by Steven Brill
Obama became involved in trying to break the stalemate. He convened three sessions of his own with the Democratic leaders in the Cabinet Room. The House side, led by Speaker Pelosi, said it could not get a bill passed with so many of the offending provisions that were in the Senate version. The Senate side, led by Reid, countered that Reid couldn’t afford to lose even one of his senators, and that going along with the House would surely do just that.
Though they seemed slowly to be making progress, there was still no agreement through the first half of January.
The groups were working on the Sunday before Election Day in Massachusetts when one negotiator said out loud what many had begun to think, based on news reports coming from the Bay State. “Aren’t we wasting our time? Are you watching the polls in Massachusetts?”
Still, the teams continued through Tuesday, January 19, 2010—until just after 8 P.M. Then, the election returns came in, declaring Republican Scott Brown the winner. The negotiators immediately put their pens down. One group adjourned to a bar near the Capitol to have farewell drinks and watch Brown claim his victory. Their sixtieth vote was gone. So was Obamacare.
THE “POTBELLY” ALTERNATIVE
The next day, Karen Ignagni called one of her contacts at the White House. Ignagni’s insurance lobby had been officially critical of the bill since the summer, when Obama had pivoted to calling it insurance reform and when the details emerged that Ignagni’s insurance industry employers disliked so much—the low penalty, the narrow age bands, what they viewed as inadequate subsidies, and, then, the $102 billion tax. And her five largest members had contributed to a Chamber of Commerce political action committee that was now funding ads that blasted the bill.
Yet now Ignagni, seemingly betraying her fear that simple insurance reform outlawing preexisting condition exclusions but with no mandate to buy insurance might become the Obama administration’s fallback, was asking what she could do to help get things back on track. Her White House contact told Ignagni she would get back to her when they figured out what they were going to do.
In fact, someone on Nancy-Ann DeParle’s staff was preparing a memo for the president suggesting exactly that fallback. Forbidding exclusions for preexisting conditions would cost nothing yet arguably yield nothing—except, as had happened with that “reform” in New York, a nationwide evaporation of the individual marketplace because of skyrocketing premiums resulting from only the sick wanting to buy insurance.
The same day, Liz Fowler began thinking about her future. Her thoughts stretched so far beyond healthcare reform that she went online to see how much it would take to open a franchise for Potbelly, a sandwich shop she liked. The up-front investment was $275,000. Not likely.
The next day, January 21, Ignagni emailed one of Valerie Jarrett’s aides asking that Jarrett be given the message that “Leader Reid’s office said we are done with health care for the year.” Wasn’t there something Jarrett or the president could do?
STILL “FEELING LUCKY”
But by January 22, there was hope in the air in some quarters. That night Zeke Emanuel was seated at a dinner next to Supreme Court justice Antonin Scalia. The conservative Scalia kidded Emanuel about the apparent collapse of Obamacare. Zeke offered to bet him that they would get Obama’s reform package through, somehow.
At Rahm Emanuel’s behest, his brother and others on the Obama team had begun playing with a drastically scaled-back proposal that might extend coverage to more children or go after the insurance companies the way Ignagni feared. However, Obama had told the staff that he had not given up yet. He was still “feeling lucky.” And determined.
“When the going got tough,” Obama recalled when I asked why he persevered, “thinking of those Americans [he had met with healthcare coverage problems] and what they were going through is what kept me going.” To Phil Schiliro, the Scott Brown election posed less of a challenge than what they had faced during the Tea Party summer. Reform bills had already passed both the House and the Senate, and he and his congressional liaison team were already mapping out an idea to turn them into one bill that could become law despite the apparent loss of the sixtieth Senate vote that seemed to be needed to pass a House-Senate conference version.
Schiliro, as well as some of the political people at the unions and other interest groups promoting Obamacare, had begun thinking about that idea when the polls in Massachusetts started signaling trouble in the weeks running up to Election Day. In fact, Schiliro had told Obama about it the night of the Scott Brown election.
It boiled down to this: Why not just have the House pass the Senate bill? Then they would not need another Senate vote on a negotiated conference bill, requiring the now-impossible sixty-vote margin. There would be no conference and no conference bill, just the Senate bill that had already passed.
The problem, of course, was that most House Democrats hated the Senate bill, as evidenced by the hostile, agonizing, and mostly fruitless negotiations that had preceded the election debacle in Massachusetts. House members would never agree to pass the Senate’s version of healthcare reform. They hadn’t even agreed to meet the Senate halfway. The White House had had lots of problems with the Senate bill, too.
But there was a way the House could get some changes in the Senate bill that the Senate could agree to without needing sixty votes. It had to do with the procedural rule called reconciliation, the rule Ted Kennedy had refused to tell the Republicans he would not try to use. From the grave Kennedy was still keeping healthcare reform alive.
Under the Senate rules, if a bill was predominantly about finance—raising taxes and spending them—a majority of senators could vote to limit debate and force a vote. It did not take the sixty votes to cut off a filibuster that other legislation did.
If the House and Senate Democrats could negotiate changes in the Senate bill, those changes could be introduced in the Senate as an entirely new bill to supplement the bill already passed. If those changes could pass the test of being mostly about financial matters, then Harry Reid would need only fifty-one votes to pass this new Senate bill, which would actually be a bunch of amendments to the first bill that had needed, and gotten, sixty votes.
The first hurdle, though, was negotiating those changes. Negotiating was exactly what the House and Senate Democrats had been unable to do before the Scott Brown Massachusetts victory, and now the House at best could only tweak a Senate version that a large contingent of House Democrats detested.
PhRMA’s Billy Tauzin thinks that the freak election of Scott Brown is the one accident of history in healthcare reform annals that worked the other way, to help reform. In his view, it provided the path to save the reform effort because it eliminated the House’s ability or willingness to fight with the Senate. For Speaker Nancy Pelosi and her House Democrats, it was now the Senate bill—with whatever relatively minor finance-related tweaks they could get—or nothing.
There could be no more arguments from Pelosi that Reid had to put in a public option or her members would walk away, or that there had to be one national exchange instead of the unwieldy fifty state exchanges the Senate had provided for. It was crunch time, and the Senate had all the leverage. Scott Brown had called the House Democrats’ bluff. And they could rationalize folding by blaming it on Brown (and Martha Coakley’s decision to take a vacation).
Tauzin’s theory made sense to many of the other troops in the battle when I later asked them about it. Then again, that assumes that both sides would otherwise have let their disagreements kill reform after all the work that had been put into it—and knowing that Bill Clinton’s failed healthcare reform effort was thought to have turned the House over to the Republicans in 1994.
Either way, the Scott Brown election did get the House Democrats back to the table, though with so little leverage that the only question left was whether they would, indeed, swallow their pride (and put aside their strong beliefs) and let Max Baucus and Harry Reid prevail.
“THANKS FOR NOTHING”
Soon, Pelosi had no qualms about taking whatever she could get. She wanted to pass a law, not win a debating contest with the Senate.
She was fierce about it. Yes, they would do the best they could to get whatever changes to the Senate bill they could negotiate into a reconciliation bill requiring only fifty Senate votes. But at the end of the day, they were going to pass the Senate’s bill, no matter what they could get. She and other senior House Democrats began whipping their members into line.
“I got you elected and now you won’t do this? Thanks for nothing,” she spat at one reluctant Democrat as a stunned Nancy-Ann DeParle looked on. The congressman soon changed his mind.
“We will go through the gate,” Pelosi told reporters on January 28, 2010. “If the gate is closed we will go over the fence. If the fence is too high, we will pole-vault in. If that doesn’t work, we will parachute in.”
A much more publicized Pelosi statement would come a few weeks later, when on March 9 she was quoted telling a national convention of county officials that “we have to pass the bill so that you can find out what is in it.” Her comment was seized on by reform opponents as proof of the proposal’s monstrous complexity and its supporters’ disregard for the democratic process.
In fact, Pelosi was simply promoting what she thought were the bill’s benefits, which, in her view, had not been discussed enough because the political fight over passing it was dominating the cable news networks. What Pelosi actually said was, “You’ve heard about the controversies, the process about the bill … but I don’t know if you’ve heard that it is legislation for the future—not just about health care for America, but about a healthier America. But we have to pass the bill so that you can find out what is in it—away from the fog of the controversy.”
Obama supplemented Pelosi’s efforts with his own wrangling of House Democrats, something he had not done nearly as avidly as most of his predecessors.
On February 4, the day Scott Brown was sworn in as a senator, Obama told an audience at a fund-raiser that he was planning to continue the fight. A New York Times article about the speech was skeptical. Referring to the possible strategy of using the Senate bill with a few amendments to be passed in a new bill, it reported that “it is no longer clear that Senate leaders could muster even 51 votes to make fast-tracked changes to the Senate-passed health bill, let alone the 60 votes it would take to approve a revised measure under the normal rules. In the House, Ms. Pelosi, too, now faces an uphill climb.”
The climb got easier a few days later when WellPoint, the insurance company where Fowler had worked and that had rejected her mother because of her preexisting condition, announced an increase in premiums of as much as 39 percent throughout California. Jubilant Democrats seized on it as proof that the insurance companies had to be reined in.
“To do this at that moment, someone at WellPoint must have been trying to sabotage their company and us,” a senior Republican staff person later told me. “Could they actually be that stupid?”
Karen Ignagni at America’s Health Insurance Plans had a similar reaction. She quickly convened a staff meeting to try, fruitlessly, to think of ways to put out the PR fire ignited by her second biggest member company. It didn’t matter that WellPoint’s profit margin for 2010 would be less than 5 percent (and would decline further in 2011)—far less than the margins enjoyed by the hospitals, drug companies, and device makers, whose bills the insurer paid.
Meantime, Obama helped keep the battle alive with a head fake. On February 25, he convened a televised session with Republican and Democratic legislators at Blair House across from the White House. It was billed as a bipartisan summit to discuss ways to resolve the healthcare deadlock. It really was a way for Obama to buy time while Reid and Pelosi worked far from the cameras on a solution that was anything but bipartisan: getting Obamacare through the House and Senate without a single Republican.
Earlier that week, Obama had issued—finally—what he said was his own plan. But it was only the list of changes that he said would improve the Senate bill. In fact, most were the amendments that were coming into focus as ones that the House wanted and that Reid would agree to.
It was a small list. Obama’s “plan” would, among other things, eliminate the now widely ridiculed Louisiana Purchase and Cornhusker Kickback deals that Reid had made; provide more generous subsidies for people to buy insurance; and scale back the Cadillac tax on generous insurance plans and not have it kick in until 2018.
The unions wanted that last change badly. As a result, the Cadillac tax—which would have yielded $300 billion over ten years in Baucus’s original bill and would have, in Orszag’s view, done the most to encourage lower healthcare spending—was now scaled back to about $39 billion.
Among the changes added to make up for the lost money was a reversal of what Charles Schumer and Olympia Snowe had done to minimize the penalty for ignoring the mandate. It would now apply in the first year. More important, to the relief of people such as Ignagni and Gruber, it was stiffened significantly; it would now be the higher of $95 or 2 percent of a family’s income, and both benchmarks would rise year by year. The employer penalty for not providing insurance was also increased, angering businesses, especially those with part-time hourly workers. Now it would apply to all employees working thirty hours or more a week, not forty. The Chamber of Commerce, the National Retail Federation, and the Republicans said that this would be a job killer.
Other proposed changes, such as a strengthening of the Senate’s abortion restrictions, were ruled out of order in an arduous, arcane hearing before the Senate parliamentarian. He decided they were not sufficiently linked to budgetary issues and, therefore, could not be included in a reconciliation bill that required only fifty-one votes. To appease conservative Democrats in the House, Obama agreed to issue an executive order purporting to do the same thing once the bill passed.
“FISCAL FRANKENSTEIN”
Once the House and Senate had agreed on the amendments that were to be included in what would be called the sidecar bill, which needed only fifty-one Senate votes, there was a final problem. It epitomized the hostility between the House and Senate and the general atmosphere of distrust in Washington. To make the deal work, the House first had to vote for the Senate’s original bill. Only then could the House and Senate vote for the sidecar bill to amend it to be more to the House’s liking. But what if the Senate Democrats reneged? Many House Democrats didn’t trust the Democrats in the Senate to keep the deal and vote for the sidecar amendment once the House had voted for their bill.
To solve that, Pelosi had Reid get a letter signed by fifty-one senators promising to vote for the amendments.
On Sunday, March 21, 2010, Pelosi wrangled a 219–212 vote for the Senate bill. Thirty-four Democrats voted against it.
“The American people are angry.… This body moves forward against their will. Shame on us,” said then–House minority leader John Boehner just before the vote on a bill that Republican Paul Ryan, the future Republican vice presidential nominee, called a “fiscal Frankenstein.”
“This isn’t radical reform,” Obama said in a televised victory statement from the White House, “but it is major reform.”
The Senate quickly kept its end of the bargain, voting 56–43 for the sidecar amendments.
WHETHER RYAN WAS RIGHT about the new law being a “fiscal Frankenstein,” it certainly was a drafting Frankenstein. One had to read the 55-page sidecar bill full of the agreed-upon amendments alongside the original 906-page Senate bill to understand what was really in it. Worse, the rush to finish off the deal had produced some sloppy drafting from the Senate Office of Legislative Counsel, an obs
cure group of career lawyers who put the Senate staff’s long legal drafts into actual legislative language. Beyond the usual typos there were some significant inconsistencies.
The most important drafting mistake seemed to say that insurance bought on the exchanges run by the federal government and not by the states (if a state decided not to set up its own exchange) would not qualify for subsidies at all, although elsewhere the language did, as was clearly intended, include the exchanges run from Washington.
That error—which would become the subject of litigation in the federal courts in 2014—was the result of a last-minute change as the Senate bill was being passed early in the morning on Christmas Eve. Fowler and her staff had always intended that the federal exchange would be a backup in states that could not or would not mount their own exchanges so that people in those states could get the full benefit of Obamacare. The CBO had scored the bill based on this unambiguous intention. However, someone had mistakenly cut and pasted language from a provision in an earlier draft that referred only to state exchanges and used it in one place, though not elsewhere, as a boilerplate reference to the exchanges in one of the clauses describing how the subsidies would work.
Normally, these and other slipups, once discovered, would be corrected in a routine “fix” that would get a unanimous vote. However, with Republicans already talking about repeal, no unanimous vote on anything related to Obamacare was likely.
“ASSUMPTION THAT PASSAGE = EXECUTION, WHICH IS WORRISOME”
The night of the House vote, Obama gathered his staff on the Truman Balcony for a champagne celebration. Obama toasted his team, although he noted that “now we all have to get to work.”