Why liberals won't get anything for giving up the public option.

How to fix health policy.
Dec. 14 2009 3:19 PM

Plenty of Nothing

Here's what liberals will get instead of a public option: nothing. They should take it.

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Sen. Joe Lieberman
Sen. Joe Lieberman

Independent Sen. Joe Lieberman's threat to filibuster a health-reform bill that includes a Medicare buy-in, combined with the firm opposition of swing-voting Republican Olympia Snowe and growing dissatisfaction from conservative Democrat Ben Nelson, means that Sen. Harry Reid's public-option compromise is dead before the Congressional Budget Office even has a chance to calculate its cost. The Medicare buy-in was, truth to tell, a more liberal idea than the public option, and if the initial willingness of Lieberman and Nelson to consider it seemed too good to be true, well, that's because it was. (That the Gore-Lieberman ticket endorsed the idea in 2000 was never likely to weigh heavily on Lieberman.)

What, then, will liberals get instead? Uh, nothing.

Oh, they may get thrown a scrap here or there. No one's paid much attention to Reid's pledge to Sen. Jay Rockefeller, D.-W.Va., to fund the Children's Health Insurance Program through 2015. The Congressional Budget Office will probably score this as a money-saver because the government-funded CHIP would likely be cheaper than the alternative, which is government subsidies to private-sector policies sold on the new health-insurance exchanges. Rockefeller didn't push the measure as a money-saver; he pushed it because he thought it would provide better health care to kids. That government-funded health care turns out to be both cheaper and better than the private-sector marketplace created under Obamacare is a distraction that liberal supporters of health reform have struggled not to dwell on. But socialism for children is an easier sell than socialism for grown-ups, so there's a decent chance this isolated concession will stand.

Reid also massaged Rockefeller by bumping up the bill's required "medical loss ratio" (i.e., the percentage of premium dollars an insurance company is required to spend on health care) to 90 percent. That will probably float back down to 85 percent, which is what the House bill requires—or perhaps to 80 percent for family policies and 75 percent for individual policies, which is what the bill says now. That would still be pretty good; state-level requirements are typically a dismal 55 to 65 percent. Since the big health insurers claim (unpersuasively) that their current medical loss ratio is 87 percent, they probably won't have an easy time persuading Congress that 80 percent or 85 percent would be a burden.

Perhaps liberals could still get the consolation prize of two national nonprofit plans to be managed by the federal government's Office of Personnel Management. Increasingly, though, the OPM option calls to mind the old joke, "Second prize, two weeks in Philadelphia!" Yale political scientist (and public-option creator) Jacob Hacker recently pointed out that in addition to the problem of an unwieldy regulatory structure (OPM is Uncle Sam's human resources office for federal workers, not a social-services agency), the OPM option's likeliest participant is Blue Cross/Blue Shield, which already has a "massive market share, and [the Blues] are generally among the most costly plans." For liberals, the OPM option could easily end up being worse than nothing.

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The task before liberal Democrats, then, is to achieve a Zen-like calm about the empty space where the public option used to be.

I take no pleasure in noting this. I am not one of those Washington commentators inclined to judge harshly anyone caught out of step with political reality, especially when the dissenter happens to be right. A public option, or expansion of the already-public Medicare, really is health reform's single plausible answer to the question, "How do we rein in medical spending?" Without it, government can put the brakes on its own spending, but it can't curb spending by health providers. (See "Forget the Cost Curve.") Politically, I'm unpersuaded by those who say a public option will be easier to get after health reform is passed—in much the same way that, say, tougher civil rights laws became achievable only after passage of the loophole-ridden 1957 Civil Rights Act. Health reform is different, because it will put half a trillion dollars into the hands of a lobby (health insurers) that's already powerful enough to knock the public option out of the bill. A wealthier health-insurance industry will be a more powerful opponent, not a less powerful one.

The Senate could probably pass health reform with a public option if Reid were willing to ram it through via reconciliation, an option I continue to judge doable. (It's little-noted that Vice President Joe Biden is perfectly free to ignore any adverse rulings from the Senate parliamentarian—as Vice President Hubert Humphrey did routinely during the 1960s.) Reid got Nelson to support bringing health reform to the Senate floor in part by threatening to use reconciliation. But the chance that Reid would make good on that threat is remote, especially if he could get 60 votes for a health reform bill lacking a public option, as still seems probable.

I don't believe that 60th vote will ever be Lieberman. His actions increasingly demonstrate that he is grasping for a reason, any reason, to oppose the bill, probably to appease the insurance industry, which is headquartered in his home state of Connecticut. (To dispel this idea, Lieberman recently sponsored an amendment to eliminate health insurers' antitrust exemption. But while insurers oppose repeal, Los Angeles Times business columnist Michael Hiltzik recently argued that the matter doesn't worry them terribly, because even after repeal, they would probably face few federal antitrust actions.) Carrie Budoff Brown reports in Politico that the White House wants Reid to jettison the Medicare buy-in (he's bound to sooner or later) to cut a deal with Lieberman. But the assumption that Lieberman would support a health reform bill that lacked a public option or a Medicare buy-in overlooks the fact that Lieberman opposed the Senate finance committee bill, which included neither.

Lieberman may be unreachable, but Snowe is not, and neither is her fellow Maine Republican, Sen. Susan Collins (who may prove helpful should a faint breeze knock over 93-year-old Sen. Robert Byrd, D.-W.Va.). Further compromises would probably have to be made, many of them unappetizing. But no matter how much Moveon.org fulminates  and no matter how many meetings the Congressional Progressive Caucus demands, it just isn't plausible that liberals would walk away from a bill that extends health insurance to 31 million of the 45 million people who are currently uninsured. I doubt they'd walk away even if that number were reduced to 20 million (not that I recommend it). Health reform legislation will leave liberals plenty of work to do. But when has that failed to be true?

E-mail Timothy Noah at chatterbox@slate.com.

Timothy Noah is a former Slate staffer. His  book about income inequality is The Great Divergence.

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