Democrats Find Rallying Points on Health Reform, but Splinters Remain

By Shailagh Murray and Paul Kane
Washington Post Staff Writers
Monday, August 3, 2009

Democrats leave town for the August recess with frayed nerves and fragile agreements on health-care reform, and a new bogeyman to fire up their constituents: the insurance industry.

With the House already gone and the Senate set to clear out by Friday, the terms of the recess battle are becoming clear. Republicans will assail the government coverage plan that Democrats and President Obama are advocating as a recklessly expensive federal takeover of health care. And Democrats will counter that GOP opposition represents a de facto endorsement of insurance industry abuses.

"We know what we're up against," House Speaker Nancy Pelosi (Calif.) told reporters on Friday. "Carpet-bombing, slash and burn, shock and awe -- anything you want to say to describe what the insurance companies will do to hold on to their special advantage."

Although Pelosi won a significant victory last week when the Energy and Commerce Committee approved the House bill, setting up a floor debate after Labor Day, conservative Democrats were able to demand that negotiators weaken the government-plan provision. The uprising, which lasted for several days, suggested that the public option is growing increasingly vulnerable even as a consensus forms around other reform policies.

Republican leaders have pledged to use town halls, ads and other forums to intensify their assault on the Democratic-led reform effort. "I think it's safe to say that, over the August recess, as more Americans learn more about [Democrats'] plan, they're likely to have a very, very hot summer," House Minority Leader John A. Boehner (R-Ohio) said.

In the Senate, a bipartisan coalition of Finance Committee lawmakers is backing a member-run cooperative model as an alternative to the public option. But Republicans are beginning to push back against that cooperative approach, too.

The latest critic is Sen. John McCain (R-Ariz.), who on Sunday compared insurance co-ops to Fannie Mae and Freddie Mac, the government-backed mortgage giants that played prominent roles in the housing crisis. "I have not seen a public option that, in my view, meets the test of what would really not eventually lead to a government takeover," McCain said on CNN's "State of the Union."

Pelosi and other Democrats have countered that Republicans are seeking to protect a health insurance industry that is their business ally, not so much from a government insurance option, but from the broad industry reforms that enjoy public support, including the elimination of coverage caps and the practice of denying coverage to those with pre-existing conditions. The White House also wants to steer the debate toward insurance reform, as it is easier to digest than long-term cost control, which is another chief objective.

"How you regulate the insurance industry is as important to health-care reform as controlling costs," said White House Chief of Staff Rahm Emanuel. The public plan, he said, is one of an array of measures intended to change industry behavior.

As the rhetoric against the industry heated up, the leading insurance trade group issued a statement Thursday calling for lawmakers to cool down their criticisms and redouble efforts toward "bipartisan health-care reform." Robert Zirkelbach, spokesman for America's Health Insurance Plans, defended his industry, saying it had already proposed many of the changes that Congress is seeking, including those involving pre-existing conditions and ratings based on health status and gender.

Despite the sparring, House and Senate Democrats and three GOP Senate negotiators have reached broad consensus on the outlines of reform. Lawmakers generally agree that individuals must be required to buy health insurance, that Medicaid should be significantly expanded, and that tax increases, in some form, will be required. The final bill also could bring about some of the most significant changes to Medicare since the program was created in 1965.

But the rebellion from fiscal conservatives on the Energy and Commerce Committee last week served as a political wake-up call for Democratic leaders. With enough votes on the panel and on the floor to sink reform legislation, the Blue Dog Coalition forced Pelosi and Emanuel into concessions that made the government plan similar to private health insurance, sparking a new fight with House liberals.

Sensing that the Blue Dogs had dug in for a prolonged fight, Pelosi and Emanuel gave in to most demands in order to get the legislation moving again. They essentially decided that it was better to pick a fight with their liberal flank, where Pelosi remains popular and where loyalty to Obama is strongest, particularly in the Congressional Black Caucus.

Despite threats from almost 60 progressive House Democrats -- who outnumber the Blue Dogs -- Pelosi defended the compromise, saying it was similar to one backed by Sen. Edward M. Kennedy (D-Mass.). Pelosi predicted that the liberal wing would fall in line because the legislation is so important to them.

"Are you asking me, 'Are the progressives going to take down universal, quality, affordable health care for all Americans?' I don't think so," Pelosi told reporters Friday, breaking into laughter at the question.

Just as troublesome as the internal House divisions is the burgeoning distrust among House Democrats, their Senate counterparts and the White House.

Pelosi acknowledged that "there are concerns" in her caucus that the White House, namely their former colleague Emanuel, takes House Democrats for granted. House lawmakers are being encouraged to pass the most liberal bill possible, she said, while the White House works on a bipartisan compromise with a select group of senators.

"It's no secret," Pelosi said, "that members sometimes think: 'Why do I always read in the paper that they're checking with the Finance Committee all the time? What does that mean, that they just want to know what's happened with the Finance Committee? What about the [Senate health] committee? What about our committees over here?' "

The six Senate Finance Committee negotiators have burrowed in for another six weeks of talks, having set a Sept. 15 deadline for producing a bill. The group includes an array of small-state senators with little national prominence who have proven surprisingly resistant to pressure from their party leaders and the White House.

Although the House bill and the Senate Health Committee version have attracted no Republican support, the Senate Finance Committee coalition includes Sens. Mike Enzi (Wyo.) and Charles Grassley (Iowa), both Republicans, along with moderate GOP Sen. Olympia Snowe (Maine). And the lead Democratic negotiator, Finance Committee Chairman Max Baucus (Mont.), is a moderate who has broken with his party on numerous bills co-authored with Grassley.

The closer these negotiators move to striking a deal, the more fraught the discussions become by issues of trust and political will. Among Republicans, the pressure is especially acute. All three GOP senators fear they will be sidelined once the bill is approved at the committee level, with their names invoked to demonstrate bipartisanship even as they're left with no say over the final product as it is meshed with the Senate health panel's version and then ultimately with the House bill.

For Republicans, a prime concern is that Senate Majority Leader Harry Reid (Nev.) will abandon the Finance Committee bill and force legislation to the Senate floor using budget rules that would protect against a Republican filibuster. Even advocates concede that the option is highly risky and that it would vastly limit the policy scope of the bill. For instance, Senate budget experts say most insurance reforms would have to be sidelined.

Treasury Secretary Timothy F. Geithner said Sunday that the administration would consider all options. "Ideally, you want to do this with as broad a base of consensus as possible," he said in an interview on ABC's "This Week." "But people on the Hill are going to have to make that choice: Do they want to help shape this and be part of it, or do they want this country, the United States of America, to go another several decades [without reform]?"

Reid said he already provided the Republicans with some assurances, and added, "I'll do more if necessary." He said of GOP concerns, "I don't blame them." And he added that, considering the political realities of the Senate, with its large number of moderate Democrats, health-care reform would have to gain significant bipartisan support to cross the finish line.

"I sure hope we can get a bipartisan bill; it makes it easier for me to go home," moderate Sen. Mary Landrieu (D-La.) told the Democratic caucus last week, according to Reid.

"We all feel that way," Reid added.

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