Senate Democratic Leaders Agree to Kill Medicare Expansion     Permalink

The Senate Democrats have agreed to kill the expansion of Medicare to 55-year-olds to please Sen. Joe Lieberman (I-CT), although Lieberman still hasn't said he will vote for cloture on the bill as he has additional demands. Lieberman does not really have any policy objection to expanding Medicare. He ran for Vice President in 2000 on a platform promising this and as recently as three months ago argued for doing this. The only reasonable conclusion is to assume that he is threatening to filibuster the health-insurance bill simply to punish liberals who opposed him in his 2006 primary against Ned Lamont. By denying liberals something they really wanted and giving them nothing in return, he made it clear that he is a force to be reckoned with.

It is very unlikely he will be punished by his caucus because they will need his vote in the future as well and on some issues, he is arguably progressive. For example, his committee is about to pass a bill that would extend marriage benefits to same-sex partners of federal employees, something that many people who despise his stand on health care actively want. He has also taken a fairly progressive stand on climate change.

Majority leader Harry Reid is being attacked from the left for capitulating to Lieberman and getting nothing in return. He said he had no choice but actually he had other options. For example, he could have told Lieberman that if he filibustered the bill, it would be passed anyway using the budget reconciliation process and Lieberman would be stripped of his committee chairmanship for being an obstructionist.

Another option Reid had is the so-called "nuclear option," which the Republicans threatened to use in 2005 when Democrats were preparing to filibuster George Bush's court appointments. The nuclear option is clearly hardball. It would work like this. After some debate on the health-insurance bill, Reid could recognize a Democratic senator who called for an immediate vote on the bill. Some Republican would surely raise a point of order claiming that Senate rule 22 prohibits a vote unless 3/5 of the senators agree to cut off debate. The Senate's presiding officer, Vice President Joe Biden, would then ask the Senate Parliamentarian, Alan Frumin, whether the point was valid. Frumin would say it was, but Biden could overrule him and call for an immediate vote anyway. Some Republican would surely object to this ruling from the chair and ask the Senate to decide. If a simply majority of the Senate agreed with the ruling, the vote would take place. In other words, when the meaning of a Senate rule is in dispute, the presiding officer makes a decision, which the full Senate can sustain or overrule. Changing Senate rules requires 67 votes, so that is not going to happen any time soon. It is possible that Reid didn't want to go this route because he was worried that in some future Republican-controlled Senate, the Democrats might want to filibuster something and he could then appeal to the Republicans saying: "We could have gone nuclear on you in 2009 and didn't, so please be nice and don't go nuclear on us now."

Many people wonder why Sen. Max Baucus (D-MT) spent half a year locked in a room with Sen. Olympia Snowe (R-ME) but it is at least possible that he believed she was negotiating in good faith and if he gave her what she wanted, she would support the bill, whereas he believed Lieberman was not negotiating in good faith and was simply using the bill as an opportunity to get revenge on the liberals who opposed him in 2006. In fact, he could conceivably even go back to her now and say he will now accept her trigger option, thus making Lieberman irrelevant, but it may be out of his hands now.

So what is left of the bill? The view from 30,000 feet is this. The bill requires every American not covered by Medicare, Medicaid, or the VA system to buy health insurance from a private company. It also provides about $900 billion in subsidies to poor people to help pay for it. From the insurance companies' point of view, this is a good deal--they really don't care who is paying the bill. About 30 million people will now be covered who weren't in the past. At its core the bill is about the government buying health insurance from private companies for 30 million people who can't afford it now. As a result, this bill is the largest expansion of insurance coverage since the enactment of Medicare in 1965.

But the bill fails badly on two scores: cost containment and insurance company malfeasance and politically these may be the biggies. For most people, they are pretty much stuck with whatever insurance their employer chooses to offer. In practice, they have no choice because getting individual insurance is prohibitively expensive except for the young and healthy. Whether that changes remains to be seen. While insurance companies are now forbidden from refusing to accept people with preexisting conditions, they are not prohibited from dragging their feet and providing terrible service to people they don't want in the hopes they will get angry and leave. In most regions of the country one or two companies dominate the market and without private or public competition, they will naturally exploit their monopoly or duopoly and continue to raise premiums. Nothing in the bill provides any incentives to stop this. Even Olympia Snowe's trigger would have made them a little bit cautious to avoid having it pulled but now there is nothing.

The second problem is that since people have no where to turn, insurance companies can try to weasel out of their obligations. For example, the bill says companies can't cancel policies except in case of fraud. Suppose you were an insurance company lawyer, what would you do? Most likely you would have new applicants fill out forms asking them to list every doctor visit in their entire lives and also to authorize the company to ask for all the applicant's medical records. If someone got expensively sick, then the company would get all the medical records looking for some detail not mentioned on the application form and claim fraud. The insured person might be able to go to court, but litigation could take years and the result would be uncertain. In a world with competition--private or public--if a company did this too often, word would get around and it would lose business. But in the absence of competition, there is no real reason for a company to stop this practice.

Even without a public option, in principle, there is a way to keep the companies honest and that is competition from the private sector. If the antitrust exemption for insurance companies were repealed and insurance companies were allowed to operate anywhere in the country, any region dominated by one or two companies with sky-high premiums would likely be seen as a business opportunity by some competitors. This was the essence of the Wyden-Bennett bill, but it didn't go anywhere despite the Republicans generally liking the idea of competitive free markets. They could have gone along with the idea of health-case reform under the condition that it was a private-sector solution. But they chose not to.

What certainly seems strange is how disinterested President Obama has been in the whole process. When Lyndon Johnson was fighting for Medicare, he was right there all the time arm wrestling the Senate, one senator at a time. He didn't just say: "Senate, please write a bill." He made sure everyone knew what he wanted and what the personal consequences would be for every senator for both a vote for the bill and one against the bill. Obama has done none of that. He is both inexperienced and lacking Johnson's clear willingness to break legs to get what he wants. The message seems to be: "I want a bill but I don't care what is actually in it." He'll probably get what he wished for.

No matter what the Senate bill looks like, it is going to have to be reconciled with the House bill. They differ in some key ways. The House bill gets its money by raising the income tax on high-income individuals. The Senate bill gets its money through an excise tax on gold-plated insurance plans. The lack of a public option in the Senate bill may not be an issue though as House majority leader Steny Hoyer has already said he is willing to jettison the public option and Medicare expansion. In contrast, Howard Dean has said it is better to kill the Senate bill and start again using budget reconciliation. But Dean is not a voting member of Congress and Hoyer is.

If the current Senate bill or something close to it becomes law, although Lieberman didn't realize it, he may have done the Democrats a real favor. If the final bill that Obama signs into law does not have a public option and does not have an expansion of Medicare, it will be far harder for the Republicans in 2010 to make the case that Democrats engineered a government takeover of health care. Thus without realizing it, Lieberman may have inadvertently eliminated one of the Republicans' most potent arguments in 2010.

Crist and Rubio Tied in Florida     Permalink

A new Rasmussen poll of the Republican senatorial primary has Gov. Charlie Crist (R-FL) and former state House speaker Marco Rubio tied at 43% each. Six months ago, Crist was leading by 35%. This is why we don't report the polls systematically this far from the election: they are too volatile to mean much. But no matter what the exact score is, Rubio has come from nowhere to be a serious threat not only to Crist but to the Republican Party as a whole. If an extreme right-wing candidate can seriously challenge a charismatic, popular, incumbent governor in a swing state like Florida, it is likely that Republican incumbents all over the country could be vulnerable if they act too moderate. This will put pressure on them to move to the right in their voting behavior, which may not always square with what their constitutents want.

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