Democrats Risk Electoral Disaster If They Drop the Public Option

If the Democrats bend to the demands of the industry and the Republicans, Obama and congressional Democrats could find themselves in several years explaining how they enacted “reforms” that bully moderate-income Americans into buying over-priced health insurance, fatten the industry’s profits and fail to achieve any meaningful cost controls.

Such an outcome could be catastrophic to the Democratic Party’s future and to the concept of progressive governance. Yet, some members of the Senate Democratic leadership appear to heading in that direction, wanting to portray pushing through some bill – even one without a public option – as a victory.

As the legislation stands now, many of the key features that hold some promise of helping consumers – such as the “exchange” where individuals and small business would shop for the best product – won’t even take effect until 2013. That means that Americans now facing the crisis of no health insurance won’t get much help for another four years, if then.

After the long political fight over health care, many of these hard-pressed Americans will suddenly realize that they have been left to the tender mercies of the health insurance industry until after the next presidential election when another person, possibly a Republican, could be in the White House.

By contrast to the four-year phase-in for these relatively modest reforms, the Medicare single-payer program for senior citizens was signed into law by President Lyndon Johnson on July 30, 1965, and was up and running less than a year later.

Republican Attacks

The implementing delays mean that in both 2010 and 2012, Republicans will be free to make the truthful case that the Democrats – despite their promises – had accomplished little to help the American people on health care.

Already, Republican senators are using the talking point that the four-year delay is part of a budgetary trick to make the bill appear cheaper over 10 years than it would be if its key features took effect quickly.

Even when those new features do appear, Americans may find themselves coerced by the government into buying unsatisfactory plans from the same small group of giant insurance companies – essentially a cartel – that have little incentive to undercut one another on prices. It will be the Democrats who will be blamed for the fines on the uninsured.

The Democrats would not be much better off if Sen. Olympia Snowe of Maine, the one Republican who voted for the Baucus bill in the Senate Finance Committee, has her way. She wants the public option included only as a standby provision with a trigger if “affordable” plans do not materialize.

But the insurance exchanges won’t open until 2013, so it may take years before any trigger would be pulled. At minimum, the industry would have earned a lengthy reprieve.

And by the time, the exchanges have a chance to be tested, Congress and the White House could be in Republican hands. If that’s the case, the Republicans might well undo even the triggered public option. Unlike the Democrats, the Republicans would surely not worry about ramming their preferred policy through the Congress.

On the other hand, if Congress enacts a public option now, it presumably could be implemented at least as fast as Medicare, especially if it were piggybacked onto the existing Medicare bureaucracy. That would enable Democrats to show they had accomplished something beneficial for the public before voters go to the polls in November 2010.

By 2012, if the CBO predictions of substantial savings prove true, Obama could campaign for reelection on the basis that he had improved the welfare of the American people -- and the budget outlooks for government and business.

The loser in that scenario would be the insurance companies. Their plight might not be as dire as the Lewin Group predicted, but they probably would not be celebrating the windfall profits from the combination of coerced consumers and government subsidies.

Given those prospects, it’s hard to understand where Democratic leaders see the political or policy upside of selling out the public option.