How Democrats can get health reform without sacrificing too much.

The toughest political challenges in health reform come from the right and from affected interest groups. The toughest intellectual challenges come from parts left: progressives who advocate an expanded public role.

Jonathan Cohn has noted an important paper by Ted Marmor, Jonathan Oberlander, and Joseph White that expresses the criticism well. These authors argue that key elements of Candidate Obama’s health plan--pay-for-performance, electronic medical records, preventive care, comparative effectiveness research--are sound policies but remain unproven as pathways to markedly reduce health spending. Many industrial democracies--using rougher, more contentious means--are better than we are at accomplishing this task. Marmor and colleagues argue that aggressive price bargaining, which exploits the government’s gorilla-size bargaining power arising from Medicare, is the most reliable and powerful lever to constrain costs.

Progressive critics also worry that incremental reformers--of which I am one--shy away from necessary fights in pursuit of Republican and moderate Senate votes that will never be delivered. As Ted Marmor put things, in a personally warm but substantively blunt email: “Stop this silly unwillingness to confront the realties of cost control. … The other side will fight as hard over a strong public option as they would Medicare for all. This is about ideology and interests, not one or the other.”

I worry about Republican resistance, too, because for many reasons I won’t rehash here (but have gotten into before), a strong public plan is good policy.

The pushing and shoving over the public plan is important for another reason: It reveals both the shrewdness and the inevitable exasperations that accompany the Obama administration’s chosen approach to health reform. Learning from the difficulties now associated with Hillary-care, the Obama team has wisely avoided offering its own detailed plan. Though the president has enunciated a handful of broad principles he demands be included, he has left the House and Senate to do the legislative sausage-making required to get this bill passed.

For many political reasons, this is the right strategy, maybe the only workable one, to get the job done. By avoiding ownership over a 1,300-page detailed “Obama Plan,” the president deprives opponents of a juicy target. He offers congressional allies greater room to maneuver, as well as an accompanying incentive to fight for an acceptable final bill. No single embarrassing sticking point is likely to thwart the whole reform effort. Plus, if Congress passes the Baucus-Grassley-or-whoever Health Reform Act of 2009, it’s not as if Americans will forget who happened to be sitting in the Oval Office.

The frustrations arise when we move beyond that. In telegraphing its bottom line, the administration credibly signals that it will go to the mattresses to protect various core essentials: a national insurance exchange, protections for low-income workers and for individuals with preexisting conditions. The administration takes a decidedly more ambiguous and wary stance towards the public plan. President Obama and his crew have said that they really like the idea; they’ve said less about their real willingness to push, shove, and haggle to enact it into law.

This will be a fight. Republicans have rather obvious political and ideological motives to struggle against an expanded public role. Insurers and many medical providers have even more obvious reasons to oppose a plan whose chief virtue is to increase payers’ bargaining power and to offer attractive alternatives to a deeply unpopular private insurance market. It’s hard to imagine a more naked clash of interests and competing visions of government’s proper role.

On the merits, most experts I know hope that the Democrats will win. A complete victory may not be possible in this area. The strategic and policy dilemma is how to find a workable compromise that creates some sort of a public plan, but that is sufficiently neutered to attract a critical mass of moderate Democrats (and maybe even Republicans) who seem to hold the balance of power in the United States Senate.

Democratic officials and policy wonks are fishing for a compromise that might work. Senator Charles Grassley--perhaps the key Republican in this effort--has sent out some ambiguous though generally disheartening signals.



The New America Foundation’s Len Nichols and John Bertko have proposed a compromise public plan that moves some distance to protect private insurers from the most threatening possibilities. For example, Nichols and Bertko would forbid the public plan from requiring Medicare providers to serve public-plan patients. In case you missed their differences with Hacker, Marmor, and others, they write:

"The disagreement over the potential uses of the public plan to rein in system costs could not be more profound. Our vision would not use the public plan's potential market power over provider payment."

Substantively, I prefer Jacob Hacker’s plan. Yet Nichols-Bertko provides a useful negotiating fallback. You might think Republicans and their allies would stampede to embrace the Nichols-Bertko plan, which greatly accommodates insurer and provider concerns. From distant Chicago, I can’t see much evidence of movement.

Beyond that, I fear that Republicans have little desire or incentive to play ball. Their smart political play seems quite the opposite. They worry about the long-run consequences of a working public plan. Plus, they stand a decent chance of dealing liberals a notable defeat, and they perceive little prospect that they will lose something valuable if they stand firm.

Sure, many within the Republican camp would prefer Nichols-Bertko to the Hacker plan. Yet virtually every Republican politician and friendly stakeholder would prefer no public plan to one designed to accommodate their immediate interests.

The threat that Democrats will “go nuclear”--that is use reconciliation to get an overall bill passed--is real. News of recent days suggests that this threat is even more real than many of us expected. Cohn has broken some game-changing stories revealing that the final budget resolution will include a "reconciliation instruction" for health care reform.

Whether Democrats will follow through on the threat to enact a public plan seems, at the moment, less credible. The way things currently stand, I suspect Republicans will oppose any public plan, and then dare the administration to use reconciliation to get it. The ambivalence of key Democratic moderates does not temper this Republican stand.

Ironically, though, when the reconciliation threat is credible, the possibilities and incentives for bipartisanship become radically altered. Here is one intriguing thought-experiment to get this done. Suppose Harry Reid and selected key Democrats held a press conference in which they announce that the Senate Democratic caucus has united behind three points:

(a) There will be some public plan in the final bill.

(b) Democrats will use reconciliation to make this happen, though they do not want to take this step.

(c) At the request of the White House, Democrats are inviting their Republican counterparts, without precondition, to negotiate the best structure of this plan.

For this to be credible, some surprising faces would need to sign on. Yeah, Ted Kennedy should be there. Yet he and his allies are not the problem, and thus a less powerful part of this particular solution. Max Baucus, Kent Conrad, and some others within the self-styled moderate caucus would be the real players here.

(Who else might be useful? Who really owes his Democratic colleagues something, and has oddly derived but impeccable bipartisan credentials to go along with reasonably liberal health policy views? I know it’s a pipe dream, but could anything be more satisfying than injecting a little Joe-mentum into the debate?)

What’s frustrating is that health care reform is supported by large majorities of the American people and a dominant House majority. It is also supported by a clear Senate majority that remains one or two votes shy of a filibuster-proof majority. The situation gets especially galling when you consider that one of these votes by all rights belongs to Minnesota’s Al Franken. It’s an open secret that incumbent Norm Coleman stands virtually no chance of regaining his seat. He is running out the clock to deny Democrats a critical Senate vote.

Republicans are maintaining party discipline, as they have every right to do so. Democrats, for their part, have every right to use Senate procedures to call an up-or-down vote, and to be held accountable for the results. I hope we don’t need to use rinky-dink reconciliation procedures for such a milestone in American history. Yet we’ve been debating this issue for decades. As those ruthless political operatives at The New York Times editorial board put things: “A bipartisan agreement would be nice, but what the country needs right now is effective health care reform.”

That’s what I think, too. Enough negotiation with ourselves. Now that Democrats have put reconciliation on the table, they should use its prospect to negotiate a public plan.

Harold Pollack, a frequent contributor to The Treatment, teaches at the University of Chicago, where he is faculty chair of the Center for Health Administration Studies.

By Harold Pollack