The Fate of the Public Option could be in Obama’s hands

The fate of the public option might not rest in Congress as some people might think especially since the Senate Finance Committee spent more than five hours debating the public health insurance option Tuesday before voting down two Democratic amendments to add it to the bill. But the one person who will effectively decide its fate wasn’t even in the room. President Barack Obama got an early look at the depth of the Democratic divide on the government insurance option Tuesday — with Democratic Sen. Kent Conrad saying it would bankrupt North Dakota’s hospitals and Sen. John Rockefeller (D-W.Va.) saying it’s the only way to rein in ravenous, profit-hungry private insurers.

Not long from now, Obama’s going to have to referee the whole thing. A bloc of three moderate Democrats joined with Republicans to defeat the two public option amendments Tuesday, setting up the Finance Committee bill as the only version advancing in Congress that lacks the government plan. Now, squabbling Democrats are looking to the president to be the final arbiter of whether they include the public option in the version of the bill that goes to the Senate floor — and later, whether it will emerge in compromise legislation from a House-Senate conference.

In the Senate, Obama will work closely with Majority Leader Harry Reid (D-Nev.), who speaks with White House chief of staff Rahm Emanuel several times a day. But the final decision rests almost entirely on the president’s shoulders. “Expect the president and his staff to be key participants in the tough decisions we have to make, on such issues as the level of subsidies and the public plan versus the co-ops,” said a senior Democratic Senate aide. “The only way we are going to get this done is with active involvement of the president.”

Public-option supporters are fine with that. They say they’ll take their chance with Obama at the helm because he’s declined every public opportunity to remove the government option from the table. Sen. Maria Cantwell (D-Wash.), who voted for both public option amendments, said she wants the White House to make its position clear, if it expects the bill to drive down the cost of private insurance. “They should weigh in,” Cantwell said Tuesday. Rep. Anthony Weiner (D-N.Y.) even describes Obama as the Democrats’ “cleanup hitter” who will mediate the dispute — noting approvingly that Obama has always said he wants the public option.

Of course, other more moderate Democrats could point to a variety of statements where Obama is cool to the idea of government-run health care — including saying during his speech to Congress that it’s just one option for driving down costs and ratcheting up competition, but not the only one. Going forward, Obama will have several chances to inject his views into the process, but he already faces one big decision — does he want a bill that can garner 60 votes in the Senate, or can he live with a bill that Democrats have to force through using a procedural maneuver that requires only 51 votes?

As long as the Democratic leadership and the White House want a bill that can win 60 votes, the public option isn’t likely to survive. Democrats are expected to go for that threshold as they merge competing bills from the Finance Committee and the Health, Education, Labor and Pensions Committee. So in terms of the most immediate decision, Obama and Reid are not expected to push for a bill with the public option, according to Senate sources. Sen. Olympia Snowe (R-Maine) would not support the public option, which means Sen. Ben Nelson (D-Neb.) is also a “no” vote since he told constituents that he could not go with a Democrat-only bill. Sen. Blanche Lincoln (D-Ark.) voted against both public option amendments in the Finance Committee.

But once the bill makes it to the conference committee, the calculus could change. This is where Vice President Joe Biden has said the White House plans to really exert its voice. Half the committee will be from the House, which is expected to pass a bill with a public option. And Republicans, as the minority party, play a diminished role. A third option is asking the 60 Democratic senators to vote to break a filibuster before allowing them to vote as they wish on final adoption, which requires only 51 votes. Sen. Tom Harkin (D-Iowa) told “The Bill Press Show” on Tuesday that a simple majority of Democrats support the public option. “This was the toughest terrain for us,” said Sen. Chuck Schumer (D-N.Y.) of the Finance Committee. “It gets easier on the Senate floor, and it gets easier still in conference.”

While progressive senators work to win 60 votes for a public option, a new alternative is beginning to emerge on the Finance Committee. Cantwell said she will offer an amendment to give states the power to negotiate down the price of insurance. If insurance companies agree to cover a chunk of the uninsured, states would help pay for the coverage. The states negotiate with insurers to set the cost and coverage of the program. The rates wouldn’t be tied to Medicare or Medicaid but set at the state level, she said. “It’s a way to get a foothold. If you can cover 75 percent of people that way, then it’s definitely a public plan for the big chunk of the uninsured,” Cantwell said of the idea, which is modeled after her state’s “basic health plan.”

In the Finance Committee, eight Democrats supported an amendment from Rockefeller that would have created a Medicare-like program for all Americans. Five Democrats voted against it: Conrad, Lincoln, Chairman Max Baucus of Montana, Tom Carper of Delaware and Bill Nelson of Florida. The division was less apparent on a more moderate approach offered by Schumer, which would set higher reimbursement rates for providers. His amendment failed 13-10, as Baucus, Conrad and Lincoln voted with Republicans. “My first job is to get this job across the finish line,” Baucus said. “I fear if this provision is in this bill as it goes out of this committee, it will jeopardize real meaningful health reform.”

Conrad said Rockefeller’s amendment will tie the public option to Medicare rates for two years. If that happens, Conrad said, “Every major hospital in my state goes broke.” That’s because Medicare reimburses his state’s providers well below the cost of care, and they make up the difference with higher payments from the insured and private payers, he said. Despite the loss, Schumer said he was more optimistic about the chances of enacting a public plan. “It was given up for dead a few weeks ago, but what we find is every time we debate it, whether back home or here at the Senate Finance Committee, we pick up more support,” Schumer said. “I am more optimistic now than I was six hours ago. Every day I am more optimistic that we can get something done.”

Schumer's amendment picked up support from Nelson and Carper, who had previously been noncommittal on the public option. Schumer said Carper still had concerns, but “voted with us as a message that we can get this done.” The two switched votes indicate that moderates are more willing to negotiate than their public pronouncements have suggested. As jockeying gives way to voting, Schumer and other public plan proponents are expected to tweak the proposals to attract moderates, and to move the bill closer to 60 votes. If Democrats show movement towards the public option, the White House could be less inclined to go with one of the weaker compromises, such as Snowe's trigger plan or Conrad's nonprofit insurance cooperatives.

In a statement, Carper said Schumer's proposal was "not perfect," but he supported it because "I believe it -- or something similar to it -- could help drive down insurance costs for consumers in a way that doesn't unfairly disadvantage insurance companies." Carper said he would work on a compromise as the bill moves to the floor. The debate laid bare the philosophical divides over government. Sen. Chuck Grassley (R-Iowa) captured the dichotomy between Democrats and Republicans on the level of trust in government: “The government is not a fair competitor — it is a predator.”

Echoing the warnings used for decades against increased government involvement in health care, Republicans uniformly presented the public option as a federal takeover that would leave bureaucrats in charge of medical decisions. “Gimme a break,” said Sen. Orrin Hatch (R-Utah), dismissing the argument that the public option won’t lead to an entirely government-run health care system. “If we pass a single-payer program or something that gets us there ... we’ll never be able to change it. And I can tell you right now it will be a disaster.”

Nonetheless the fate of the public option could be in the hands of Obama and this will truly be a test of Obama’s political might. However at the same time with the public option being in the fate of Obama’s hand, there is still the question is how do you pay for a public option without raising taxes on more Americans who so far until now Obama has pledged no tax hikes on those making $200,000 or less. So as the public option continues to be debated, let’s see how it all comes out but make no mistake about it, the Obama administration will have to weigh in on it eventually.