The Last Worst Hope for Health Reform

If Senate Democrats seem to be in endless negotiations about health care, there's a reason: They only have one shot at a sweeping reform bill. If they don't get enough support for it, there's no good fallback route.

Even as his administration is dealing with fallout from the Bush-era war on terror, including a possible Justice Department probe of prisoner abuse, President Obama on Monday renewed his push for action on health care reform. "We are going to get this done," he said.

The House plans to preview its version of health reform today – Tuesday. The Senate has fallen behind schedule as Finance Committee chairman Max Baucus tries to produce a bill backed by Iowa Republican Chuck Grassley. But Obama is ratcheting up the pressure and reportedly told Baucus he wants a bill by the end of the week.

The liberal fantasy is that Democrats should use their 60 votes to break any potential filibuster and muscle through the bill they want, or pass health reform under a Senate "reconciliation" procedure that requires only a simple majority of 51 votes.

Both approaches are problematic. The filibuster-proof 60 votes are only there if you count two ailing senators who haven't been in the chamber for weeks (Edward Kennedy and Robert Byrd). Furthermore, ending a filibuster could take as long as a week, and require the presence of Kennedy and Byrd for multiple procedural votes.

Even assuming the pair could be physically present to vote, keeping all 60 Democrats together on health reform is a challenge. Moderates and conservatives have expressed concerns about the cost of health reform and a proposed public insurance plan. Liberals, meanwhile, say the bill must include the public plan.

The failsafe is reconciliation. Yet if Democrats resort to that, their hopes for comprehensive reform are likely to be dashed. It's no wonder Baucus and Senate Majority Leader Harry Reid keep urging Republican senators to stay engaged, to keep negotiating.

Reconciliation was designed in 1974 as a housekeeping procedure to align federal budget numbers with actual spending. But it quickly became a vehicle for major policy initiatives (the Commerce Committee once put its entire agenda into it), giving rise to the 1986 "Byrd Rule." Since then, reconciliation bills have been limited to provisions deemed germane to raising and spending money.

The Congressional Budget Office "scores" or analyzes provisions that affect federal revenues. So that's the first threshold for inclusion in a reconciliation bill. But not all provisions scored by CBO would be cleared. Those decisions lie with Alan Frumin, the Senate parliamentarian, and they are complicated.

Bob Dove, a former Senate parliamentarian, says parliamentarians consider how much an item costs or saves, and judge whether its budget impact is outweighed by its policy implications. "You get involved in motives. It's tricky. It's horrible," he told me. "You get yelled at because of it. You make enemies because of it. But that's the rule."

Like many others, including Frumin's office, Dove declined to speculate on what particular health proposals might live or die under reconciliation. But he did mention an instructive example from the past. "You can put a provision in a reconciliation bill that says the federal government shall not fund any abortions. That will save money," he said. "But it's not in there to save money. It's there to implement a social policy."

Using that as a guide, let's look at the questions a parliamentarian might ask if Senate Democrats attempt to pass health reform inside a reconciliation bill:

The public insurance plan. While Obama says he has not drawn any lines in the sand about what he will and won't accept in a health bill, he often says a public plan is the best way to control costs and keep private insurers "honest." By keeping down prices generally, a public option could help the government save money on subsidies and reimbursements -- $150 billion over 10 years, according to a preliminary CBO analysis obtained by The New Republic.

That's a substantial fiscal impact, but the policy goals are just as substantial: to make sure everyone can buy coverage at a reasonable rate, even if they are sick, jobless or working for a firm that doesn't offer insurance. The public plan also would require a new government body to decide who is eligible and set other standards. It's not clear whether that would get a thumbs up under reconciliation.

That said, a new child vaccine program did make it through the Senate on a reconciliation bill in 1993. The program, complete with instructions on eligibility and negotiations with manufacturers, was ruled germane after intense line-by-line negotiations, according to a source who was involved in the process.

The health exchange. This would allow people to comparison shop for insurance offered by private companies and, if Obama gets his way, the competing public plan. The exchange would be organized by the government, and the government might set standards for what must be offered. It's not clear what parts of this, if any, would be permitted under reconciliation.

Taxes and subsidies. Democrats want to help small businesses and low-income people pay for insurance. The primary impact of subsidies to both groups is fiscal, as are the tax changes that will be made to finance these and other elements of health reform. Likely not a problem under reconciliation.

New regulation. Part of health reform may involve new regulations on the private insurance industry, such as a requirement that insurers must cover people with pre-existing conditions. Such regulation has no revenue impact on the federal treasury so it's hard to see how it could be shoehorned into a reconciliation bill.

Employer and individual mandates. Some lawmakers want to require that employers offer health insurance or participate in the exchange. Also under consideration is a requirement that individuals buy coverage. If tax incentives or penalties are involved, such a mandate might be deemed relevant to reconciliation.

Changes in care delivery. Obama wants to stop paying doctors and hospitals for each test and procedure they order or perform. Instead, he wants them to be rewarded for preventive care, best practices and other means of keeping patients healthy. Presumably this would reduce costs for the federal Medicare plan, but it's not clear yet that CBO will analyze savings in areas such as preventive care.

Comparative effectiveness research. Democrats want the government to study what treatments work best and disseminate that information to health providers more quickly than they get it now. The goal is to cut back on expensive treatments that don't work. That would save money for Medicare as well as in the health sector in general. This may be impossible to score, however, and in any case it involves far more than money. The research would have to be overseen by a board. And there would have to be language addressing concerns such as whether plaintiffs or defendants would be allowed to use the treatment guidelines in malpractice suits. So there are several elements of uncertainty about the fate of this initiative under reconciliation.

The bottom line, from Dove: "This route could be a nightmare" for health reform. The bottom line for Democrats: True, but it could be their least nightmarish option if the choice comes down to fragmented, muddled, limited reform or no reform at all.