Why a Health Care Reconciliation Sidecar Will Fail: Democrats Learned Nothing About Politically Toxic Carve Outs

Democrats in Congress have not learned all the wrong lessons from the Massachusetts special election--just most of the wrong lessons. They have at least realized that the special deals and selective carve outs, like Ben Nelson's extra Medicaid money for Nebraska, put in the health care bill were very unpopular and angered voters. Yet, instead of trying to use the reconciliation sidecar to scrub health care reform clean of its unpopular provisions and fill it with very popular ideas like the public option, Democrats are going to use it to add even more politically toxic provisions.

One of the most unpopular parts of the health care bill is the excise tax on employer-provided insurance. The only thing that makes it even more unpopular is that some politically connected groups are getting special exemptions. So, what are Democrats doing? They are going to give federal bureaucrats a special carve-out to protect them from this very unpopular tax. (From Inside Health Policy via Politico)

“Federal employees -- but not lawmakers or political appointees -- would be exempt from lawmakers' proposed ‘Cadillac tax’ on high-cost insurance plans under an agreement that Rep. Gerry Connolly (D-VA) and House Majority Leader Steny Hoyer (D-MD) secured with the White House last week, according to sources and reports. A House staffer confirms that the proposed exemption does not include Congress members or political appointees. Connelly's office said Wednesday that he worked with Hoyer to exempt the federal employees who were not part of the earlier deal that exempted collectively bargained plans from the tax for the first five years.

This is a Republican political operative's dream come true. Special tax deals for federal bureaucrats—GOP mouths must be watering at the thought. What Democrats are doing is creating a brand new unpopular tax, which they had campaigned strongly against in 2008, but they are going to give a special carve-out to protect the IRS agents assigned to collect this new, unpopular tax from the tax, itself.

Brilliant Democrats! This will sell well in middle America. Have fun explaining why you desperately need this “fix” before you can pass an already unpopular health care bill.

What do we know from Massachusetts? People don't like special deals, carve-outs, and legislative horse trading. People voted for Obama to change the way Washington works, and, by that, they meant special deals for the politically connected. People want the law to be fair for everyone.

If Democrats fill this reconciliation sidecar with even more horse trading, it will become even more toxic than the current Senate bill. If it looks like it was done purely to bribe even more special interest groups and legislators instead of making the bill better and more popular, it will be torn apart in public. The only way to sell the sidecar and salvage some popularity for health care reform is to use it to expunge any hint of a deal and add new, popular provisions like the public option, drug re-importation, and Medicare buy-in that will allow Democrats to honestly sell the reconciliation measure as a popular fix in response to public complaints about reform--instead of just another political pay off.