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Holy Cow, Is Congress Getting Serious About Real Health Care Reform?

There is still no guarantee that a progressive bill will end up on Obama's desk. But the chorus in favor of the public option is getting louder.

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In its annual survey of the nation's health insurance industry, released in January, the American Medical Association found that just one or two companies dominate in 94 percent of 314 metropolitan markets. "Without rivals to compete against," said AMA President-elect James Rohack, "a large health insurance company can take advantage of patients by raising premiums and dictating important aspects of patient care without fear of losing business."

To prepare for the battle over reform, health industry lobby groups had hired more than 350 former government staff members and retired members of Congress to lobby for them; two of them are Baucus's former chiefs of staff. Since 2007 the insurance industry and HMOs have spent $51 million in campaign contributions, targeted disproportionately to key members of the Congressional committees drafting health reform bills. They have also spent at least $191 million on lobbyists, according to the nonpartisan Center for Responsive Politics. During the first half of this year, the insurance and HMO industry increased its lobbying expenditures and campaign contributions to some $700,000 a day.

President Obama hasn't shied away from criticizing insurance companies, either. In his September 9 speech to Congress about health reform, Obama turned a corner: he gave healthcare reform activists the signal to accelerate their grassroots push for a bold plan that includes a public option and requires insurance companies to act more responsibly. Obama took aim at the right wing, calling its claims "a lie, plain and simple."

Equally important, Obama finally took off the gloves and came out swinging against the insurance industry as the major obstacle to significant reform. "As soon as I sign this bill, it will be against the law for insurance companies to drop your coverage when you get sick or water it down when you need it the most," Obama declared.

Obama's speech, and HCAN's burgeoning protest movement, emboldened Organizing for America (OFA), the group created to organize Obama's former campaign volunteers. Once in office, Obama moved quickly, announcing one ambitious legislative objective after another. But instead of launching a parallel strategy to mobilize Obama's campaign supporters, OFA failed to keep up. Some critics argued that Obama had put OFA in a political straightjacket by folding it within the Democratic National Committee, making it difficult to confront conservative Democrats. Many Obama campaign activists grew restless, hoping to participate in organizing efforts to push a progressive policy agenda.

In September a number of OFA staffers and key volunteer leaders threatened to quit if OFA didn't use its potential influence by encouraging members to challenge Democrats who refused to support Obama's healthcare plan. In response, OFA directed its members to participate in the protest rallies across the country, and it began targeting conservative and moderate Democrats. On October 20, local OFA groups generated 315,023 calls to Congress pushing healthcare overhaul, tripling the original goal of 100,000.

The Insurance Lobby Miscalculates

In response to escalating criticism, the insurance industry miscalculated. After pretending to cooperate with the Obama administration and Democrats, the industry's CEOs and lobbyists double-crossed their onetime political allies by publicly attacking a compromise bill crafted by Baucus.

What triggered the industry's about-face was a Congressional Budget Office report scoring the Senate Finance Committee proposal. The CBO estimated that it would cost $829 billion over the next ten years -- less than the $900 billion President Obama had suggested -- and would reduce the deficit by $81 billion. The industry wasn't happy with even the weak provisions in the proposal that would "contain costs" -- which the insurance companies translate into "reduce profits." Nor did it like that the Senate Finance Committee adopted amendments reducing penalties for those who fail to buy private insurance.