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Miles Mogulescu Headshot

Who's Killing the Public Option? President Obama With a Rahm-Bow

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Sometimes, if you follow the evidence, you find that the perp is hiding in plain sight. When it comes to repeated attempts to kill off the public option, you'll find that the person most responsible isn't Olympia Snowe or Max Baucus or any of the other the usual suspects. It's Barack Obama.

Those fighting for a "robust" public option need to finally accept the hard truth that Barack Obama is not any ally. He's an obstacle.

The evidence points to President Obama having made a deal with the devil--the for-profit health care industry--to kill any meaningful public option in exchange for their support for industry-friendly health care reform and campaign cash, and the time has now come to pay up, while trying to avoid leaving any fingerprints around the corpse.

Let's rewind to last summer. On August 13, The New York 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." Among these deals by the Obama administration: A deal with big Pharma to reduce drug prices by a relative paltry $80 billion over 10 years in exchange for Obama reneging on his campaign promise to allow Medicare to negotiate lower drug prices; and a deal with the private 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, under the White House deal, weak coops are ok, weak public options at the individual state level are ok, triggers that would likely never be triggered are ok, but a national public option on day one comparable to Medicare has been taken off the table by the White House.

Even more important, under the White House deal, any public option would be prevented from paying Medicare rates (and by implication, from using Medicare rates as a reference point, as would be the case for proposals in the House for the public option to pay Medicare rates plus 5%). Banning the use of Medicare rates as a benchmark for the rates to be paid by the public option ensures that the public option would be unlikely to be able to pay providers lower rates than private insurers, and would thus be unable to save its customers meaningful amounts of money over private insurance premiums. In other words, the deal that the White House made with the for-profit hospital lobby promises that Obama will not back any public option, except one that is likely to fail. And the for-profit hospitals' chief lobbyist, Chip Kahn, is confident he can trust the Obama administration to live up to this deal.

The Obama's administration's actions have consistently shown that Mr. Kahn's confidence that the White House can be counted on to block any effective public option is well placed.

Skip ahead a few weeks to President Obama's big health care speech to a Joint Session of Congress on September 9. Many liberals and progressives were encouraged that 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 his speech, Obama downplayed the impact of the type of public option he might support, noting that it would be no threat to private insurance because "less than 5% of Americans would sign up." Moreover, Obama reminded "my progressive" friends that

"The public option is only a means to [an] end--and we should be open to other ideas...For example, some have suggested that the public option go into effect only in those markets where insurance companies are not providing affordable policies. Others propose a co-op or another non-profit entity to administer the plan. Those are all constructive ideas worth exploring".

In other words, the White House might actually support a trigger or co-ops instead of a national public option. Mr. Kahn, the Washington lobbyist insider was right to be reassured and progressive activists should have been more wary.

In fact, since the beginning of the health care debate the pattern from the Obama White House has been to give enough comfort to his progressive supporters that he's really on their side when it comes to the public option so that they won't jump ship, while winking at the private health care lobbyists to reassure them he'll keep his promises to them that there will be no meaningful public option in the end.

It appears to be part of a Democratic "K Street Strategy" engineered by Rahm Emanuel with the consent of Barack Obama in which concessions are made to powerful special intersts, like health insurance companies and drug companies, in exchange for campaign cash for Democrats. Even Republican Minority Leader John Boener is starting to complain that most health industry contributions are going to Democrats and not Republicans. The cynical calculation is that the Democratic base has nowhere else to go so the way to win elections is to outspend Republicans with special interest money. The problem with the strategy, as the Gingrich revolution in 1994 should remind us, is that a demoralized Democratic base is at least as likely to lead to a low turnout and a Republican victory.

Let's rewind even further to last January, right after Obama's inauguration. That's when Rahm Emanuel started floating the strategy of a trigger compromise on the public option. Anyone who thinks that as Chief of Staff, Rahm-bo is an independent operator who is making deals that his boss, President Obama, doesn't want is kidding themselves.

Ever since then, the White House has been giving vague statements supporting the public option while repeatedly undermining it. Rather than use the space to repeat this sorry history here, I refer readers to Jane Hamsher's excellent timeline in Firedoglake.

The problem for the White House, however, is that it doesn't want its fingerprints around the corpse of the public option. It can't be in a position where a bill with a "robust" public option comes to the President's desk. Instead, Obmaa needs Congressional leaders to kill it first so he can tell his followers, "I wanted a public option but it just couldn't make it through Congress."

But here's the rub. Democratic leaders in Congress don't want to be the fall-guys in the murder of the public option. Too many of their constituents have become attached to it. The public option has in effect become a symbolic proxy for the activist base of the Democratic Party on whether Democrats are fulfilling their campaign promises or selling out to special interests. Harry Reid's reelection chances in Nevada in 2010 are shaky and he needs aggressive backing from the Democratic base and unions to keep his seat, which he won't get if he's seen as a weak leader who aided and abetted the death of the public option in the Senate. Nancy Pelosi faces a rebellion from a significant portion of her caucus if she fails to fight for a "robust" (i.e. Medicare plus 5%) version of the public option.

Which brings us up to the present moment. As of the end of last week, Harry Reid was telling the White House that he was within one or two votes of a bill which would include a somewhat weak public option with a state-by-state opt-out. According to which report you believe, Reid was either told by the White House to substitute a "trigger," or at minimum was given a cold shoulder to putting any public option in the Senate. Reid has now decided to go ahead with an opt-out public option, but without White House support, it's unclear if he has the votes to keep even this weak tea in the final Senate bill. Nancy Pelosi convened a meeting of the House Democratic caucus to poll its members whether there were enough votes to pass the most "robust" version of the public option still on the table, one that would set payment rates at Medicare plus 5%. About 50 or 60 House Democrats ducked the meeting to avoid going on record and Pelosi remained a few votes short. Does anyone really believe that if the White House wanted a public option, a few phone calls wouldn't have generated the handful of needed Democratic votes? Or conversely, if Congressional Democrats are falling a few votes short, given the White House's history of subtly and not so subtly putting impediments in front of a public option, isn't it apparent that a wink and a nod from the White House may be enough to hold back those few extra votes?

As a long-time supporter of single payer, I've never been the world's biggest fan of a public option, and I've written about its limitations in these pages many times. But right now, it's the only mechanism on the table that might put any brake on skyrocketing insurance premiums. Without it, all we're left with is Health Reform in Name Only that will mandate that everyone buy private health insurance too skimpy to pay all their costs if they actually get sick; fine middle class people just over the subsidy level who can't afford premiums exceeding $6,000 for individuals and $14,000 for families; tax the Pick-Up Truck policies of union workers; and continue to ban Medicare from negotiating for lower drug prices. If that's what ObamaCare ends up looking like, it might be better that it be defeated and we start over.

The only remaining hope for a public option as part of the mix is that progressive activists put so much pressure on Congressional Democrats that they fear passing a bill without it. In that battle, they must recognize that President Obama is not their friend but an obstacle.
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UPDATE: The latest news is that while the White House is publically giving faint praise to Harry's weak version of the public option (i.e. no Medicare pricing, opt out for the states), behind the scenes, according to CNN, administration officials are called Reid's opt-out public option proposal "dangerous". According to NBC's Chuck Todd, the White House has told Reid "Don't come crying to us when you need that last vote". Does anyone reallly think that if the Democrats have 58 or 59 votes to break a fillibuster for a bill which includes Reid's public option opt-out, the White House doesn't have the influence to twist arms for those last one or two Blue Dog Democratic votes if it wanted to?
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UPDATE II: Greg Sargent is reporting on Plum Line that according to House Democratic Whip Jim Clyburn, he currently has only 200 pledged votes out of the 218 votes needed for the House to pass the the most "robust" version of the public option still on the table--One that would pay providers Medicare rates plus 5% instead of having to negotiate on a provider-by-provider basis. This is still a relatively weak public option and would only be available to the currently uninsured and not to employers, or their employees, as a competitor to private group insurance. The CBO estimates that over 10 years, this would save about $110 billion dollars (compared to the negotiated rate version which would only save about $25 billion dollars). This average of $11 billion a year is a rather paltry sum compared to the $2.2 trillion dollars America spends annually on health care (likely to double to over $4 trillion dollars by the end of the 10 year period.) Still, it's the most "robust" public option still on the table. Of the 256 Democrats in the House, 56 won't yet commit to going even this far. If Pres. Obama really wants a "robust" public option, does anyone doubt that firm calls from the President or Rahm Emanuel couldn't rustle up 18 more Democratic votes?

Alternatively, do the more than 60 members of the House Progressive caucus have the courage to stand up and say they won't vote for a bill without the Medicare plus 5% provision? If they do, the White House will have a quandry if its determined to have a "win". Either twist the arms of 18 Blue Dogs to vote for Medicare plus 5% or twist the arms of "Progressives" to vote for a bill without it.
If the progressives stand firm, they have the power to force the President's hand.

Instead of sending love letters to Harry Reid for supporting an opt-out pubic option with negotiated rates, the large "progressive" organizations supporting the public option like Move On and Health Care For America Now should be joining Jane Hamsher and her Firedoglake crew in pressing the House Progressive caucus to stand firm on the Medicare plus 5% version. Anything less is a "Public Option in Name Only"