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The Real Reason Obama's Plan Doesn't Include a Public Option

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The reason Robert Gibbs gives for President Obama's health care plan not including a public option -- that despite majority voter support, it can't get 51 Democratic votes in the Senate -- doesn't hold up. The real reason is that Obama made a backroom deal last summer with the for-profit hospital industry that there would be no meaningful public option.

This is one of the great under-reported stories of the health reform saga. Much has been written about the Obama administration's deal with big Pharma to continue to block Medicare from negotiating for lower drug prices or to allow consumers to buy cheaper drugs from Canada, in exchange for Pharma running pro-Democratic ads and giving campaign contributions to Democratic candidates. That's the reason, under pressure from the White House, that Senate Democrats voted down an amendment that would have allowed consumers to buy cheaper drugs from overseas.

But Obama's deal with the for-profit hospital lobby to insure there would be no public option has, as best I can tell, only been reported in two articles in The New York Times. On August 13, The Times reported that while President Obama had presented himself as "aloof from the legislative fray," particularly in connection with the public option, "Behind the scenes, however, Mr. Obama and advisors have been...negotiating deals with a degree of cold-eyed political realism potentially at odds with the president's rhetoric." One of the deals reported in The Times article was the Pharma deal. The other was a deal with the for-profit hospital lobby to limit its cost reductions to $155 billion over 10 years in exchange for a White House promise that there would be no meaningful public option.

According to The Times:

"Several hospital lobbyists involved in the White House deals said it was understood as a condition of their support that the final legislation would not include a government-run health plan paying-Medicare rates...or controlled by the secretary of health and human services. 'We have an agreement with the White House that I'm very confident will be seen all the way through conference', one of the industry lobbyists, Chip Kahn, director of the Federation of American Hospitals, told a Capitol Hill newsletter...Industry lobbyists say they are not worried [about a public option.] 'We trust the White House,' Mr. Kahn said."

Mr. Kahn's lobbying group, with whom the White House made the deal, represents America's investor-owned, hospitals whose profits could be diminished by a public option with the negotiating clout to negotiate lower prices. To say that the deal included ensuring that any public option would not be "controlled by the secretary of health and human services" is code for saying it would not be national in scope and would lack negotiating clout--In other words, the Obama administration made a deal that a national public option on day one comparable to Medicare was off the table.

On September 9, a few weeks after The Times reported Obama's deal to gut the public option, President Obama gave his big health care speech to a Joint Session of Congress. In the speech, Obama said one of the programs he was considering was a "not-for-profit public option available in the insurance exchange." Supporters of the public option took this as a sign that Obama was on their side.

But Washington insiders noticed that Obama parsed his words very carefully. The New York Times noted that:

"Mr. Obama's call for a public plan, however, omitted any discussion of what rates it might pay or who might control it...'He worded it really carefully, because he said 'not for profit' and he didn't say it had to be controlled by the government,' Mr. Kahn [the hospital lobbyist] added. 'The way he described it, we could support that!"

In other words, Obama signaled the private health care industry that his deal that there would be no meaningful public option still stood.

Throughout the process, the White House has given vague statements supporting the public option -- enough to keep liberals and progressive on board -- while repeatedly undermining the public option in practice. Jane Hamsher has written a useful timeline of White House efforts to undermine the public option.

There is no evidence that President Obama has ever twisted the arm of a single Senator to support a public option and plenty of evidence that he has assiduously avoided doing so, sending a message to Senators that he doesn't want a public option. When the Senate passed its version of the health reform bill, the reason the White House gave for there being no public option was that it couldn't garner 60 votes. But Joe Lieberman, who could have been the 60th vote, insists that the Obama administration never pressured him to support either a public option or a Medicare buy-in. And Sen. Russ Feingold blamed the demise of the public option in the Senate on the White House's failure to push for it.

Now the White House is saying they're not including a public option in Obama's plan because they can't get even 51 Democratic votes in the Senate. Does anyone really believe that if President Obama really wanted a public option -- if he hadn't dealt the public option away in a backroom deal with the for-profit hospital industry -- he couldn't get 51 out of 59 members of the Senate Democratic caucus to vote for it?

As a long-time supporter of single payer, I'm not the world's biggest fan of the public option and I've written about its limitations in these pages many times, included here. But at this point, when it comes to health care reform, the Democrats face a Hobson's choice of their own making between two suboptimal alternatives. Either they can use reconciliation to pass a defective health care bill that's supported by only 1/3 of the voters. Or, as in 1993, they can let health reform die for this year. The first choice means passing an unpopular bill, but at least it would show that when Democrats set out to accomplish something, they actually have the strength to do it. The second choice means admitting that their year-long efforts to pass health reform were a failure.

The most popular aspect of health care reform is the public option, which is supported by nearly 60% of voters while the overall bill is supported by only about 33%. Adding a public option to the final legislation may be the only thing that can boost its popularity among voters.

Will the Obama administration continue to cling to its deal with the for-profit hospital industry to block the public option, even at the price of public support? Or will it finally release at least 51 Democratic Senators to include a public option in the final bill through reconciliation? Its decision may be decisive in determining whether President Obama and a Democratic Congress can govern.