As expected, the Senate Finance Committee rejected two amendments yesterday that would have added a public health insurance option to the health care reform bill Chairman Max Baucus drafted with a big assist from industry lobbyists. Five Democrats voted with all the committee Republicans against Senator Jay Rockefeller’s amendment, which would have created a national public option tied to Medicare rates. Three Democrats also joined Republicans to vote down Senator Chuck Schumer’s much weaker “national level playing field” public option. CA Berkeley WV liveblogged yesterday’s hearing for Congress Matters.

Senator Chuck Grassley sang the same old song about the “government run plan” forcing private insurance companies out of business. He got a little tripped up when Senator Chuck Schumer asked him for his views on Medicare, though.

“I think that Medicare is part of the social fabric of America just like Social Security is,” Mr. Grassley said. “To say that I support it is not to say that it’s the best system that it could be.”

“But it is a government-run plan,” Mr. Schumer shot back.

Mr. Grassley, a veteran Senate debater, insisted that Medicare did not pose a threat to the private insurance industry. “It’s not easy to undo a Medicare plan without also hurting a lot of private initiatives that are coupled with it,” he said.

Chairman Baucus scored highest on the chutzpah meter, praising the public option even as he refused to support it. Grassley also held out false hope that maybe someday some other bill will accomplish that goal.

Several Senate Democrats, including Tom Harkin, insisted yesterday that they will get some kind of public option into the bill that reaches the Senate floor. After the jump you’ll find lots of links on the battles to come.

I agree that the public option is not dead yet, but for it to survive, President Barack Obama and Senate Majority leader Harry Reid will need to do a lot more than they’ve done so far to lean on the Senate conservadems.  

The Finance Committee still has lots of amendments to plow through before this bill comes to a vote. In theory, three progressive Democrats on the committee could vote against the final version, which would mean that Senate Finance would fail to report a bill. No one seems to know how things would play out in that event, but David Waldman, who has forgotten more about Congress than I’ll ever know, considers it an unlikely scenario.

That means that Senate Finance will report a bill with no public option, and the big battle will be over how that bill is combined with the version passed by the Senate Committee on Health, Education, Labor and Pensions (now chaired by Harkin).

It is imperative that the combined bill contains the HELP version of the public option. Amending the bill on the Senate floor to add a public option will be impossible.

Harkin admitted as much yesterday, when he said he had the votes to pass a public option:

“I have polled senators, and the vast majority of Democrats – maybe approaching 50 – support a public option,” Harkin said told the liberal “Bill Press Radio Show.” “So why shouldn’t we have a public option? We have the votes.

“I believe we’ll have the 60 votes, now that we have the new senator from Massachusetts, to at least get it on the Senate floor,” Harkin later added. “But once we cross that hurdle, we only need 51 votes for the public option. And I believe there are, comfortably, 51 votes for a public option.” […]

Citing the three House committees’ and his own Senate committee’s bills including the public plan, Harkin asserted that Senate Majority Leader Harry Reid (D-Nev.) should include the public plan when merging the HELP bill and the Senate Finance Committee’s proposal – which doesn’t include the public option – for debate on the floor.

“I would hope – assume – that in the bill we send to the floor, it will have a public option,” Harkin said. “Then let the minority offer amendments to take it out, and we’ll see where the votes are.”

Emphasis added. Amendments on the Senate floor will require 60 votes to pass. The Republicans and conservadems won’t be able to get 60 votes to remove the public option from the bill. The most important thing is to make sure that the HELP bill, not the Finance bill, is the baseline for the bill on the Senate floor. (UPDATE: David Waldman has a new post up with details about various Senate procedures that will affect this process.)

Senator Chuck Schumer is confident about the prospects for improving the bill:

“If you followed this closely, we said all along we never expected to win in the Finance Committee. In fact, there were some who were saying we were going to get so few votes, we shouldn’t bring it up,” the New York Democrat told MSNBC’s Chris Matthews.

“We gained votes today [for Schumer’s public option amendment], to get 10 votes in this, which is the most difficult terrain for the public option, because the Finance Committee is more conservative than the Senate Democrats as a whole, and the Senate Democrats as a whole are more conservative than the House and the conference,” he added. […]

“We didn’t expect it would be this close,” he said. “And there’s momentum. It’s going to keep getting better, better on the floor than in the Senate and better than in the Senate Finance Committee, and better in the conference, where the House has 70 to 100 members who say they won’t vote for anything without a public option.”

Chris Bowers explained here who will influence the rewriting of the bill en route to the Senate floor:

Because Democrats are not going to pursue reconciliation for the public option (see why here), the next step in the process does not actually involve Kent Conrad’s Budget Committee, as I had previously reported (the Budget Commitee only comes into play with reconciliation). Instead, a source on the Hill confirms to me the Senate HELP and Senate Finance committees will be merged by an informal, behind the scenes process involving the four major players in the Senate: Tom Harkin (Chair of HELP), Max Baucus (Chair of Finance), Harry Reid (Majority Leader), and the White House. Together, these four will meet and decide what sort of bill to send to the Senate floor for debate and amendments.

During this process, we can guarantee that Harkin will push for a HELP or Schumer-like public option to be sent the floor, while Baucus will push for no public option to be in the bill at all. Given his recent statements, the best bet is that Reid will probably push against a public option too, and instead favor either triggers (which he has called a good idea) or co-ops (which seems to be the sort of public option he likes best). With two against and one in favor, this means that the only way a public option ends up in the bill that is sent to the Senate floor will be if the fourth major player, the White House, demands it.

It is all up to the White House now. If it pushes for a public option to be included in the health care bill sent to the Senate floor, then a public option will pass as part of health care reform (at that point, all we would need are 60 votes for cloture, and from what I hear we have 57 already). However, if it allows a health care bill to go to the floor without a public option, it is pretty unlikely that a public option will pass as part of health care reform.

Reid’s office has sent conflicting signals on the public option lately. I assume he will try to keep it out of the bill that reaches the Senate floor unless he gets a lot of pushback from the White House or from major donors to the Democratic Senatorial Campaign Committee. Reid is up for re-election next year, and he’s looking quite vulnerable.

Alternatively, a group of 10 Democratic senators could announce that they will vote against any health care bill if it doesn’t contain a public option. So far Harkin, Rockefeller and others have declined to make that kind of threat, for some reason.

That leaves the White House. All summer, President Obama talked about preferring the public option but sent administration officials on tv regularly to say it’s not a deal-breaker for him. He’s avoided getting involved in the Congressional negotiations so far. He didn’t insist on the public option in his big speech to a joint session of Congress either.

Senator Rockefeller is rightly disappointed in the president:

“A little bit, a little bit I’m disappointed,” the West Virginia Democrat told CNN’s Wolf Blitzer. “I know he’s strongly for it, and I know his tactic has been to let the Congress do his work and then he’ll come in when the crunch really counts. What I’m saying is that the crunch is really beginning to count now, and I think he’s – I know he’s for it, and said so publicly, and campaigned on it, so I think it’s important that he come in at this point strongly.

I am not optimistic that Obama will ride to the rescue. It’s clear that with a little arm-twisting from the White House, a public option could be included in the Senate bill, and we would be able to pass it with 51 votes. However, Obama hasn’t twisted any House Blue Dog or “centrist” senators’ arms so far. Not arousing the anger of the drug and insurance industries seems to be a higher priority for him than getting a health care reform bill that vaguely resembles his campaign promises. As always when I am wearing my Obamaskeptic hat, I’d love to be proven wrong about this.

Final note: I want to pre-empt Bleeding Heartland user ragbrai08’s likely comment that this is all kabuki theater, because the public options in the House bill (HR 3200) and the Senate HELP version are too weak to provide real competition anyway. I think Bowers had the best answer for this objection:

In one camp, there are conservatives and private health insurance companies who oppose the public option in all forms. Their basic argument is that the public option would work too well, offer health insurance that is too affordable, and as such will deny private health insurance companies more business. A secondary argument from this group is that a public option supposedly cannot pass the Senate, even though a list of Senators is never provided with this claim and even though either reconciliation or the nuclear option would allow a public option to pass with 51 votes.

In the other camp are House and grassroots progressives. Their basic argument is exactly the same as the first camp: a public option, even in its current form, would offer lower-priced health insurance than private companies. This group is composed of the most reliable Democratic votes in all of Congress, the most Democratic districts in the country, and organizations that provide a huge percentage of pro-Democratic activism.

So this is about who the Democrats in Congress and the White House are going to govern with:

–Those who think that protecting large industries is more important than providing lower cost health care;

–Those who think offering lower cost health care is more important than protecting large industries.

Additionally, the first group is lying about Senate procedure and are the top political opponents of Democrats, while the second group is just about the most loyal and active group of Democrats in the country.

If grassroots and House progressives can’t even get a watered down public option in this environment, then it is very difficult to conclude that we are actually part of the governing coalition in this country. And really, that is what this campaign is about who runs the country at least as much as it is about health policy.

Share any health care reform thoughts or horror stories in this thread. Here’s a baby with a heart defect whose mom is uninsured. And did you hear about Blue Cross California denying this woman’s claim because she supposedly should have known that waking up with a bleeding breast was not a medical emergency?