Why Reform Survived August

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THE TREATMENT SEPTEMBER 7, 2009

Why Reform Survived August

The August recess began with critics attacking health care reform because of its high price tag. It ended with critics attacking health care reform because of how reformers proposed to reduce that high price tag. The intervening weeks were nightmarish: Instead of using August to showcase what reform could do for the average American, the White House spent most of its time knocking down rumors of death panels for the sick and elderly. And as the right became energized, the left grew disillusioned, as much by the administration’s backroom deals as by its ineffectual messaging. Eventually, the shift showed up in the polls. First people grew more wary of reform. Then they grew more wary of the president. It was if everything that could go wrong did go wrong.

Somehow, though, health reform is not dead. Despite all of the setbacks and all of the missed opportunities--despite this train wreck of a month--the situation remains remarkably similar to what it was before the recess. Significant health care legislation is likely to pass, particularly if Obama manages to give a good speech on Wednesday night. And while the possibilities for what that legislation might accomplish have certainly diminished, mostly for worse, it’s not clear how much they have diminished--and to what extent progressives may yet have the power to change that fact.

Here is where the debate stands, based on interviews with about a dozen key players spanning the administration, Congress, and broader reform community:

Things certainly weren't looking this promising as recently as ten days ago, when the status of legislation remained precisely what it was before the recess. Four congressional committees had passed health reform bills, but the fifth and perhaps most crucial one--the Senate Finance Committee--remained stuck. Chairman Max Baucus hadn’t been able to forge a consensus within the “Gang of Six,” the bipartisan group he’d convened to hammer out a bill that could claim at least some Republican support. This was said to be crucial because Democrats needed a few Republicans in order to get the 60 votes necessary for breaking the inevitable filibuster. Trying to use the reconciliation process, in which filibusters can’t block a simple majority from passing bills, was said to be impractical and too divisive.

But then the reality about the Gang of Six started to set in, particularly at the other end of Pennsylvania Avenue. Mike Enzi and Charles Grassley, two of the three Republicans, made clear through statements and actions they wanted no part of reform--that their goal was to stop Obama's proposal from becoming law. That prompted terse dismissals from the White House, which focused all of its energies on the third Republican, Maine’s Olympia Snowe. As my colleague Suzy Khimm has reported, Snowe has been negotiating about health care in good faith. By all accounts, she wants a bill and she wants a good bill. And if her notions of a good bill don’t always gibe with those of liberals, they’re closer than those of some Democrats, including some of her colleagues on Finance.

The White House made clear that it saw Snowe as a partner--and that it was willing to write a bill with her, even if it had to do so itself. At the same time, White House allies started talking about the reconciliation process--not to dismiss it, as they had before but to suggest it might work after all. Key players inside the administration and on Capitol Hill began suggesting in background conversations that reconciliation, although not ideal, could produce meaningful legislation. (One knoweldgeable source challenged the prevailing wisdom that the parliamentarian would knock out provisions to create insurance exchanges, a crucial piece of reform.) Nobody was talking about it as a first choice option. But the change in tone was unmistakable and, I assume, not at all accidental.

Most of these developments took place last week, culminating in perhaps the most intriguing news of all: Baucus was finally offering legislative framework to the Gang of Six. He distributed that framework over the weekend with a request for feedback before Obama's speech on Wednesday--a clear indication that he realizes his window for action is closing.

The proposal is not good as it could be, at least relative to what the other committees have produced. But it's certainly not as bad as it could be, given expectations and the demands Republicans have been making. Rather than gut the proposal in order to keep the price tag down, Baucus has kept most of the basic structure and offered financial assistance that’s close to--if not equal to--what the other committees have offered. As a result, the bill will require between $800 and $900 billion in outlays over ten years rather than, say, between $600 and $700 billion--as some recently circulated language suggested. But with that extra money, the proposal delivers at least some financial relief to people with incomes up to four times the poverty rate, rather than cutting off assistance at a much lower number. (It also reduces the deficit in the budget planning window, something no other bill does. More analysis of the proposal to come soon.)

So what happens now? For the moment, it's all about Snowe. If she signs on to a bill--whether it’s the proposal Baucus has put forward, a framework Obama himself delivers, or some other iteration--it will most likely get out of the Finance Committee. Among other things, several sources note, Baucus’ proposal has features designed to appeal to the committee's increasingly anxious liberals; a proposed tax on insurers, for example, is something Jay Rockefeller has endorsed. That might be enough to get Rockefeller's assent, even though Baucus ditched the public plan in order to include a co-op--the idea Kent Conrad, a member of the Gang of Six, has pushed.

At that point, the process would move forward, just as it was supposed to move forward before the Finance Committee got stuck. The Senate would have a floor debate, in which the Finance and HELP bills would somehow have to be merged; the House would have its floor debate, based on some amalgam of its three bills (which actually differ very little). If both houses passed a bill--and if the Senate does, the House almost surely will--then a measure would go to conference committee. There, the two chambers would work out a mutually acceptable compromise--and send it back to each chamber for a final vote.

That’s a lot of deliberation. Liberals would try to improve the bill at every step, whether by adding more financial assistance or a real public plan. And, speaking as a liberal, it'd be great if they could succeed.

But if Snowe signs on, according to nearly every person I consulted, it’s quite possible the legislation she supports would become the Senate’s bill with very little change--and that, in conference, the Senate bill would prevail. She’d hold the leverage, as long as the administration and Democratic leadership prefer to pass pass legislation with 60 votes. And that certainly seems to be the inclination of Obama and his advisors. (It's harder to tell about Congress, particularly the House, but they're unlikely to challenge the White House openly on this.)

Unless, of course, it never gets that far. Snowe may not sign on; even if she does, one source close to the process notes, she "may not bring a sufficient number of conservative Democrats" to reach 60. If that happens--if consensus proves elusive, for whatever reason--then Obama and his allies would focus on trying to pass a bill through reconciliation. And they would move quickly.

It is, as one senior administration official put it recently to me, a “high-risk-high-reward” strategy. Since reconciliation means passing a bill with just fifty senators supporting it, the group of interests to satisfy becomes narrower--potentially allowing for a bolder, more progressive bill. That's the reward. At the same time, it’s risky because of the procedural hurdles. Among other things, Conrad would apparently become the measure’s “floor manager,” since he's chairman of the Budget Committee. (It’s not clear to me what that entails, but, I gather, it’s not entirely helpful, given his well-known skepticism about health reform.)

But the greatest risk with reconciliation is that the process produces a weak bill, an incomplete one, or, in the very worst case, a counter-productive one--not that it fails to produce any bill at all. The Democratic Party isn’t necessarily the bravest. (If it was, it’d have passed reform already.) But it’s also not the dumbest. Failing to pass a bill when they have the numbers would be politically suicidal, just like it was in the 1990s. Having committed themselves to passing legislation, they now must follow through. They knew that before August. Knock on wood, they still know it today.

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