"When history calls . . ." we'd better hope Olympia Snowe is not the only one listening. Snowe was primarily responsible for weakening the stimulus, and now she's in a position — because that's where the White House wanted her — to do similar damage to health care reform.
Ms. Snowe was the center of what Krugman called the "destructive centrists" whose demands on weakening the stimulus bill led to the firing of 40,000 or so teachers and thousand more state workers by stripping state budgets of a desparately needed federal rescue.
So, we have Sen. Snowe to thank for allowing the states to become dozens of anti-stimulus time bombs that are still going off, as they cut spending, raise taxes and lay off hundreds of thousand of workers tied to those budgets.
Now she's become a major obstacle to fixing the abysmal Baucus health bill, and so far she's staked out positions that, if honored, will leave the Democrats with a bill no one should vote for unless they're hoping to earn the contempt of the American voters. Let's just describe the minefield she's created. . . .
1. She's tanked the public option so far. Except for insurance reforms (and she's undermined those) that's about the only widely popular provision in the packages. The right to choose a public option is supported by huge majorities of Democrats, large majorities of independents and strong pluralities of Republicans even in red states. People want the choice of a public option because they don't trust the private insurance industry. It's hard to imagine a clearer mandate from the public.
2. She can't seem to accept that her "trigger" has already been pulled. The insurance industry has already pulled the trigger by doubling insurance rates in the last decade. And under the Baucus bill, AHIP just told us that they plan to increase insurance premiums by another 110 percent by 2019.
And she's incoherent about how a trigger would even work. She's said that if a public option were triggered, it should be available immediately to consumers. But how could that occur if the Public Option were not already functioning, already had providers lined up and rates (Medicare or negotiated) already settled, and admininstrative systems already operational? Does she mean that that people should be allowed immediately to sign up for Medicare?
3. She worked to seriously undermine the mandates that allows risk pooling to work. She's responsible for keeping a true employer mandate out of the Baucus bill, instead limiting employer contributions to pool costs only to cover subsidies for low income folks, a design that everyone says discourages employers from hiring low income workers. And with Schumer's help, Snowe weakened the individual mandates by minimizing and slowly phasing in penalties for non-compliance.
Weak mandates means millions of uninsured consumers will opt out of coverage — they'll be left uninsured, while those who stay in the exchanges will face higher average premiums because of the dilution of risk sharing. To the insurers and Wall Street, that looks like a death spiral, so it's no wonder insurance stocks tanked yesterday.
4. She opposes efforts to pay to improve affordability. While claiming to support making insurance more affordable, she opposes the competitive and revenue means to make it so. She opposes giving consumers the choice of a public plan alternative. She opposes the House surtax to raise revenues for greater subsidies. She supported efforts to raise the impact of the high-end insurance exise tax. Where does she think the money will come from to pay for expanding subsidies?
Maybe it was inevitable, but it seems the Democrats have created a terrible dilemma for themselves. They're 60-member caucus includes unprincipled opportunists and narcissists like Lieberman and Bayh, and not too bright bulbs like Ben Nelson. The leadership assumes it must have Snowe and/or Collins to help drag these anchors off the bottom. But Snowe has offered nothing to help them, and she too will be an anchor.
Bernie Sanders is right. Schumer is right. Harry Reid can change the dynamics by fixing the Baucus bill in the merger process. Put in the public option, fix the mandates, accept some surtax dollars to improve the subsidies, and so on. Then make the other side find 60 votes to strip these solutions out. But Reid shouldn't stop there.
The Republicans (with Fox help) and the insurance industry will now savage the bill and frighten seniors in the process. The Democrats need to do something extra to strenghten Medicare — e.g., add dental — and reassure seniors that their benefits will be improved, not stripped to cover the uninsured. Make your deals with patients, with AARP, not PhRMA.
I think that's the way out of this mess. But I'm afraid everyone Harry Reid invites into his little merger meetings will be demanding he do the opposite. And our friend Dodd will be sent out to console us that he didn't get everything he wanted, but gosh, we'll get a chance to amend the bill on the floor, just like FISA. If Reid listens to that crowd, he'll lose the party, not just his seat.
Update: Like many Republicans, Snowe's core instinct is to remove/diminish the role of government, and for some industries'/problems, that may be an interesting argument. But not in health care, let alone health insurance. There is nothing resembling efficient market competition here, and merely offering exchanges won't cure that.
Given the perverse incentives private insurers have, enforcing reforms like banning rescissions and denial based on prior conditions, imposing community ratings and ending discrmination, etc will require more, not less government intervention. The mandates that create risk pooling (and enable consumers to gain market power) arise only from government intervention. And creating an alternative without the perverse incentives to cherry pick and discrmination will require in addition to much stronger government oversight, a direct government alternative. In short, Snowe's basic instincts are inimical to what needs to be done in this industry. She's only valuable if she changes her core views and brings others along.
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