Mr. Brown Goes to Washington

If you have not seen the classic film, Mr. Smith Goes to Washington, I highly advise you to add it to your Netflix queue. As the story goes, the young and energetic Jefferson Smith is selected to fill a vacancy in the United States Senate, a chamber full of greed and corruption. Smith, played by Jimmy Stewart, is a complete outsider and heads to Washington to take on the political machine and shake things up. The film – nominated for 11 Academy Awards and selected by the Library of Congress to be included in the National Film Registry – is a story of how one man can have an impact on American politics. Sound familiar?

With Scott Brown’s election to the Senate, Democrats have lost their 60-40 filibuster proof supermajority they once enjoyed. Though they still hold the majority, the continuing unanimous Republican opposition to their healthcare reform package has made passage of the existing program far less likely.  Making matters tougher, Senator-elect Brown ran on a platform of fiscal conservatism and criticized Washington for big spending and tax proposals. A main issue of the campaign, Brown opposed healthcare reform as a candidate and stated that states should be able to craft their own plans. As the Republican’s 41^st vote heads to Washington, Democrats are being forced to re-examine all of their options on how to move forward with their top domestic issue and Obama’s promise for healthcare reform.  So, what are the options?

Option #1: The House Acquiesces to The Senate– Given the potential for filibuster in the Senate, the simplest option for moving the existing healthcare reform effort forward would be to have the House pass the Senate version of the bill without accepting any amendments or variations. If the House of Representatives were to pass the Senate bill without changing it, the bill would be sent directly to President Obama’s desk to be signed into law. Though technically an option, I believe it has nearly zero possibility of occurring.  In fact, on behalf of House Democrats, Nancy Pelosi on Thursday announced that she will reject this approach.

Option #2: Reconciliation– I’ve discussed this approach previously.  It has been referred to as the “nuclear option” by Senator Kent Conrad (D-ND) and, I think he’s right. Basically, the difficulty of reconciliation is that any provision is considered “extraneous” it can be taken out of the package which is known as the Byrd rule. Specifically, the Byrd rule requires Congress to follow six tests in determining if a provision is extraneous.  The criteria apply to provisions that:

1. Do not produce a change in outlays or revenues;
2. Produce an outlay increase or revenue decrease when the instructed committee is not in compliance with its instructions;
3. Is outside the jurisdiction of the committee that submitted the title or provision for inclusion in the reconciliation measure;
4. Produces a change in outlays or revenues which is merely incidental to the non-budgetary components of the provision;
5. Would increase the deficit for a fiscal year beyond those covered by the reconciliation measure although a provision can receive an exception if it reduces the deficit;
6. Recommend changes in Social Security.

Reconciliation cannot be used for any measure that increases the deficit after 10 years following the bill’s passage. Additionally, the above rules essentially require provisions that deal directly with the federal budget.  Other non-budgetary issues (e.g. insurance market reforms to eliminate pre-existing conditions) cannot be considered as part of reconciliation.

Another key consideration if the Democrats were to use the reconciliation process is the political ramifications.  If Senate Majority Leader Harry Reid (D-NV), who is trailing deeply in his home state polls, were to accept reconciliation, a substantial backlash from voters is likely.  The perception of back room dealing and closed door processes to allow passage of the healthcare reform package would be used on the political front.  Although reconciliation is a way of pushing healthcare reform through Congress, it is certainly one of the most dangerous ways to go about it.

Option #3: Break It Up– Another approach would break up the comprehensive healthcare reform package into a series of smaller provisions, each of which would be voted on by Congress.  This approach would also reduce the overall cost of the healthcare plan from nearly a trillion dollars to somewhere in the ballpark of $200 billion.  Included in this smaller version would be some increased Medicare spending, less restrictive insurance regulations, tax credits, and possibly the so-called “doc fix.” However, there are questions on whether or not any savings would accrue over time.  Part of the rationale for the existing package is the potential savings which will occur in our nation’s healthcare spending over the coming decades.  If the bill is parsed apart, the savings do not necessarily accrue.  Depending on which parts are included or excluded, the math on this question changes.

Though it would be difficult for many Democrats to swallow a truncated version of the healthcare reform bill, this very well may be the best option. If Congress goes down this path, the Republicans can be expected to hammer the Democrats for wasting nearly a year of critical legislative time on passing a bill that did not provide what they originally promised. And, if the attitude of Massachusetts voters is any indication of sentiment around the country, such a debate is clearly not what’s desired with the 2010 midterm elections approaching in November.

Option #4: Start Over– Some are calling for a re-start of the whole process.  Such an approach would require a bi-partisan approach in both the House and Senate.  In an increasingly ideological Congress where both extremes have taken command of their respective parties – this approach is also fraught with potential problems.

Finally, the President’s 2011 Budget will be released during the first week of February.  A report that shows looming budget deficits will further erode the public image of healthcare reform and could easily play into how many members vote on the issue. With the President’s State of the Union now scheduled for this coming Wednesday, expect Obama to speak directly to the healthcare issue and outline his position on how he would like Congress to proceed.

Right now, it is anyone’s guess whether or not one of these four options will be pursued by Congress.  And, there may be other options which percolate through Congress in the coming days and weeks.  Coupled with the uncertainty of when Senator-elect Brown will technically take office, it seems that we are not nearly so close to knowing what healthcare reform will look like whereas just a week ago it looked like the finish line for this round was close.  Then again, I’ve been saying for months that this is a good five year process.  It now seems true.

Kevin Fickenscher, MD

The views and opinions expressed herein are my own and do not necessarily represent the views and opinions of Dell Services or its affiliates.