The Long Arm Of Chuck Schumer

New York Senate Democrat Chuck Schumer is a natural deal maker. He is the type of guy who was born to be in politics. As health care reform moves forward, it is interesting to see how much he is shaping the debate behind the scenes. His public plan, his campaign language, and his strategy to promote reform are all slowly being adopted by the vast majority of Democrats.

A few months ago Baucus asked him to come up with a compromise public plan which could win over the conservative wing of his party. Chuck Schumer did as he was asked and created his “level playing field” plan. It would be a government-run plan but would not use Medicare's payment rates. I suspect Schumer worked with his party to find a compromise that would be acceptable to over 50 Democratic senators, but probably not all 60.

Senator Grassley threw a hissy fit over any public plan, so Baucus scrapped Schumer's well constructed compromise. Baucus than asked Conrad to come up with anything that would make Grassley happy, and he completely cut Schumer out of the negotiations.

Conrad created the idea of co-ops with federal seed money. Schumer told Conrad his idea was unacceptable, but would work with him to find a compromise of his compromise. He created an outline of a national co-op that might be acceptable to enough liberals. Reporting indicates that Conrad rejected Schumer's suggestions. Not surprisingly, there is now a near full blown rebellion against the Conrad's co-ops in the Democratic Party.

While Conrad and Baucus have remained cloistered in their secret meetings, Schumer's “level playing field” public plan has caught fire. The Senate HELP committee adopted a public plan nearly identical to Schumer's compromise. Not surprisingly, in the House the Blue Dogs and the Progressive Caucus have tentatively agreed to a public option nearly identical to Schumer's compromise. In fact Blue Dog Ross' amendment which changes the structure of the public plan used the subtitle: “Level Playing Field for Public Option.”

I expect to hear the phrase “level playing field” a lot in the coming months. Schumer was also railing against the insurance company villians long before it started getting fashionable.

Currently all the focus in the Senate has been on Senator Baucus because he is the Chairman of the Senate Finance Committee. But Baucus works in near isolation from his party and is sowing an incredible amount of ill will with the rest of his caucus.

All this time Schumer has been unusually quiet about an issue that he is personally invested in. Schumer got almost a fourth of all Democratic senators elected while head of the DSCC in 2006 and 2008. I'm very interested to see when and how he plans to weigh in on co-ops versus the public option. Indications are that Schumer could put together a large group to bring down the co-ops proposal.

Public Option Could Save $250 Billion

Now that I have some official numbers from the CBO I can do a better analysis of just how much the public option would save the taxpayer. Since in the HELP committee's bill, the size of government subsidies given to individuals to buy health insurance is based on the average of the three cheapest plans (the “reference premium”), offering a cheaper plan would reduce the size of the subsidies given out.

I'm assume, as is widely agreed, the public option would be the cheapest plan offered. If there was a strong public option (basically a full Medicare opt-in) it would be about 30% cheaper. If there was a weak public option (the Schumer plan) it would be about 10% cheaper.

With the weak public option the “reference premium” would be 5% less, and the total size of subsidies should be reduced by roughly 7-10%. That means a weak public option will make the HELP committee's health care reform bill roughly $90-130 billion cheaper.

With the strong public option the “reference premium” would be 10% less, and the total size of subsidies should be reduced by roughly 15-20%. That means a strong public option will make the HELP committee's bill roughly $200-250 billion cheaper.

I have not seen the details to Conrad's co-op plan, (because they do not exist) but similar co-ops currently operating are not significantly cheaper than other private insurance plans. Conrad's co-op should have almost no impact on reducing the cost of the bill.

*all numbers are rough estimates and can change dramatically based on the size of subsidies, eligibility, and structure of the public option.