Closer: Schumer Tinkers, a Public Option Looms

The on-again, off-again legislative odyssey of the public option has been filled with false alarms, red herrings, and dead-end breakthroughs. So the latest twist, Thursday’s news of a potential Chuck Schumer–engineered compromise that would create a national public option but allow states to opt out, could end up a forgotten blip a month from now.

But there are some very intriguing, if tentative, signs this could achieve the seemingly impossible balancing act that Democrats have been aiming for. Already, both Howard Dean and Ben Nelson—polar opposites in the Democrats’ intraparty public option debate—are indicating they could sign off on it.

This all comes just as the legislative process is entering its most precarious phase, with the Senate Finance Committee preparing to vote next week on a plan that—at least until now—would be directly at odds with the one approved this summer by the Senate Health, Education, Labor and Pensions Committee.

The process of merging those two bills—the Finance one, it has long been assumed, that would not include a public option, while H.E.L.P.’s does—into a unified bill has loomed as a hellish venture with no obvious solution.

That merged bill would then have to be reconciled with whatever emerges from the House—likely a bill with a more aggressive public option (i.e., one in which provider reimbursement rates are pegged to Medicare). This could be equally, if not more, brutal, particularly if the merged Senate bill doesn’t contain a public option—a bottom-line issue for House progressives, who have threatened to sink any reform plan that doesn’t include a “robust” government-run option for consumers.

And hanging over all of this is the reality that whatever bill the House-Senate conference produces will probably need a 60-vote supermajority in the Senate, with Republicans sure to filibuster and Democrats still apparently resistant to the idea of using the filibuster-bypassing reconciliation process to push a bill through the Senate.

Unlike other public option compromises that have been floated—like the “trigger” championed by Olympia Snowe, or Max Baucus’ beloved co-ops, both acceptable to conservative Democrats but reviled by the left— the opt-out concept actually has the potential to unite these deeply divided factions.

Conservative Democrats (and, perhaps, Snowe and one or two other Republicans) would be able to claim that they stopped a public option from being forced on an unwilling public, since any state would, for any reason, be free to ban the public option from being offered on its insurance exchange.

At the same time, progressives could credibly tell themselves that something reasonably close to their vision has been preserved. The key is that, under the compromise as it’s currently conceived, the default for all 50 states would be to participate. In other words, a state would have to take formal action—whether through a referendum, act of the legislature, or gubernatorial decree—to opt out.

This is enticing to progressives because most states probably wouldn’t opt out. Certainly most of the population-rich states—Democratic bastions like New York, California and Illinois—would participate, while (most likely) only a scattering of smaller, Republican-dominated states would opt out. This would potentially give the new public option the power-through-numbers that it would need to provide meaningful, cost-reducing competition to private insurers.

Plus, the thinking goes, leaders in the states that initially opt out would soon face enormous pressure from their citizens to reverse course, once the cost-reducing benefits of the program become clear. It’s worth remembering that, for all the controversy over the “public option” (a term whose definition is unclear to most Americans), there is wide and deep backing for the concept behind it: 65 percent of voters in a recent poll said they want the government to offer “a health insurance plan like Medicare that would compete with private health insurance plans.”

This explains how, for instance, Dean—who has said that any bill without a public plan is “less than worthless”—and Nebraska’s Nelson, a former insurance executive from a state with a major insurance industry presence, might both see potential in the opt-out idea.

That said, there’s still plenty left to be resolved. Conservatives like Nelson might insist on a different variation on the opt-out concept—one that starts out with no national public option but that would give states the option to create one. That might be a deal-breaking twist for progressives, since it would delay the implementation of a public plan and severely limit the number of people participating in it.

And even if a public plan is approved under the opt-out model, progressives might be overstating its significance. Even the most expansive, aggressive public option currently under consideration—the House version, with its Medicare rates—would allow only a relative handful of Americans to participate. Anyone with employer-sponsored coverage—the vast majority of insured Americans—wouldn’t be able to sign up for the public plan, even if he or she wanted to. To create a real public option, future reforms would be necessary.

Still, the opt-out idea has the feel of a workable legislative compromise.  And not surprisingly, Schumer seems to be the man behind it, having tweaked an idea first offered by Delaware’s Tom Carper, who is something of a public option skeptic.

Many Democratic senators (like, for instance, Jay Rockefeller) have loudly and forcefully advocated for a public option, refuting the G.O.P.’s talking points and railing against efforts to water-down it to the point of worthlessness. But none have taken such an aggressive and consistent role in trying to shape a workable compromise—one that would retain the basic integrity of a public option while actually securing those magic 60 Senate votes—as Schumer.

His maneuvering represents a fascinating mix of idealism and pragmatism. On the one hand, Schumer is simply fighting the good fight for a worthy policy idea. But, as is always the case with him, there is more to it than that. Schumer would also (very presumably) like to be the Senate majority leader, a spot that will open up at the end of next year if—as the polls now show he will—Harry Reid loses his reelection bid in Nevada. He can’t even informally campaign for the job, though, since any steps he takes would be construed as disloyal to Reid.

But if he can be the guy who delivers a public-option-saving compromise, it would be just as good: Not only would it win Schumer admirers on the left (in and out of the Senate), it would also show Democratic senators of all ideological stripes that he can break through even the most impossible legislative logjams—that he is, in other words, a natural Senate leader.

Just consider some of Schumer’s moves this year:

* In early May, when President Obama’s health care effort was in its early stages and before the contours of the public option debate were clear, Schumer sought to head off conservative fears by advocating what he termed a “level playing field” public option.

The basic idea: the public plan wouldn’t rely on taxpayer money, wouldn’t be able to set reimbursement rates at Medicare levels (as many liberals would prefer) and wouldn’t be managed by the same government officials who regulate the market. In other words, Schumer anticipated what has become the right’s main assault against the public option—the charge that it would have an unfair competitive advantage and would drive private insurers out of business.

* Over the summer, as it became clear the right was not open to any public option compromise, key Senate Democrats (and the White House) seemed to wobble on the necessity of a public plan and began exploring alternatives, such as Kent Conrad’s idea of nonprofit purchasing cooperatives. The left recoiled, and Schumer publicly promised that a real public option would be in the final bill.

* When Finance Committee Chairman Max Baucus finally, after months of plodding along, unveiled his attempt at a health care compromise (one that included the dreaded co-ops), Schumer offered his level playing field plan (which had already been approved by the Health, Education, Labor and Pensions Committee) as an amendment. A lively day of debate ensued, one that allowed Schumer to score points with the left by confronting the panel’s rejectionist Republicans while also earning praise from moderate Democrats (including Baucus) for trying to broker a good faith compromise. His amendment failed (as expected), but that hardly killed the public option, and the committee’s debate helped certify Schumer as one of its public faces.

* Now, with the Finance and H.E.L.P. Committee bills heading for a seemingly impossible merger, Schumer has stepped forward with the most intriguing compromise idea to date—a plan that would allow states to opt out of it. It stems from an idea floated by Delaware’s Tom Carper, which would have allowed states to join together to implement a public option, but is far more acceptable to public option advocates since it would create a national public option on day one. Most states, especially the biggest (and most Democratic) ones, probably wouldn’t opt out. Conservative Democrats (like, say, Nebraska’s Ben Nelson) could conceivably go along with it because they’d be able to tell their constituents that they saved their state from the public option—if the state chooses not to participate.

To put it Schumeresquely, there will be other "twists and turns" in the public option saga before it’s over. But Schumer has claimed the quest for a compromise as his own—and if he can deliver, the long-term payoff for him could be considerable