an agreement on that, because it is part of the president's plan," DeParle said in a session with reporters at which she fielded repeated questions on the issue. "It's included because he wanted a mechanism to lower costs and to keep the private sector honest." [...]

DeParle suggested one compromise might be that the public plan pays hospitals and doctors rates similar to what private insurers pay. That would address fears that government would use its muscle to pay rock-bottom prices for medical services, allowing the public plan to charge discounted premiums that private insurers couldn't compete with.

Even if the government plan paid private-market rates to doctors and hospitals, it could still cut costs, DeParle said. A government plan wouldn't have to turn a profit, and could also save on administrative expenses.

"If it's a policy disagreement, there are ways of bridging that gap," said DeParle.

As Jonathan Cohn says, there's a public option and there's a "public option", and unfortunately what DeParle is setting out here looks a lot more like the one with the sarcastic quotes.

A second version has emerged, which you might call the partial, or weaker, public plan option: Creating a plan, or set of plans, that realize some of the administrative savings you find in programs like Medicare but explicitly avoid using government bargaining power to set prices. These plans would have potential to achieve some savings, but not nearly as much; and it's not clear whether they'd be as secure, or offer the same protection to the truly sick (who rightly worry whether private carriers will take care of them), as a strong public plan.

On the other hand, precisely because these plans would be less aggressive about underselling private insurers and driving down reimbursements--and since they wouldn't be "government-run" in the way a strong plan would--they are more acceptable politically [...]

DeParle's statement both clarifies and qualifies what Obama has said in the past. The administration likes the strong option, clearly, but they're open to the lesser version as well.

Essentially, the insurance industry has co-opted this debate, and is blocking the actual public option in favor of this lesser one. I understand the political realities here, but I hope that the groups (like DFA) pushing for a public option understand that the meaning of that phrase has shifted beneath their feet. We need a public option with bargaining power, otherwise you have a mild non-profit providing insurance without much difference in cost.

At that point, it may be worth scrapping the public plan altogether and going with something like the German model - which has no public option but very tightly regulates insurers to act toward desired social ends. Germany also eliminates the uninsured by having unemployment insurance pay for premiums of the non-working, and general fund revenue pay for kids.

I think what will need to be remembered in this debate are the stories of the uninsured, the underinsured, and those wiped out by soaring medical costs. Kate Michelman's story is almost unbelievable, but given the realities of the broken system all too familiar. And everyone has a relationship with the health care system, and knows a story just like this.

Michelman's daughter worked with horses. One day her horse spooked, reared and fell backward on top of her, crushing her spine and paralyzing her. Her daughter's employer provided no insurance, and after several surgeries and long hospital stays, the bills were astronomical.

Michelman cashed in both her 401(k) and her IRA to cope with the bills. "It was hundreds of thousands of dollars, close to a million," she says.

Then, a year later, her husband was diagnosed with Parkinson's disease. As a retired college professor, he was well-insured, Michelman says. He was on Medicare, but had supplemental health insurance. "The top of the line option," she says, "The most expensive, because it offered the greatest coverage."

They even had purchased long-term care insurance. "We felt we were really covered very, very well — we thought."

Despite the tragedies, Michelman's family was handling the expenses. But one last misfortune was too much to bear.

One day, Michelman's husband got out of the car in the driveway — and fell. "I knew immediately when my husband fell — and he screamed in pain — at that very instant, our lives would be forever different," Michelman says. "And it has been a nightmare."

Her husband had fractured his hip and broken his femur bone. He was in the hospital for months before being moved to an assisted living facility.

Michelman thought most of the bills would be covered. "But when 'most' comes to be reality," she says, "you're left with thousands of dollars of bills that are not covered for one reason or another."

This must be at the top of mind for the politicians when they set out on this debate. We aren't functioning in a healthy fashion. We need real reform. Just ask Kate Michelman.

The Week In Health Care

This has been a very interesting week in the fight for health care reform. Let's take a look at some of the major developments.

• Single-payer: Sen. Bernie Sanders introduced S.703, a single-payer health care bill (called the American Health Security Act of 2009), in the Senate. While this would be a companion bill to HR676 on the House side, it's the first time I can remember, and apparently the first time since the death of Paul Wellstone, that anyone in the Senate has carried a single-payer bill. Sanders in the release calls the bill "the most fiscally conservative option for reform" because private insurance overhead would be eliminated, saving over $400 billion dollars annually. Now that such a bill has been introduced in both Houses, there should be a demand from single-payer advocates to get the CBO to score the bill. Without numbers that Washington trusts, and sadly the CBO is the only number-crunching body with that authority, single payer will not be taken seriously. But a true accounting of the cost savings could spur reform. You can find the bill here.

• The Public Option: Howard Dean has jumped squarely into the health care debate from his perch at DFA, advocating strongly for a public insurance option to compete with the private market. Dean has gone so far as to say that without a public option, health care reform essentially doesn't exist.



Obviously, the insurance industry wants no part of a public option, that would force them to compete on price and quality of coverage, instead of the current system of competing to deny care to their customers to maximize profits. They say such a system would put them out of business. To which I say, YAY! What's important to understand is that there are public options and there are public options. Ezra Klein explains the structure of the three most common proposals:

• Single-Payer Lite. This was the rationale you heard during the primary campaign. A public insurance plan able to use Medicare's bargaining power to secure deep discounts for its customers and ensure the maximum possible network would be cheaper and more efficient than private insurers. Over time, this increased efficiency would make the plan more attractive because it could offer more coverage for less money. As consumers recognized this fact, they would increasingly migrate towards the plan, and the public insurer would become, if not a de facto single payer system, something close to it. The public insurer, in this scenario, is a game changer. But it's a game-changer because it's a form of single payer using a mild version of monopsony buying power.

• The Level Playing Field Plan. Insurers, predictably, howled that a public insurer with access to Medicare's market power would put them out of business. (Generally speaking, liberals agreed with that.) The messaging they settled on was conceptually odd but has proven pretty effective. A public insurer, they argued, would not be competing on a "level playing field." This might have caused someone to wonder when, exactly, the market had ever cared about "fair." But instead, this frame has been widely adopted, with Obama telling Chuck Grassley, "I recognize that there's that concern. I think it's a serious one and a real one. And we'll make sure that it gets addressed." In answer to this, Len Nichols proposed a public insurance plan that doesn't have access to Medicare's bargaining power, and this is the policy that CAP's paper advocates. This is not single-payer lite. It's just an insurer without shareholders or highly-paid executives. (I should note that some, like Harold Pollack, believe you could begin with this plan and end with the single-payer lite plan. I'm not convinced, but its possible.)

• The Catch-All. I've heard that the insurance industry and some advocates are interested in a compromise that looks a lot like Medicaid choice. Here, you'd have a public insurance option, but only for people making under a certain income level. It's a way of folding Medicaid into the new system.

If the single-payer lite plan is jettisoned, with the "level playing field" plan offered, such a public option would not achieve the kind of bargaining power to make it cost-effective. You reduce a bit of overhead and eliminate the profit motive to a certain extent, but you will not have done much to force private industry to heel. So if Dr. Dean wants to advocate for a public option, it had better be the right kind. For his part, Max Baucus, who has as much power over health care reform as anyone in Congress, characterized the public option as more of a bargaining chip than an actual policy point:

"Essentially, it's to keep it on the table to encourage the private health insurance industry to move in the direction it knows it should move toward—namely, health insurance reform, which means eliminating pre-existing conditions, guaranteed issue, modified community ratings. [TRANSLATION: Measures that would force the insurers to cover the sick as well as the healthy, at a cost that everyone could afford.] It's all those actions that insurance companies must take in order to provide affordable coverage. And the public option helps encourage the private companies to move in that direction, because they're worried. We might have to modify the public option to get enough votes. I hear some concerns among Republicans about the public option. The main purpose is to keep the health insurance feet to the fire."

Which leads us to...

• Industry Concessions: The insurance industry has offered what I imagine they consider their grand bargain: they will agree to both guaranteed issue (no more denial for pre-existing conditions) AND community rating (charging a flat rate for a community regardless of medical history) in exchange for an individual mandate that forces everyone to buy health care. This would be significant, but the devil is in the details:

The companies left themselves several outs, however. The letter said they would still charge different premiums based on such factors as age, place of residence, family size and benefits package.

"If the goal is to make health care affordable, this concession does not go far enough," said Richard Kirsch, campaign manager for Health Care for America Now. "It still allows insurers to charge much more if you are old." His group, backed by unions and liberals, is trying to build support for sweeping health care changes.

Importantly, insurers did not extend to small businesses their offer to stop charging the sick higher premiums. Small employers who offer coverage can see their premiums zoom up from one year to the next, even if just one worker or family member gets seriously ill.

Ignagni said the industry is working on separate proposals for that problem.

"We are in the process of talking with small-business folks across the country," she said. "We are well on the way to proposing a series of strategies that could be implemented for them."

Lots of outs for themselves, particularly age, which is intimately tied to increased need for care. It's good in the abstract because the industry clearly feels the need to move in the direction of reform. But they sang a lot of this tune in 1993 as well. Kevin Drum has more.

• Massachusetts Debate. One of the more interesting arguments among health care reformers concerns Massachusetts' "universal health care" policy adopted in 2006. It included an individual mandate and shared responsibility for stakeholders to provide subsidies to ensure everyone signed up for insurance. Monica Sanchez took a look at the MassCare plan relative to Barack Obama's principles for health care reform and found it lacking. A sample:

1. Does it protect families' financial health?

NO - Of those surveyed in a fall 2008 survey of Massachusetts residents on healthcare conducted by the Boston Globe and the Blue Cross Blue Shield of Massachusetts Foundation: in a recent survey 13% of insured said they were unable to pay for a health service; 13% said they were unable to afford to fill a prescription; and 33% ranked the cost of care their biggest health concern.

2. Does it make health coverage affordable?

NO - not for the middle class and not even for some people with low incomes. According to the report released last month, "Massachusetts' Plan: A Failed Model for Health Care Reform," by Drs. Nardin, Himmelstein, and Woolhandler, in fiscal year 2009, to bring cost increases down from more than 15.4% to 9.4% for CommCare, the state cut benefits and increased copays.

Read the whole thing. Jon Gruber argues that cost control was not entirely a part of the Massachusetts reform, as it focused more on universality. Thus it created what amounts to an entitlement in the hopes that the political dynamic could be changed to focus on bringing down costs once the plan was in place. In other words, there is, as Ezra Klein put it, an embedded political logic to doing coverage first.

States don't really have the bargaining power to bring down costs, nor can they deficit spend, so I don't know how building the political advantage for cost control really helps them, actually. And while this would possibly make sense on the national level, the Obama plan seeks to do everything at once, so it's not really germane.

• Budget Reconciliation. Harry Reid says he is completely open to using the budget process for health care reform, meaning that such legislation would only need 50 votes. Others violently disagree, not just Republicans but people like Budget Committee Chair Kent Conrad and Ben Nelson. In steps Steny Hoyer, of all people, as a mediator.

As House Speaker Nancy Pelosi (D-Calif.) did earlier Thursday, Hoyer defended the House’s decision to include budget reconciliation in its budget.

“Reconciliation on healthcare is a fallback position. It is not the preferred option. The preferred option is creating a bipartisan consensus,” Hoyer said [...]

Republicans argue that Democrats, by having reconciliation in their hip pocket, can pull out of any negotiations, whenever they want, making those talks potentially pointless for the GOP.

Hoyer said that if Democrats acted in that way, the Republicans would have a right to complain.

“If they are negotiating in good faith and then we pull the rug out from under them, I think that would be harmful to our objective of passage with a degree of bipartisan support and therefore credibility in the public,” he said.

Without reconciliation as a fallback, Republicans wouldn't even come to the table. So I do think it's a vital tool and shouldn't be set aside just yet. Hoyer had some interesting things to say about single payer and the public option, as well.

Borrowing Into Health Care Minutiae

Jonathan Cohn, one of the more knowledgeable health care writers out there, has an interesting defense of the proposal to tax health care benefits as a means to overall reform. His argument appears to be that John McCain's conception of taxing health care benefits offered nothing in the exchange, while Obama at least offers... something.

To be clear, such a move would happen in the context of an entirely different health reform proposal than McCain was suggesting. McCain's plan would have undermined employer-sponsored insurance and forced large numbers of people to purchase insurance as individuals through an unregulated market, where it can be incredibly tough to buy decent coverage. Obama's reforms, if executed properly, would make good coverage available to everybody. And they'd still leave in place most employer-sponsored insurance. Changing the tax treatment of health benefits would simply provide a nice way of financing these reforms.

Employer-provided health insurance is a quirk of the 1940s, when it was seen as a way to increase job market stability. Unfortunately, as currently constructed this has transformed into a tax break for very wealthy employees and their coroprations, reinforcing inequality. I think taxing all health care benefits would be wrong, but capping the amount excluded for the benefit of funding a plan that offers affordable care to the broadest number of people makes a good deal of sense, particularly if the cap was phased in progressively, and ultimately I think that's where Obama's team will fall on this. The budget does not provide the funds needed to enact reform, so no sacred cow can really come off the table at this point.

Looking at another piece of health reform, the public option, the Chairman of the health insurance lobby, AHIP, has apparently endorsed the inclusion of a public plan with Medicare bargaining power that would lower prices for consumers by 20-30%. I say "apparently" because he appended the endorsement shortly afterward:

Updated: Halvorson's office e-mails with a correction. When Halvorson signed the document, he privately attached a "signing statement" expressing concerns about -- you guessed it -- the public plan. Sort of like an insurance policy in case anyone noticed. I have the letter for download here. The wording remains a bit vague, so I've asked for an interview with Halvorson in which he can clarify his stance.

Halvorson also runs Kaiser Permanente, which has always been a little more daring than his compatriots in the health insurance world. By and large insurers would rather not compete on price and quality and instead just have customers funneled to them. And of course they wield a certain amount of political power. But public option advocates have something going for them - the enormous popularity of public plans. Seeing the outrage over soldiers possibly having to use private insurance instead of the VA for treating combat injuries should be a warning to those who would kill a public plan. The principles are exactly the same.

Health services provided by the Veterans Health Administration (VHA) are truly socialized medicine, because the doctors and other health care providers who serve veterans work for the government and the government owns and runs the hospitals and other health care facilities where veterans get treatment. The VHA treats over 5 million veterans a year.

It may surprise you to know that in the U.S. members of Congress and Presidents have a long history of also enjoying the socialized medicine taxpayers provide for them. In fact, members of Congress have the choice many of them want to deny you. They can choose a private health insurance plan through the Federal Employees Health Benefits (FEHB) program or they can get top-notch medical care at government facilities, like the Bethesda Naval Medical Center in Maryland [...]

But the socialized medicine veterans, members of Congress and U.S. Presidents enjoy is not what Barack Obama is proposing when he includes a choice of public health insurance in his health reform plan. The public health insurance plan being discussed as part of national health reform would work more like Medicare, in which the government runs the insurance coverage, but the doctors, hospitals and other health care providers people go to are the same private, independent providers that currently care for them.

In fact, people with Medicare currently have the choice of public health insurance or private plans that contract with Medicare. About eighty percent of the 44.8 million older and disabled Americans who have Medicare coverage—about 35.4 million people—choose the government-run public plan over the private Medicare plans.

It is the choice 73 percent of voters want, including Democrats (77 percent), Independents (79 percent), and Republicans (63 percent).

Seems elementary to me. Harness the power of public opinion and even Congress will be forced to listen.

Does The Next California Governor Matter?

Several weeks back, during the deepest throes of the budget crisis, I wrote that the problems of the state are not a matter of personality but process, and you can reason that out to understand that a change in the personalities without a concurrent change in process will accomplish absolutely nothing on reforming the state and getting a functional government again in California. This thought occurred to me again last night, as I sat in the press section during Gavin Newsom's "conversation with California" as part of his tour of the southern part of the state. Newsom's description of the challenges the state faces - and his solutions - gear more to the idea that a different person, dedicated to solving the same problems in a new way, can overcome any obstacle, rather than the reality that no individual under the current system of rules could possibly thrive. And while the San Francisco Mayor shows a recognition of the structural impossibility of California, his relative nonchalance about how to reform it shows he believes for more in himself to overcome the rules than the demonstrable history of the rules overcoming everyone in their path.

First, let's be clear that Newsom is running with someone else's platform. The first policy mentioned last night as a reflection of his record is the Healthy San Francisco effort toward universal care for the uninsured in his city. That is not his plan to tout, and the simultaneous description of it as a savior for the state's residents while cutting $100 million dollars from the city's Department of Public Health and programs aimed at the needy is nothing short of troubling.

"It's not that Healthy San Francisco is wrong its the mayor's obvious ..." (Tom Ammiano) pauses. "Look, he's running for governor and taking full credit for it. It's not true. The labor community, my office, community activists, health people -- some of the same people who are unhappy with him now -- worked with him on this. When he goes out there and claims full credit, that pisses people off, especially people who are dealing with [health care in the city] every day. ... The reaction is really based on the mayor boasting and overselling Healthy San Francisco." [...]

"Healthy San Francisco -- I think people should be very proud of it. I think it's going to meet its full potential. The rollout is going to be incremental and there's going to be little tweaks that it needs. But, you know, that's not the target [...] Unfortunately, it's getting tainted because of the mayor's boasting and overselling of it."

The neighborhood clinics at the heart of the Healthy San Francisco plan are at full capacity while funding is being slashed, and additional "woodworking" - residents coming out of the woodwork to seek services. The revenues aren't meeting the expenses, and the General Fund of the city, now facing a $590 million dollar shortfall (less per capita than Los Angeles'), has to make up the difference. As the economy continues to slow and the ranks of the unemployed swell, those at the bottom of the income ladder are already seeing service cuts. I would simply call it bad politics to put so much emphasis on a program you can barely claim ownership to and are cutting funding for at the same time as more services are desired. And this is sadly part of a pattern of the whole story being left out.

But let's set aside the issues for a moment. As focused as I am on process, I awaited Newsom's response to the inevitable questions about budget reform. He asserted support for a 50% + 1 threshold for the budget process, using the line "You need two-thirds of the vote to pass a budget, but only a simple majority to deny civil rights," referring to marriage equality. It's a good line, but he leaves out that he was shamed into changing his position after the initial proposal for a 55% threshold was slammed by just about everyone. The first instinct was to half-ass reform. There was also no explanation that there are two thresholds requiring two-thirds, the budget and tax increases, leaving his answer fairly vague, as it has been in the past.

But far worse than this was his flippant approval of Prop. 1A, the draconian spending cap that would effectively eliminate what amounts to half of the state school budget within a few years, and his dishonest rendering of the initiative as "a rainy day fund," without explaining how the rainy day fund is created. On the other ballot measures like 1C, 1D and 1E, which would privatize the lottery and raid voter-approved funds for children's programs and mental health, he gave a Solomonic "on the one hand, on the other hand" soliloquy and ended saying that he would be a bad spokesman for them.

This, then, is what needs to be kept in mind when Newsom urges a call for a constitutional convention. We see by his stances on the May special election what he would reasonably be expected to get out of that convention - a constitution that includes a "rainy day fund" created by a spending cap, coming at it from a right-wing perspective and ultimately resulting in a fake reform. This is essentially the position of Arnold Schwarzenegger, clueless media elites, bipartisan fetishists who assume without evidence the midpoint of any argument is automatically the best option, and most tellingly, the Bay Area Council, which makes perfect sense.

Meantime, the Schwarzenegger-sponsored political campaign in support of the six measures announced today an endorsement from the Bay Area Council, the business-centric public policy organization that is the impetus behind calls for a constitutional convention. Last week, Schwarzenegger made it quite clear that he supports the first convening of a state constitutional convention in some 150 years... a way to focus on multiple ideas for government reform at one time.

These two announcements certainly play to the idea of another "business vs. labor" narrative in California politics. Another possible fuel for that storyline comes in a $250,000 donation to the pro-budget measure committee on Friday by wealthy Orange County developer Henry Segerstrom. The donation from one of his companies is easily his largest campaign contribution in recent years, which saw smaller checks written to both the guv's 2006 reelection efforts and to the California Republican Party.

I support a Constitutional convention because I know what my principles are. I don't support mealy-mouthed calls for "reform" that are essentially corporate-friendly back doors to advance the interests of the powerful over the people.

Ultimately, Randy Shaw has this right - the people of California could elect Noam Chomsky, Warren Buffett or Howard Jarvis, and nothing would fundamentally change until the structures that restrict anyone in Sacramento from doing their jobs are released. And our assessment of who would be best to lead that reform should be based on deeds and not words.

If California’s future is measured by our education system, we are in deep trouble. And we are in this difficulty because the state’s Democratic Party and progressive activists have allowed right-wing Republicans to exert major control over the state’s budget.

I say “allowed” because there is no other explanation for elected officials and activists failing to put a measure on the November 2008 ballot removing the 2/3 vote requirement to pass a budget. Although state Republicans made their opposition to new taxes clear, progressives passed up a large turnout ballot whose voters would have approved such a reform. Passage of such an initiative would have avoided the billions of dollars in cuts we went on to face, with more cuts slated for future years [...]

If we have learned anything from the past months, it should be that putting money into state candidates will accomplish less than passing the budgetary reforms and tax hikes needed to return California to its leadership in education and other areas [...]

It’s time for the people to say “Yes We Can” to a new progressive future for California. Once the people lead, the politicians -- particularly those seeking their votes -- will follow.

It is senseless to discuss candidates for a race into a straitjacket, which is the current dress code for Sacramento. Anything less than fundamental reform will not solve the enormous set of problems the state faces - and it will take more than charisma, but an actual commitment, to make it happen.