The Schumer Option: A Short-Term Winner

We still don’t know for sure what the final Senate health care plan will look like, but the most likely resolution to one of the stickiest issues has been obvious since early May.

That’s when Chuck Schumer outlined his own compromise vision for an optional government-run insurance package. His proposal, a “level playing field” public option that would be subject to the same rules that govern private insurance plans, was vintage Schumer, reflecting his canny grasp of the various political calculations guiding his colleagues’ thinking.

There’s a catch, though: For all of its present-day political savvy, Schumer’s solution poses a potential long-term political risk for Barack Obama and the Democrats if they do ultimately embrace it.

Schumer was correct to discern that a public option in its purest form—one immune from any profit motive, able to partner with Medicare, and empowered to use its large market share to drastically lower costs—would be hugely problematic in the quest to reach 60 votes (the number needed to cut off the inevitable Republican filibuster) in the Senate.

Simply put, too many Democratic senators—even though there are 60 of them, on paper—represent constituencies that require them to be sensitive to the familiar G.O.P. attacks against “socialized medicine” and any form of government-run health care. Signing off on a pure public option would leave them virtually defenseless back home. Thus, keeping them all in line would be just about impossible.

And that, in turn, would be devastating, because the inclusion of a pure public option would eliminate any chance of attracting even a single Republican vote for the final plan—meaning that Democrats would then need all 60 of their votes to stay loyal on the filibuster vote. This was asking too much.

At the same time, Schumer recognized the supreme importance his own party’s base had placed on having a public option in the final plan. To liberals, it had become a litmus test. The single payer system that, in a perfect world, they would like to see enacted just wasn’t politically feasible, they were willing to concede. But an optional single payer system, one that would allow Americans to choose for themselves whether they wanted private or public insurance? That would be the next best thing, and liberals weren’t going to be happy if this once-in-a-lifetime reform effort didn’t yield at least that.

So it was against this backdrop that Schumer, with Majority Leader Harry Reid’s blessing, went to work and drew up his alternative, the “level playing field” public option. In essence, it mixes the basic concept and nomenclature that the left likes with concessions to the fears that party moderates have of the “socialized medicine” tag. It would be a nonprofit publicly run insurance plan that would lack the powers of a Medicare-style program to drive the market and bargain for lower rates.

Schumer’s plan became even more politically fashionable when North Dakota’s Kent Conrad began pushing his own plan, one that would eliminate the public option label altogether in favor of nonprofit cooperatives—a concept that immediately offended the left. “This is a big mistake,” Howard Dean, a leading public option advocate, declared. “These co-ops will be very weak.”

And with that, Schumer’s plan was exactly where he wanted it to be: smack in the middle of both extremes—less radical than the pure public option (and thus more appealing to moderates and even maybe a few Republicans) but not as watered-down as Conrad’s (and thus a potentially acceptable compromise for liberal public option backers). Not surprisingly, when the Senate Health, Education, Labor and Pensions Committee passed its plan last week (which will eventually be reconciled with whatever emerges from the Finance Committee), it included Schumer’s level-playing-field vision.

When it comes to rounding up Senate votes for a health care plan, it’s tough to argue with Schumer’s strategy. As much as the left would love to see a stronger public option, Schumer seems to have identified the limit of what they can actually obtain 60 votes for. He’s quite good at this and, ordinarily, that’s a very good thing for Democrats.

But health care is different. This is an issue that has dominated the American political conversation for decades, and the volume has never been higher than it has been during the first six months of Obama’s presidency. Voters don’t just want a piece of legislation to be passed and signed into law; they are expecting that they will feel a significant (and positive) impact from that legislation—especially in light of all they have heard about how much it will cost.

This casts Schumer’s compromise in a different light, and creates a new standard for measuring its political wisdom: How will voters feel about it in two years? Voters forget about most bills that pass Congress even before they reach the president’s desk. Not so on this one. If, two or three years from now, voters don’t see increased access to health care and lower costs, they will be very receptive to Republican claims that the plan was a gigantic, massively expensive boondoggle—that Obama and the Democrats fumbled on the one issue that, more than anything else, they promised to deliver on.

The public option feeds directly into this. A full-scale, Medicare-style public option would radically alter the health care market. An independent estimate suggests it would be 20 to 30 percent cheaper than current private policies. And its presence and popularity would force those private insurers, for the sake of their survival, to lower their own costs. Insurance companies understandably detest this and have, along with Republicans, succeeded in making a real public option seem politically risky. But if one were to be enacted, voters would have no trouble recognizing two or three years from now that the system had been changed.

And what about the level playing field plan? As Ezra Klein has written, it would be “simply another insurer run by the government and it wouldn’t have the cost-cutting impact of a real public plan. At best, it would be marginally cheaper than existing private plans, with a slight savings coming from reduced administrative costs. It might help insure more Americans, but would they feel the system has been reformed in a meaningful way? If they don’t, they will be far more likely to listen to the G.O.P.’s attacks on Obama in 2012.

Congress, and the Senate in particular, is built on compromise—something Schumer understands as well, if not better, than most. But it almost seems as if Democrats are in a catch-22 right now. Schumer has identified what may be the only way to get a bill through the Senate, something that is absolutely essential for the White House and Democrats in the short term. But the compromises required to get the bill through may just be what causes Democrats to look back a few years from now and say, “I wish we hadn’t done that.”

The Schumer Option: A Short-Term Winner