Obama's Health Care Speech a High-Stakes Political Game

Several Democratic senators from red states are saying publicly they will not support a health care reform package that includes a public option.  The progressive and ethnic caucuses in the House are belligerently staking out their  ground, saying that they will not support a package without a “robust” public option.

MSNBC broadcaster Keith Olbermann is discussing with Eugene Robinson the possibility of a progressive challenger to Obama in the 2012 Democratic presidential primary if Obama caves to moderates in the health care reform fight. Perhaps Olbermann and his supporters can rally progressives around Van Jones, whose views may more clearly mirror their own. There does not appear to be much common ground within the Democratic Party as the president prepares for an address to a joint session of Congress on Wednesday night in which he hopes to regain the momentum for passing health care reform legislation this year.

The president is undoubtedly aware that his approval ratings have dropped to around the 50% mark, and a majority of Americans do not support the reform package that has worked  its way through four committees in the Senate and House, with only Max Baucus’ Senate Finance Committee still at the drafting stage.

So what should the president say, and where is the reform packaged headed?

To be sure, the president’s approach at this stage is certain to be political -- meaning the only goal, given how he has staked his presidency on passing health care reform, is finding a way to get the votes needed in the House and Senate to pass something that he can sell to the public as real reform.  At a minimum, that package will have to include some insurance market reform that significantly whittles down the number of uninsured and provides greater security to individuals that they will be able to buy insurance (regardless of pre-existing conditions) and can keep their insurance if they become very ill.

With new estimates of federal deficits averaging close to a trillion dollars a year for the next ten years, unemployment hovering near the 10% level, and polling data suggesting that twice as many Americans are concerned about addressing  the federal deficit as  health care reform, the administration is almost certain to scale back the size of the package it will accept. That means that the goal of universal coverage may be scrapped and federal subsidies to assist the uninsured to purchase insurance will be provided to those at  lower income levels and not become the broader middle class entitlement the administration sought (higher income levels for subsidies helps create an expanded class of voters feeling allegiance to the party that has delivered the “goodies”).

The fight over the public option is now a loser for Obama. The left wing of the Democratic Party wants a single payer public system.  A public option was a way station to that goal, with the left fully expecting that tens of millions of currently insured Americans would shift from private insurance to the public option, given the structural advantages the public option would have, allowing it to under-price private insurance alternatives. A new federal program could set rates to providers, unlike private insurers who have to negotiate  rates.

Maine Republican Senator Olympia Snowe, one of three GOP senators working with Senator Baucus to craft a bill,  has offered a face-saver for Obama to deal with his left-wing zealots on the public option. Snowe’s proposal is for a trigger -- giving insurance companies the chance to prove they can reform their practices, with the public option as a fallback  if they don’t.  The supporters of a public option do not want  the private insurance industry to reform; they want it to disappear. One would think that private insurers faced with such a trigger would behave rationally.