Oct. 15 (Bloomberg) -- In the No Drama Obama administration there is plenty of it.

I’m not referring to the Senate Finance Committee vote this week that was certain to pass. The only surprise there would have been if Republican Senator Olympia Snowe hadn’t joined with the Democrats after being offered everything but a Nobel Peace Prize to do so.

The real shocker this week, at least to the credulous committee Chairman Max Baucus and the White House, was the insurance industry balking at the bill hours before it was to be voted on.

Karen Ignagni, the lead lobbyist for insurers, waving a quickie study by PricewaterhouseCoopers, announced that contrary to what the Congressional Budget Office said, the committee’s bill would cause health-care costs to rise much faster and higher than they would under the current system.

Almost as she spoke, PWC pointed out it had only been asked to analyze four provisions of the bill, not the whole thing, and none of the cost-saving measures.

But never mind. Ignagni just needed a basis for attacking a bill no longer to her liking because of what she called “the decoupling of market reforms and personal responsibility.”

Falling Short

When asked on a conference call how high the enrollment rate would have to be in order for the industry to stick with its promise to stop cherry-picking, purging sick people and frivolously denying claims on the basis of pre-existing conditions, Ignagni said it would have to reach “the high- 90s.” Only 83 percent of the potential market is likely to sign up under the current bill.

Baucus wouldn’t have been surprised by Ignagni’s about-face if he hadn’t been so enthralled by everyone getting along in a haze of corporate good citizenship encouraged by the White House. Baucus was so happy having insurers at the table -- holding off unleashing Harry and Louise, the yuppies in the million-dollar ad campaign that helped kill HillaryCare -- he didn’t notice they were walking off with doggie bags bulging with goodies and silverware in their pockets.

But insurers were only playing as long as the government was serving up 40 million new customers on a silver platter, tax and tip included. When a little air seeped out of that windfall because the government wasn’t quite as willing to force new customers into a flawed system with the threat of draconian penalties, Ignangi stood up from the table loudly scraping her chair.

Start Listening

In fact, if Baucus had listened to Senator John D. Rockefeller -- not hard given that they sit next to each other on the committee everyday -- he wouldn’t have been surprised. Rockefeller has been fairly shouting that the insurance companies would take their impenetrable explanation of benefits forms and go home if the prospect of all those new premium- payers was jeopardized.

When word of Ignagni’s statement came out, Rockefeller said, “The industry stands today as the greatest impediment to real health-care reform,” adding that “the idea that anyone’s concern should be whether the insurance companies make enough money is absurd.”

At 6 feet 6 inches, thin as a pinstripe and lacking a reflex to race for a camera, Rockefeller has stepped into the void left by the death of Senator Ted Kennedy as the unapologetic liberal. In 1993 Rockefeller was an ardent but behind-the-scenes supporter of the Clintons’ sweeping health- care reform package, hosting the first closed-door strategy session at his Rock Creek Park estate but letting Kennedy take the lead.

Squandered Chance

The senator from West Virginia, who went to that poor state 45 years ago as a Vista volunteer and never left, is the skunk at the garden party as he pleads to the point of tears with fellow Democrats not to squander this once-in-a-lifetime opportunity to fix health care.

Mollycoddling the industry to stop doing what it shouldn’t have been doing anyway and rewarding it with a bonanza of new customers is a fool’s errand. Tough penalties for not enrolling in insurance made more sense when there was a safe alternative in the form of a public option. In an increasingly concentrated industry, where many states are dominated by a single insurer, a public option offering better coverage and lower premiums is the only way to keep insurers honest.

As an indication of how fearful Democrats have become of real reform, when Rockefeller forced a vote on the public option, they defeated it. In explaining his “no” vote, Baucus said it was because he knew a bill with a public program would eventually lose. So he decided to hasten that day.

Money Talks

It’s hard for the rest of the Senate to even hear Rockefeller, so overwhelmed are they by industry lobbyists becoming rich as Rockefeller. There are enough of them for every member to have six lobbyists to call his or her very own. Almost $400 million has been spent on advertising, lobbying and direct contributions to stop anything that would threaten their profits. With the Obama White House and many Democrats pulling back from the public option, they’ve succeeded.

But Ignagni may have just revived the public option by stiffing Baucus’s valiant effort to please her with a bill crafted without one on the eve of the vote. By showing that the industry is only a friend when it is getting everything it wants, she’s proved Rockefeller right.

(Margaret Carlson, author of “Anyone Can Grow Up: How George Bush and I Made It to the White House” and former White House correspondent for Time magazine, is a Bloomberg News columnist. The opinions expressed are her own.)

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To contact the writer of this column: Margaret Carlson in Washington at mcarlson3@bloomberg.net

Last Updated: October 14, 2009 21:00 EDT