Behind Harry Reid's Bid for a Public Option

As the battle to shape the health-care reform bill comes down to the wire, maneuvering in Washington is intensifying enormously. Politicians are strategizing to get the votes they need, while lobbyists and other interest groups are scrambling either to maximize what they can get—or minimize the costs and the damage—as push comes to shove over what each bill will contain before the Senate and House move into final conference negotiations.

Now comes a surprise announcement from Senate Majority Leader Harry Reid (D-Nev.) that the Senate health-care reform bill he'll put forward will include language to create a government-run insurance option—with an provision to allow states that don't want to sign up for the public plan to "opt-out" of it.

"While the public option is not a silver bullet, I believe it's an important way to ensure competition and to level the playing field for patients with the insurance industry," Reid said on Oct. 26. He said that the bill would be sent to the Congressional Budget Office for a required assessment of its fiscal impact before being debated on the floor. Reid stopped short of saying he had the 60 votes needed to thwart a Republican filibuster, and it's not clear that he will have them by the time the bill reaches the floor.

However Reid's math works, his support marks a surprisingly strong return for the public option and is a much more significant move than many were expecting as recently as a week ago. Most had anticipated that Reid would propose the far weaker "trigger" option that Senator Olympia Snowe (R-Me.), the only Republican to vote for any of the five bills pending in Congress, has been pushing.

Snowe: "I am deeply disappointed"It's a high-risk, high-reward strategy. There are several schools of thought in Washington as to what Reid is up to—and what will come next. In a note to clients today, Rick Weissenstein, health-care analyst with Concept Capital's Washington Research Group, said: "It appears that Reid's plan is several votes short of 60 at the current time."

Reid may now have lost the backing of Snowe, "I am deeply disappointed with the Majority Leader's decision to include a public option as the focus of the legislation," she said in a statement.

One prominent theory is that while Reid doesn't have all the votes he needs among the Democrats, he is trying with this maneuver to increase the pressure on recalcitrant party members to go along. Liberal Democrats have been very vocal in the last week or so that the public option has the support of all but a handful of the 58 Democrats and two Independents in the caucus, so why should a vast majority back down and accede to the wishes of the much smaller group? Reid's move, in this sense, is a dare to those who aren't yet with him on the public option; Will they be willing to buck their party over this issue—when he's giving those who don't agree with it an out that can be taken up by states that oppose it? Enormous pressure is being applied behind closed doors to cut a deal, but no one really knows yet whether that can successfully recruit conservative Democrats who have been worried about the public plan.

Another possibility, says Daniel Clifton, the head of Washington policy analysis at Strategas Research Partners, is that some Democratic senators who have been most publicly skeptical of the public plan because voting for it would give them political problems at home—think Blanche Lincoln (D-Ark.) or Ben Nelson (D-Neb.)—have quietly promised Reid that they will vote for it, but won't say so publicly yet. "They'll wait to review the bill, to see how the Congressional Budget Office reacts, but they may have given him the signal" they will back it in the end, says Clifton.

Unions demand robust public optionA third prospect has to do with the Democrats' general need—and Reid's, specifically—to keep unions on board as they head into the final fight over health care and into next year's elections. Labor officials in recent weeks have made it increasingly clear that they want to see a bill with a public option. But they don't want it to rely on taxing the so-called "Cadillac ", high-cost insurance plans, which many union members hold, to pay for expanded health-care coverage.

The Democrats know they can't afford to lose labor's support. They have counted on labor for much of the grassroots backing for health-care reforms: Unions have been extremely active in pushing for it and even running advertising. Labor has also made it clear that health-care reform is a top priority that they expect to get from the Democrats they worked so hard to elect last fall.

But with the passage of the Senate Finance Committee bill—which not only lacked a public option, but relied heavily on taxing the Cadillac plans for financing—the unions have become very unhappy. They've increasingly raised questions about whether they would back a bill along those lines, or even support Democrats who vote for what labor considers watered-down options. AFL-CIO President Richard Trumka made this clear in a press conference Monday morning. "We cannot be in favor of reform just for reform's sake," he told reporters. "The fight now is over what reform will look like."

A Democratic team "held hostage?"Citing a recent Washington Post poll, Trumka argues that the "American public overwhelmingly supports the public option. We need a robust public option that reduces premiums and keeps insurance companies honest by ensuring competition." He emphasized that the unions aren't backing down. Over the last two weeks, he says, over 100 AFL-CIO leaders have come to Washington and held over 100 meetings with congressional members or staffers. They also sent some 42,000 letters and made thousands of phone calls. Together with other unions leaders, they are planning "a massive day of action" to take place on Nov. 5 to lobby for the health-care reforms they favor.

Trumka says Reid's plan "is a step in the right direction." But it's not enough and the unions will continue fighting for a more substantive public option.

Andy Stern, the head of the Service Employees International Union, in an article in the Huffington Post, made the point even more forcefully: "Will the Democratic team be held hostage by a handful of conservative senators, who are willing to deny their teammates the right to even vote for a truly affordable health-care plan? Are they willing to thwart the rest of the caucus, and most importantly, what the vast majority of Americans want?," he wrote.

Which leads to another theory: Reid may not have the votes for the public option. But to keep labor on board in the health-care fight—and to help with his own reelection campaign, which is so far going poorly—he may be pushing for a public option even if he can't ultimately get one passed. Democrats could then take up fallback options such as an "opt-in" proposal or a trigger-based public plan. "The unions may have told him that if he doesn't put up a public plan, they won't help him," says Clifton. Reid can put it forward and push for it. If he doesn't win, he doesn't win. But, Clifton adds, "at least he can tell them he's tried."

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