Harry Reid's Public Option Plan Dead on Arrival

Tuesday, 27 Oct 2009 06:55 PM

By David A. Patten

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Connecticut Sen. Joseph Lieberman's announcement that he would back a GOP filibuster of Majority Leader Harry Reid's public-option insurance plan delivers a serious and potentially fatal blow to Democratic plans to squeeze a major healthcare bill through the Senate.

Lieberman indicated on Tuesday that Senate approval of a public-option plan would be fiscally irresponsible because it "creates a whole new government entitlement program for which taxpayers will be on the line." He was steadily joined throughout the day by a number of moderate Democrats and the lone Republican, Sen. Olympia Snowe of Maine, who had tentatively supported a major healthcare overhaul.

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The sudden rebellion occurred less than 24 hours after Reid had announced he was writing a public option into the Senate bill.

Without Lieberman, Reid will now focus on garnering support from other moderate Senate Democrats. Several say they want to review the actual legislation before deciding whether to support it.

One reflection of the sketchy support for Reid's announced "deal": None of the other key players who have been meeting behind closed doors to reach a compromise accompanied him when he made his announcement. They include Sen. Max Baucus, D-Mont., Sen. Chris Dodd, D-Conn., and White House Chief of Staff Rahm Emanuel.

Reid is up for re-election in Nevada next year and trails badly in the polls. Some pundits speculate that Reid had no choice but to at least propose some form of the public option, even if it ultimately fails to reach the Senate floor. Otherwise, he risked losing the support of liberal Democrats, which would have made a political comeback in Nevada virtually impossible.

Ed Haislmaier, senior research fellow for health policy studies for the Heritage Foundation, tells Newsmax that congressional Democrats continue to face considerable political difficulties in finding a formula that will get them the votes they need.

"The problem with this thing is you can't have a 1,500-page bill that rewrites one-sixth of the U.S. economy and not have somebody's constituents wind up with a problem. That could wind up costing that 'somebody' an election," says Haislmaier.

Many pundits presume that some type of reform legislation will ultimately pass. Haislmaier remains unconvinced, however. He says that Democrats may not find a way to overcome their political hurdles, keep various constituencies satisfied, and also hold true to President Obama's pledge to enact reforms that do not aggravate the federal budget deficit.

The major options under consideration by the Senate include:

Public Option "Opt Out'

The Senate proposal for healthcare reform proposed by Senate Majority Leader Harry Reid contains a form of the public option known as 'opt out.' It implements a federal public option, but gives states a path to opt out of it. It's easy to see the political strategy behind opt out: Once a federally subsidized, public option for healthcare is made available, it could prove difficult politically for state authorities to reject the benefit to citizens – especially when citizens in neighboring states receive it.

There has even been discussion in liberal quarters of requiring states to remain in the public-option program for a few years, before they would be eligible to opt out. This would make it even tougher for red-state politicians to opt out of a program their citizens had grown accustomed to. One key question is the opt-out mechanism to be used: Would it be up to the governor? The legislature? A statewide referendum? As with healthcare reform generally, many of the details remain undetermined.

The reason the "opt out" form of the public option has gained momentum in Washington is simple: It gives moderate Democrats more cover, in that it leaves at least part of the decision up to state authorities; and Senate progressives are satisfied it will accomplish their goal of providing a public alternative to the private health-insurance market. Conservatives warn that a public health insurance plan would put private companies at a serious disadvantage, causing tens of millions of policy holders to abandon the private insurance market.

Political Prospects for 'Opt Out': Undetermined

Reid is considered a master at accurately discerning how many votes a senate proposal will receive. But even he admits he's at least two or three votes short of having the 60 votes needed to overcome a filibuster and bring the bill to a vote.

In addition to Lieberman's announcement that he'll side with the GOP and filibuster any proposal for a federal public-option, GOP Sen. Olympia Snowe of Maine said she was "deeply disappointed" by Reid's decision.

Assuming those two votes are lost, Reid and the White House -- which favored Snowe's "public-option trigger" proposal -- probably will have to persuade at least two of the three moderate Democrats who are known to be on the fence: Sen. Ben Nelson, D-Neb.; Sen. Mary Landrieu, D-La.; and Sen. Blanche Lincoln, D-Ark.

Nelson has said a bill will have to enjoy at least some GOP support, to receive his backing. Losing Snowe – the lone GOP supporter of healthcare reform -- could be a critical obstacle to garnering his vote.

Landrieu said Tuesday she remains "deeply skeptical" of public-option proposals, but will continue to work with Reid in search of a compromise. Lincoln voted against the public option as a member of the Senate Finance Committee. All three moderate Democrats say they'll wait until they see the details of the entire bill before they decide whether to join a GOP filibuster.

A common Washington stratagem is for senators to vote for cloture to shut off a filibuster, then later seek political cover by voting against the actual bill. That occurs because a bill only requires a simple majority of the Senate – 51 votes – to become law once it overcomes the filibuster. Lincoln has indicated she probably would not allow legislation she opposed to reach the Senate floor for a vote. So while it is possible Reid will be able to collect the votes he needs, he has no margin for error.

Public Option 'Opt In'

The "opt in" version is a little more palatable to moderates and conservatives. Unlike the opt-out, the opt-in does not assume the states will join the public option. So instead of the program beginning with the participation of all states on day one, it would begin with the participation of none of the states. To participate, states would have to choose to join the program.

The "opt in" version of the public option was the brainchild of moderate Democratic Sen. Tom Carper of Delaware. Senate progressives objected that it would put the onus on the supporters of public-option healthcare, to go state-by-state and make their case as to why their state should opt in to the program.

Political Prospects for 'Opt In': Questionable

Liberal opponents complain that the opt-out system would simply give the insurance industry another way to kill the government-run healthcare plan they covet. Without support from Reid and progressives, it's difficult to see how the "opt-in" would work – unless Democrats can't get past a GOP filibuster, and come back to "opt in" as a last-minute compromise.

Public Option 'Trigger'

This was the concept favored by Snowe. It would establish a public option that would be implemented if and only if the insurance industry failed to attain future benchmarks demonstrating competitive markets and pricing. If prices continue to rise in markets without multiple insurance companies vying for their customers' business, then it would trigger implementation of a public-option, ostensibly to make the provision of insurance in those markets more competitive.

Political Prospects for 'Trigger': Highly questionable

Liberals lambasted Snowe's proposal, saying it would only delay long-overdue reform. Some even decried it as a backdoors means of killing public-option reform altogether. Still, Senate Democrats might settle for a trigger if they were unable to pass anything else – but only as a last resort.

Cantwell Amendment

When it became clear that the Senate Finance Committee – which is more conservative than the Senate overall -- would not be able to get enough votes to pass a reform bill containing a public option, the Cantwell Amendment was offered as an alternative. Some pundits referred to the proposal put forward by Sen. Maria Cantwell, D-Wash., as a "quasi-public option." It would provide federal money which states would use to help buy private insurance for people who were poor, but not poor enough to qualify for Medicaid.

The advantage of the Cantwell system, according its proponents, is that it would leverage a state's purchasing power to obtain insurance at lower rates. But the actual insurance would be provided by private companies.

Once healthcare reform escaped the clutches of the Senate Finance Committee to be merged with other proposals, however, the Cantwell Amendment was largely forgotten.

Political Prospects for Cantwell Amendment: Highly questionable.

Influential liberal Democrats such as Sen. Charles Schumer, D-N.Y., and Sen. Jay Rockefeller, D-W.Va., would be hard-pressed to settle for the Cantwell Amendment in place of a public option.

Haislmaier of the Heritage Foundation predicts that all of the massive legislative proposals under consideration will have major unintended consequences, and will directly impact the 2010 elections.

"This is the guy next door juggling hand grenades in the back yard with the pins out," he tells Newsmax. "You don't want to be in the vicinity. That's what's going on with this legislation."

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