Rep. Lynn Woolsey (D-Calif.) is leading the charge for a new public option health plan. (Santa Rosa Press Democrat/ZUMApress.com)

Four months after President Barack Obama enacted the Affordable Care And Patient Protection Act, House Democrats have revived a top liberal priority that was eliminated from the sweeping health care law in the latter stages of a grueling year-long debate: the public option.

[Congress1] Armed with a new line of attack aimed at soothing deficit fears, Democratic Reps. Lynn Woolsey (Calif.), Jan Schakowsky (Ill.) and Pete Stark (Calif.) last Thursday unveiled a bill that would offer consumers the choice of a “robust” government-run insurance plan alongside the private plans in the law’s exchanges. The Congressional Budget Office projects that the bill, which has gained 128 co-sponsors, will reduce the federal deficit by $68 billion between 2014 and 2020.

“As the deficit continues to grow, so does the need for a program that can save billions of dollars and improve health care while doing it,” Woolsey, the co-chair of the progressive caucus, told The Washington Independent. “We are introducing the public option now so it will be available as a ready-made offset or deficit reducer in this or the next Congress.”

Schakowsky argues that the lower overhead costs of government plans such as Medicare would allow the public option to create a better deal for consumers. “We could offer that kind of plan at a lower cost, and it would compete with private insurance companies, who would have to be more efficient and lower their costs,” she told TWI. “It would follow the same rules as private insurers.”

The measure is unlikely to reach the floor this year, and could face even steeper odds next Congress. If nothing else, it appears part of a concerted effort by Democrats to galvanize disenchanted progressives and attack Republicans ahead of the tough November midterm elections.

“You’re the deficit hawks,” said Rep. Raul Grijalva (D-Ariz.), referring primarily to Republicans, “and we’re giving you a tool to be able to deal with the deficit.” Grijalva labeled deficit-minded lawmakers who refuse to consider the public option “hypocrites,” alleging that “the excuse that it was going to be too expensive is phony.”

For Democrats in election mode, catering to liberal wishes could help bridge the wide enthusiasm gap among voters — a key predictor of midterm victories, where the main objective is to turn out the party base. A Reuters/Ipsos poll last month found that 72 percent of Republicans were “certain” they would vote in November, compared to only 49 percent of Democrats.

“I do think this turnout issue is really going to be the crucial indicator, and the election hangs in the balance on how many of those less-committed Democrats actually turn out again,” said Ipsos pollster Julia Clark.

“That is a very real issue that we’re focused on,” Rep. Chris Van Hollen (Md.), the head of the Democratic Congressional Campaign Committee, admitted to Reuters. Apart from the public option bill, the White House on Monday strongly hinted it will choose liberal favorite Elizabeth Warren to lead the consumer protection agency. On Tuesday, Senate Democrats forced a cloture vote on the DISCLOSE Act, also a progressive priority, despite widespread expectations that it wouldn’t pass.

Republicans, who have depicted the public plan as a slippery slope to a national single payer system, derided the attempt to revive it and dismissed the CBO report. “House Democrats still don’t get it,” National Republican Campaign Committee spokesman Paul Lindsay told TWI. “As if it wasn’t enough to vote for their party’s overreaching health care takeover that was soundly rejected by Americans, they now have the audacity to propose a government option which would put health care in the hands of bureaucrats and further bankrupt our nation.”

The CBO estimates that the public plan’s premiums would be, on average, 5 to 7 percent lower than the private plans in the exchanges. Providers would be paid Medicare rates plus 5 percent, a figure that would rise alongside physicians’ costs.

“Although skepticism about big government is growing, the CBO estimate gives [Democrats] an important selling point at a time of rising concern about deficits,” said Jack Pitney, a political scientist at Claremont McKenna College.

Popular among the populace but highly controversial in Congress, the public plan has the political disadvantage of facing fierce opposition from insurance companies, which fear competition from the government. And progressives shouldn’t hold their breath for a vote. “It’s unlikely it’ll be taken up this session,” a House Democratic aide conceded, saying only that it’s “quite possible” next Congress. But is it?

“For the progressives, it’s now or never,” Pitney argues. “They know that Republicans will make big gains in 2010, probably winning the House and maybe even the Senate. The numbers favor further GOP Senate gains in 2012.”

Despite the historic accomplishment, liberals cannot help but look back on the vexing health care debate with wistfulness, if not bitterness. Even though the bill covers 30 million Americans, liberals felt short-changed by its lack of a public insurance program. While the House passed a version of a public option in its November legislation, it was removed from the Senate version due to a lack of votes, and subsequently pronounced dead. (For a few liberal activists, this was the final straw that made the legislation no longer worth passing.) One day later, a CBS poll found that six in ten Americans favored the opportunity to choose between private insurance plans and a government plan. Surveys have consistently found that a large majority of the American public support the idea.

At the time, President Obama, soothing concerns of House progressives unsure whether to back a bill without it, reportedly assured them in private that it was merely a first step and he’d be willing to return to the public option later.

But major domestic initiatives are more likely to occur early in presidential terms, Pitney noted, arguing that the measure’s chances of success during this Congress are slim – but not nil. “It’s a Hail Mary pass, to be sure,” Pitney said. “But Hail Mary passes sometimes work. And Speaker Pelosi likes the Hail Mary. And if they fail to make the effort now, they will regret it in the future. Better a Hail Mary in 2010 than an Act of Contrition in 2011.”

Yesterday, Senate Majority Leader Harry Reid (D-Nev.) attempted to appease some of the chamber’s most ardent public option supporters, vowing to hold a separate vote on the issue later this year, the Huffington Post reported today. In a letter to Sens. Jeff Merkley (D-Ore.) and Bernie Sanders (I-Vt.), Reid said he was “very disappointed” that the Democrats didn’t have the votes to keep the provision as part of the reform bills.

“I remain committed to pursuing the public option,” Reid wrote.

While I believe that the legislation we are considering does much to provide affordable coverage to millions of Americans and curb insurance company abuses, I also believe that the public option would provide additional competition to make insurance even more affordable. As we have discussed, I will work to ensure that we are able to vote on the public option in the coming months.

Unmentioned, of course, is the tiny inconvenience that, if Democrats didn’t have the votes to pass the public option by reconciliation (which requires just a simple majority), they certainly won’t have the votes to pass it later in the year, when the filibuster will be back requiring 60 votes to pass anything.

House Speaker Nancy Pelosi, with Majority Leader Steny Hoyer, discusses the health reform bill on Thursday. ( EPA/ZUMApress.com)

Democratic leaders pushing health care reform this year like to argue that a vast majority of the proposals represent uncontroversial changes backed by most Capitol Hill lawmakers. And while that might be true, it hasn’t prevented some sharp disagreements between House and Senate Democrats over a handful of high-profile reform provisions.

Indeed, the House-passed reform bill strayed from the Senate proposal on a number of key issues, from children’s coverage to Medicaid payments to the creation of a public health insurance plan. Here’s how the reconciliation bill — which House leaders unveiled today to address what they considered weaknesses in the Senate legislation — would tweak (or not) some of the most contentious provisions in the upper chamber’s bill.

[Congress1] Paying the Freight

A central disagreement between House and Senate Democrats has been over how to pay the substantial costs associated with covering tens of millions of uninsured Americans. The House paid much of the tab with a 5.4 percent tax on the nation’s highest earners — individuals making more than $500,000 per year, and families pulling in more than $1 million. The Senate, meanwhile, passed a 0.5 percent hike on Medicare’s payroll tax for individuals earning more than $200,000 and families earning more than $250,000. But a larger chunk of funding under the Senate bill would come from a 40 percent excise tax on high-cost insurance plans — a provision that’s wildly unpopular among a key Democratic constituency: Organized labor.

The reconciliation bill alters both funding mechanisms. First, it scales back the insurance excise tax by increasing the dollar thresholds triggering the tax — from $8,500 to $10,200 for single coverage, and from $23,000 to $27,500 for family plans. It also delays the application of that tax until 2018. To make up the revenues lost by changes to the excise tax, the reconciliation bill also expands the Medicare tax to include net investment income (i.e. unearned income).

Kids’ Care

After years of promoting the virtues of the Children’s Health Insurance Program, House Democrats did a strange thing: They proposed to eliminate CHIP altogether, instead moving those kids into either Medicaid or private plans on newly created insurance marketplaces, dubbed exchanges. The Senate bill took a different tack, reauthorizing CHIP through 2019, while funding it through 2015. Despite a more recent White House proposal to provide an extra year of funding (through 2016), the reconciliation bill doesn’t touch the issue, leaving the original Senate provision intact (and kids welfare advocates happy).

Pharma Deal

A behind-the-scenes deal cut last year between Sen. Max Baucus (D-Mont.) and the pharmaceutical lobby drew a good deal of attention: The nation’s drug makers, under that agreement, would dedicate $80 billion toward health care reform over the next decade if Democrats would oppose further industry reforms — including a proposal allowing Americans to buy their prescriptions from abroad, and another empowering states to negotiate directly with companies on behalf of their lowest-income seniors.

While the White House endorsed the deal, House Democrats didn’t. Instead, Rep. Henry Waxman (D-Calif.), chairman of the House Energy and Commerce Committee, included the state negotiation provision as part of the House-passed bill. While the reconciliation bill does tap the drug makers for $28 billion over 10 years ($5 billion more than the original Senate bill), it doesn’t dabble with the other terms of the Pharma deal.

Abortion

Always the hot-button issue, abortion has emerged as the one topic that still really threatens House passage of health care reform. Late last year, Speaker Nancy Pelosi (D-Calif.) had negotiated a delicate compromise designed to satisfy a number of anti-abortion Democrats — notably Rep. Bart Stupak (Mich.) — who were concerned that the reform bill would allow taxpayer dollars to subsidize abortions. The so-called Stupak amendment would ban exchange plans from offering abortion coverage, forcing women to buy a separate policy covering abortion services. The Senate bill is a bit less strict, allowing abortion coverage on the exchange, but requiring women to write a separate check for those services to ensure that no federal funds go toward them. It’s the Senate provision that’s going to the floor of the House early next week, leaving Stupak and roughly a dozen other House Democrats vowing their opposition.

Anti-Trust Exemption

For 64 years, the health insurance industry has reaped the benefits of a rare exemption to federal anti-trust laws, which allows companies to share cost and coverage information without scrutiny from Washington. And for a number of years, Democrats have had their eyes on repealing it. The House bill would have done just that, but the provision didn’t make the cut in the Senate, due largely to the opposition of Sen. Ben Nelson (Neb.), the moderate Democrat whose close ties to the insurance industry include a stint as CEO of the Omaha-based Central National Insurance Group.

Like many other insurance reforms, this provision is one of those non-budget related items not eligible to move under the reconciliation process. The Democrats, though, are hoping to repeal the exemption later this year through separate legislation. Indeed, the House already passed such a bill last month.

Medicaid Rates

The headlines today will likely focus on the plan to eliminate the sweetheart Medicaid deal that Senate leaders cut with Nebraska’s Nelson — a deal so unpopular that even Nelson himself claims now to oppose it. But much more significant for purposes of ensuring care is a provision of the reconciliation bill that hikes Medicaid rates to primary care physicians to at least the level of what Medicare pays for those same services. That provision was contained in the House bill, but not the Senate proposal.

The issue isn’t trivial. Medicaid rates are so low that many doctors refuse to see Medicaid patients. Only about 40 percent of physicians accept all new Medicaid patients, versus 58 percent for Medicare patients, according to a September study from the Center for Studying Health System Change, which randomly surveyed more than 4,700 physicians. And that number drops to about 31 percent among family doctors and general practitioners.

For dental care, the numbers are even worse. Only 27 percent of the nation’s dentists will treat Medicaid-insured patients, according to a 2007 survey conducted by the American Dental Association. Those trends raise important questions about the value of an insurance program that nobody accepts — and led directly to the Democrats’ decision to hike Medicaid rates.

Closing the Doughnut Hole

Though seniors participating in Medicare’s prescription drug program are generally happy with their benefits, a painful thorn plagues the program: Seniors are forced to pay the full cost of drugs when annual expenses hit $2,700, and the subsidies don’t return until total costs hit $6,154 — a coverage gap known (not endearingly) as the doughnut hole. The Senate bill took steps to reduce the size of that gap, relying mostly on the pharmaceutical companies, who offered a 50 percent discount on brand-name drugs through the doughnut hole as part of their $80 billion deal with Democrats.

The reconciliation bill expands on that plan, offering seniors an additional $250 rebate in 2010, then squeezing the gap incrementally so that, by 2020, the doughnut hole would disappear entirely.

Illegal Immigrants

While both the Senate and House bills would prohibit illegal immigrants from receiving federal subsidies on the exchanges, the Senate took the restriction a long step further by preventing those folks from buying insurance from the exchanges at all — even if they paid the full price of coverage using their own money. (The House bill would allow such unsubsidized purchases.) Although some members of the House Hispanic caucus have advocated for the House language in the reconciliation bill, it didn’t make its way in.

Public Option

The House bill included the creation of a government-backed insurance plan to compete with private companies on a national exchange, while the Senate bill contained no such thing. Despite a late push from liberal groups to include the House provision in the reconciliation bill, House Speaker Nancy Pelosi (D-Calif.) declined, citing a lack of support in the Senate.

House Majority Leader Steny Hoyer (D-Md.) said today that the lower chamber hopes to vote on the reconciliation bill Sunday afternoon.

My criticisms of the legislation have been well reported.  I do not retract them. I incorporate them in this statement. They still stand as legitimate and cautionary.  I still have doubts about the bill. I do not think it is a first step toward anything I have supported in the past. This is not the bill I wanted to support, even as I continue efforts until the last minute to modify the bill.

The entire statement after the jump.

Each generation has had to take up the question of how to provide for the health of the people of our nation.  And each generation has grappled with difficult questions of how to meet the needs of our people.  I believe health care is a civil right.  Each time as a nation we have reached to expand our basic rights, we have witnessed a slow and painful unfolding of a democratic pageant of striving, of resistance, of breakthroughs, of opposition, of unrelenting efforts and of eventual triumph.

I have spent my life struggling for the rights of working class people and for health care.  I grew up understanding first hand what it meant for families who did not get access to needed care.  I lived in 21 different places by the time I was 17, including in a couple of cars.  I understand the connection between poverty and poor health care, the deeper meaning of what Native Americans have called “hole in the body, hole in the spirit”. I struggled with Crohn’s disease much of my adult life, to discover sixteen years ago a near-cure in alternative medicine and following a plant-based diet.  I have learned with difficulty the benefits of taking charge personally of my own health care.  On those few occasions when I have needed it, I have had access to the best allopathic practitioners.    As a result I have received the blessings of vitality and high energy.  Health and health care is personal for each one of us.  As a former surgical technician I know that there are many people who dedicate their lives to helping others improve theirs.  I also know their struggles with an insufficient health care system.

There are some who believe that health care is a privilege based on ability to pay.  This is the model President Obama is dealing with, attempting to open up health care to another 30 million people, within the context of the for-profit insurance system.  There are others who believe that health care is a basic right and ought to be provided through a not-for-profit plan.  This is what I have tirelessly advocated.

I have carried the banner of national health care in two presidential campaigns, in party platform meetings, and as co-author of HR676, Medicare for All.   I have worked to expand the health care debate beyond the current for-profit system, to include a public option and an amendment to free the states to pursue single payer.  The first version of the health care bill, while badly flawed, contained provisions which I believed made the bill worth supporting in committee.  The provisions were taken out of the bill after it passed committee.

I joined with the Progressive Caucus saying that I would not support the bill unless it had a strong public option and unless it protected the right of people to pursue single payer at a state level.  It did not.  I kept my pledge and voted against the bill.   I have continued to oppose it while trying to get the provisions back into the bill. Some have speculated I may be in a position of casting the deciding vote.   The President’s visit to my district on Monday underscored the urgency of this moment.

I have taken this fight farther than many in Congress cared to carry it because I know what my constituents experience on a daily basis.  Come to my district in Cleveland and you will understand.

The people of Ohio’s 10^th district have been hard hit by an economy where wealth has accelerated upwards through plant closings, massive unemployment, small business failings, lack of access to credit, foreclosures and the high cost of health care and limited access to care.  I take my responsibilities to the people of my district personally.  The focus of my district office is constituent service, which more often then not involves social work to help people survive economic perils.  It also involves intervening with insurance companies.

In the past week it has become clear that the vote on the final health care bill will be very close. I take this vote with the utmost seriousness.  I am quite aware of the historic fight that has lasted the better part of the last century to bring America in line with other modern democracies in providing single payer health care.    I have seen the political pressure and the financial pressure being asserted to prevent a minimal recognition of this right, even within the context of a system dominated by private insurance companies.

I know I have to make a decision, not on the bill as I would like to see it, but the bill as it is.   My criticisms of the legislation have been well reported.  I do not retract them. I incorporate them in this statement. They still stand as legitimate and cautionary.  I still have doubts about the bill. I do not think it is a first step toward anything I have supported in the past. This is not the bill I wanted to support, even as I continue efforts until the last minute to modify the bill.

However after careful discussions with the President Obama, Speaker Pelosi, Elizabeth my wife and close friends, I have decided to cast a vote in favor of the legislation.   If my vote is to be counted, let it now count for passage of the bill, hopefully in the direction of comprehensive health care reform.  We must include coverage for those excluded from this bill.  We must free the states.  We must have control over private insurance companies and the cost their very existence imposes on American families. We must strive to provide a significant place for alternative and complementary medicine, religious health science practice, and the personal responsibility aspects of health care which include diet, nutrition, and exercise.

The health care debate has been severely hampered by fear, myths, and by hyper-partisanship.  The President clearly does not advocate socialism or a government takeover of health care.  The fear that this legislation has engendered has deep roots, not in foreign ideology but in a lack of confidence, a timidity, mistrust and fear which post 911 America has been unable to shake.

This fear has so infected our politics, our economics and our international relations that as a nation we are losing sight of the expanded vision, the electrifying potential we caught a glimpse of with the election of Barack Obama.  The transformational potential of his presidency, and of ourselves, can still be courageously summoned in ways that will reconnect America to our hopes for expanded opportunities for jobs, housing, education, peace, and yes, health care.

I want to thank those who have supported me personally and politically as I have struggled with this decision.  I ask for your continued support in our ongoing efforts to bring about meaningful change.  As this bill passes I will renew my efforts to help those state organizations which are aimed at stirring a single payer movement which eliminates the predatory role of private insurers who make money not providing health care.   I have taken a detour through supporting this bill, but I know the destination I will continue to lead, for as long as it takes, whatever it takes to an America where health care will be firmly established as a civil right.

I know many people view this as a partisan issue, but both parties have found plenty of areas where we agree. And what we’ve ended up with is a proposal that’s somewhere in the middle — one that incorporates the best ideas from Democrats and Republicans.

Also consistent in Obama’s speech was the argument — grown louder from the White House in the last week — that the private insurance industry is responsible for much of what’s wrong with the nation’s health care delivery system. What’s not to like, Obama asked, about a reform bill that would prohibit companies from denying coverage for pre-existing conditions? Or dropping coverage when patients get sick? Or hiking premiums for no reason outside of profit motive? He invoked memories of his mother, “in the last six months of her life, on the phone in her hospital room arguing with insurance companies when she should have been spending time with her family.”

We cannot have a system that works better for the insurance companies than it does for the American people. We know what will happen if we fail to act. We know our government will be plunged deeper into debt. We know millions more people will lose coverage. And we know that rising costs will saddle millions more families with unaffordable expenses — and will force many small businesses to drop coverage altogether.

House Speaker Nancy Pelosi (D-Calif.) this morning outlined the Democrats’ strategy for passing the Senate bill by not passing it. The question remains whether she can rally 216 Democrats behind the reconciliation bill said to “fix” the upper-chamber’s proposal. Should be quite a week.

“I’m quite sad that a public option isn’t in there,” Pelosi added. “But it isn’t a case of it’s not in there because the Senate is whipping against it. It’s not in there because they don’t have the votes to have it in there.”

It didn’t take long for liberal groups to go on the attack. “When the Senate Whip says he will aggressively whip the House reconciliation bill through the Senate unamended and onto the President’s desk, the Speaker doesn’t get to say the Senate lacks the votes,” Adam Green, co-founder of the Progressive Change Campaign Committee, said in a just-released statement. Green has been drumming up support for the pubic option, getting 41 senators in the Democratic caucus to commit to the proposal.

We have 41 yes votes on the record — and it’s ridiculous to think Tom Harkin, Jay Rockefeller, Herb Kohl, Claire McCaskill, Kay Hagan, Robert Byrd, and other undeclared senators are going to vote against the president’s top domestic priority on the final vote. If Speaker Pelosi refuses to even allow a vote on the public option, than she killed the public option. It’s time for her to step up.

Last night, in a statement to liberal groups, the office of the Illinois Democrat clarified: “Sen. Durbin and the rest of the Senate Leadership will be aggressively whipping FOR the public option if it is included in the reconciliation bill the House sends over.”

That, according to those same liberal groups, puts “the fate of the public option … in Nancy Pelosi’s hands.” From the statement issued this morning by the Progressive Change Campaign Committee, Democracy for America and Credo Action:

The votes and the leadership are there in the Senate, and the public option will live or die based on Nancy Pelosi’s next moves. She’s been a hero on this issue in the past, and we hope that she steps up at this historic moment.

This creates a fascinating new dynamic, not least of all because Pelosi has never wavered in her support for the public option. Indeed, unlike the Senate health reform proposal, the House-passed bill would create one.

We’ll know the outcome soon enough. The Democrats say they want to pass health care reform before the end of the month.

But now, the public option is back, and so is our scoreboard. This time, the debate centers on the possibility of passing a bill with a public option through budget reconciliation rules, which require only 50 votes for passage. The Senate Public Option Reconciliation Scoreboard lists every senator’s stance on both the public option itself and the reconciliation route to passage.

Sure, the odds of a public option are still remote. But with a tremendous amount of uncertainty surrounding the health care debate in the House and Senate, the idea is gaining some ground.

So be sure to stop by the scoreboard daily to get the latest updates on the status of the public option in the Senate.

Senator Harry Reid’s office says that if a final decision is made to pass health reform via reconciliation, the Majority Leader would support holding a reconciliation vote on the public option.

The actual statement from Reid’s office, though, is an odd one:

If a decision is made to use reconciliation to advance health care, Senator Reid will work with the White House, the House, and members of his caucus in an effort to craft a public option that can overcome procedural obstacles and secure enough votes.

It’s a wonderful use of the passive voice  (always popular on Capitol Hill) to imply that the decision whether or not to use reconciliation will come down from Mt. Olympus or somewhere — as if the Senate majority leader doesn’t have any power to control these things. Sargent addresses this a bit, pointing out that Senate aides (1) maintain that the House would have to pass a reconciliation bill first, (2) want assurances that the White House will help to whip votes from fearful Democrats, and (3) fear that parliamentary rules to begin with might not allow the public plan to pass by reconciliation.

That’s a lot of unknowns for this late stage in the debate. You start to wonder if this public option push isn’t intended simply to shield Democrats from the liberal critics who thought all along that the Senate didn’t fight hard enough for the provision.

Democratic Sens. Michael Bennet (Colo.), Barbara Boxer (Calif.), Dianne Feinstein (Calif.), Sherrod Brown (Ohio), Roland Burris (Ill.), Al Franken (Minn.), Kirsten Gillibrand (N.Y.), John Kerry (Mass.), Frank Lautenberg (N.J.), Jack Reed (R.I.), Sheldon Whitehouse (R.I.), Pat Leahy (Vt.), Bernie Sanders (Vt.), Jeff Merkley (Ore.), Barbara Mikulski (Md.) and Tom Udall (N.M).