Sunday, February 21, 2010

Now Reid Jumps Aboard Public Option/Reconciliation Train; But Can This Happen Mechanically?

By FireDogLake's David Dayen FDL

You may have seen this, but Harry Reid sent out this statement:

Senator Reid has always and continues to support the public option as a way to drive down costs and create competition. That is why he included the measure in his original health care proposal. 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.”

Basically, he’s saying that he’ll put the public option up to a vote if he uses reconciliation. And the going belief is that they’re using reconciliation.

But I want to tease out the one clause here: “that can overcome procedural obstacles.” Greg Sargent alludes to this in his write-up of this development: “senior Senate aides still think there’s a procedural obstacle in their path: They insist that in order for them to pass a fix to their bill via reconciliation, the House must pass it first — something House leaders oppose.”

Let me try to explain why this could be a problem. A reconciliation sidecar would attempt to basically amend the Senate’s health care bill with a series of fixes to allow it to pass in the House. The initial reconciliation instructions for any health care bill require that whatever comes through reduces the deficit by $1 billion. And of course, all elements have to have a budgetary impact.

Here’s where it gets interesting. If the Senate tries to pass the reconciliation bill first, they would be making changes relative to current law, rather than relative to their own Senate bill. You cannot amend something that doesn’t exist as a law yet. So if they, for example, want to raise the affordability credits in the bill, which the House is asking for, CBO would treat those credits as a whole, and all of them would have to be offset in the reconciliation bill. In other words, instead of raising the credits by, say $20 billion, and having to offset that, you would have to offset the entire $300 billion or so of credits. And that’s nearly impossible, without a financial transactions tax or some new pot of money.

Some parliamentary experts say that the House could just pass the reconciliation bill first, with instructions that basically say “treat this as if the Senate bill has passed,” what could be called a “self-executing” provision. But the House may not be willing to do that, mindful of their lack of trust in the Senate to do the right thing. If they refuse, you can’t do a heck of a lot in reconciliation, at least the way some on the Senate side see it.

And that would include the design of the insurance exchanges, along with the public option which currently does not exist therein. Even though the public option is a net cost reducer, it would mean changing the exchanges, and until the Senate bill passes there are no exchanges.

Now, none of this is definitive. With parliamentary rules like these, where there’s a will, there’s a way. But this would explain some of the reticence on the part of the Senate, which Reid appears to have waved away with this announcement. What this signals more than anything is that he’s willing to have staff and parliamentarians work hard to figure out a solution. Until now, the Senate had been relying on the difficulty of doing just that to try and force the House to pass the Senate bill and get things over with. But that’s not going to happen. (It may not even after the fixes.) And so more than anything, this shows resolve on the part of the Senate leadership to find a solution.

As for how this reflects on the public option, I think Ezra Klein’s reporting is probably accurate. The letter is excellent politics, putting Senators in an impossible position; they almost have to sign on publicly. But they feel free to do so as long as the total number never hits 50. At that point, it becomes a political problem, not least of which because the House may not have the numbers to pass a bill with it even though they did the last time. The answer to why is simply “Because of Bart Stupak.” His 10-12 votes that he would take on the abortion funding question, which cannot be fixed through reconciliation, cannot be won back with members who voted no before if they include a public option.

So I don’t know what this means for the future of health care reform; but certainly, momentum has its own way of rolling forward, and getting every Senator – and eventually, every House member – on the record is a positive thing.

UPDATE: Arlen Specter has now signed the Bennet letter, putting the number in favor of the public option at 21. 34 have agreed to use reconciliation, with 5 maybes.