Last Chance Healthcare Reform – Betting the Ranch on a Weak Hand

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Richard Evans

212.531.6101

richard@sector-sovereign.com

March 4, 2010

Last Chance Healthcare Reform – Betting the Ranch on a Weak Hand

  • We continue to believe that large-scale health reforms will not pass this Congress, despite the decision to use reconciliation procedures
  • The House must first pass the Senate bill, then a reconciliation measure modifying the resulting law, then non-reconciliation measures with further (abortion, immigration) measures that cannot be dealt with under reconciliation
  • Accounting for vacancies and known switches the 220:215 House majority behind HR3962 now stands at 216:216. The speaker needs to gain one more new ‘yea’ than she loses to new ‘nays’; we review the relevant votes, and conclude the likely outcome is more votes lost than gained – i.e. that the House will not pass the Senate bill
  • We reach the preceding conclusion even before considering abortion and immigration – both of which argue further against House passage of the Senate bill. Pro-life ‘yea’ votes (the ‘Stupak’ bloc) would have to believe that, after passing the Senate bill into law, that this Congress would initiate and pass – outside of reconciliation, with 60 Senate votes – a law that restricts choice. The Congressional Hispanic Caucus (CHC) would have to hold similar beliefs with respect to undocumented immigrants’ right to buy health coverage with their own money
  • This legislative attempt will consume enormous time and political energy – all of which argues that if it fails, as we expect, this Congress is unlikely to have the energy for more modest reforms. It’s truly all or nothing

The President’s Wednesday speech on healthcare plainly sets the stage for using budget reconciliation procedures as the path to enacting large scale health reforms. On net, we continue to believe reforms will fail to pass; this note lays out both the (essentially unchanged) political dynamics that underlay our expectations, as well as the relevant mechanical details of pending legislative action.

For a variety of reasons the House will have to act first[1], so our political analysis focuses there. The now familiar major moving parts of our political argument are unchanged – a majority of voters oppose reforms, a large number of centrist Democrats are at risk in November if they vote for reforms; and, no clear way has been found around either the (very large) abortion or (medium-sized) immigration issue. The only change is that we now know reconciliation is on the table and likely to be used; as recently as two weeks ago it was neither on the table nor likely to be used. This infers something about the ‘invisible’ parts of the political and legislative mix – and here we see three possibilities: 1) that the President may have secured the House votes necessary to succeed; 2) the President believes that he can shift public opinion in favor of reforms; or, 3) that the President recognizes failure is likely, but wants to shift blame to Republicans – or at least to Congress — by forcing the issue.

We’ll focus on #1, after dismissing #2 and speculating on #3. As we’ve said now several times, the historical evidence shows that popular presidents pushing un-popular legislation (#2) simply become less popular presidents[2], so we have no reason to expect that Wednesday’s speech is sufficient to move public opinion behind reforms. To our minds #3 is the more likely line of thinking behind what appears to be a low-probability legislative push. Doing nothing guarantees that Democrats carry the blame for reform’s failure; moving the legislation to the floor forces Republicans to act in opposition, and in so doing may force Republicans to share blame. This strikes us as relatively weak political logic – it presumes the House can muster sufficient Democratic unity to initiate legislative action, and ignores that Republicans’ actions appear more consistent with voters’ priorities than the Democrats’ – all of which argues that forcing the vote may heighten the political cost to Democrats. The Administration may recognize this, which reduces the political calculus to simple damage control: for the White House “the President pushed for it, but Congress failed to deliver”, is far preferable to “the President failed to deliver.”

For Congress to pass health reform using reconciliation, the House first has to pass the Senate bill, and then immediately (or soon thereafter) pass a reconciliation measure that modifies the Senate bill (presumably now law) to suit the House’s concerns. This path faces two enormous problems, the first is purely political, and the second is both political and procedural.

Politically, the Speaker has fewer votes to work with than she did with H.R. 3962; and, the pressures that have divided Democrats on healthcare have only grown stronger. The House’s original health reform bill (H.R. 3962) passed by 220 to 215; since then, 3 ‘yea’ seats have been vacated, and the lone Republican yea (Cao) has shifted to no (Exhibit 1). Thus the new starting point in the house is 216:216, meaning the Speaker must convert one more ‘nay’ than she loses in ‘yea’s’. Presumably she’ll have to convert a Democratic ‘nay’, of which there are 39 (Exhibit 2). Generally speaking, these are less-tenured and more- conservative Democrats hailing from predominantly Republican districts. President Obama lost fully 31 of these districts in 2008; he only carried 2 by more than 10 percent (Davis, Kucinich – more on them in a moment). 27 of these seats (that are not open) are rated ‘unsafe’ by CQ or Cook. 23 are Blue Dogs, and 23 voted in favor of the Stupak amendment on abortion restrictions – and so on.

Classically, the Speaker’s best chance would be to focus on converting ‘nays’ from members that have announced their retirements since the H.R. 3962 vote (Exhibit 3). Six retirements have been announced; at most this yields 3 switches, and probably no more than two. Artur Davis is leaving to run for Governor of Alabama; McCain carried Alabama by 58.5 to 36.1, which argues that Davis remains a solid no. Charlie Melancon is leaving to run for Senate in Louisiana, where Landrieu is under pressure for supporting reform, where McCain won by 52.1 to 45.1, and where Melancon trails his Republican opponent 33 to 57. Melancon also looks like a solid no. Bart Gordon is retiring without other obvious plans and is an abortion moderate. His district is heavily Republican, which weighs against the tradition of retirees voting with the leadership – so we rate him 50:50. John Tanner similarly is retiring without other obvious political plans, but is in a slightly less Republican district; we rate him as more likely to switch than not (75:25). Brian Baird is retiring without obvious future political plans and is in a Democratic district, but claims he cast his healthcare vote after he knew he would retire. We give him even odds of switching (50:50).

The Speaker also will focus on the 8 ‘nay’ Dems from districts Obama won. The only two districts Obama carried by 10 points are greater were Artur Davis’s – who we think is a no because of the Alabama gubernatorial race — and Dennis Kucinich’s, who was in the media as recently as Wednesday re-iterating his opposition. This leaves 6 ‘nay’ Dems from Obama districts, but Obama carried these by less than 10 points (he carried Massachusetts by 26); and, in an election year any movement from these 6 almost certainly has more to do with voter opinion than with pressure from the Speaker. Since the original House vote opinion has shifted rather significantly against reforms (Exhibit 4) – so we balance the possibility of gaining any of these six votes against the odds that voter opinion (and election results in VA, NJ, and Mass.) shift former ‘yea’ votes to ‘nay,’ particularly in more conservative districts. 39 of H.R. 3962’s original ‘yea’s’ come from districts that President Obama either lost (18 districts), or won by fewer than 10 points (21 districts, Exhibit 5). Of these 39, 20 districts are rated ‘leans Democratic’ or less by Cook, CQ, or both. On the reasonable assumption that voters are more powerful than the Speaker in an election year, we believe more moderates’ votes are lost than gained.

The foregoing argues that the Speaker starts with 216:216, gains 2 or 3 ‘yays’ from retirees, and fights to lose no more than two moderates to mounting voter discontent with the reform effort – as starkly evidenced in recent elections. On its own, this is an incredibly big lift – but ignores the relevance of abortion and immigration.

We believe Stupak has at least 10 votes that will shift to opposition unless the Senate language on abortion is a closer match to the House language; his bloc of pro-life Democrats have voted in unison on the 15 major right-to-life relevant provisions to come before the House in the last decade, with the exception of a single member on a single provision (Exhibit 6). Presumably the effective Stupak bloc is in fact larger, as members with insufficient tenure to meet our definition of ‘core’ bloc constituents may carry equally strong convictions. 41 Democrats that supported H.R. 3962 also voted in support of the Stupak amendment. On the opposite side of this issue, if the Speaker accommodates Stupak’s demands, she stands to lose some portion of her pro-choice caucus. 153 House Democrats have a Planned Parenthood (i.e. pro-choice) score of 95 or above; 98% of them voted in favor of H.R. 3962 (Exhibit 7). We recognize the temptation to view liberal / progressive ‘yea’ votes as solid, but believe this ignores the fact that many of the party’s more liberal members simply do not like the provisions under consideration (no public option, reliance on for-profit insurers, etc.) and are unwilling to sacrifice ground on choice as the cost of passing what they see as an unappealing package of health reforms.

The Senate bill does not allow undocumented immigrants to purchase care on the exchanges with their own money; the Congressional Hispanic Caucus (20 votes, Exhibit 8) vowed to withhold its support of H.R. 3962 over similar language. Presumably, unless the Senate bill can be modified to match the House provisions in this regard, the Speaker loses some or all of these 20 votes.

All of which takes us to procedure. If the House passes the Senate bill, it must do so with no modifications – otherwise the bill would go to the Senate and die there. If the House passes the Senate bill, presumably the President signs it quickly into law. The plan is for the House to immediately pass a reconciliation measure containing language that modifies the Senate bill (now presumably law) to some agreed-to compromise. There are two enormous challenges here – first, neither the abortion nor immigration concerns of the Stupak bloc or CHC are likely to be addressable via a reconciliation measure, as provisions under reconciliation must be budget relevant, and bending these two issues (particularly abortion) to budget relevancy is difficult at best, and in all likelihood cannot be done. This means Stupak’s bloc would have to believe the House (with a pro-choice majority) would pass a non-reconciliation bill limiting women’s right to choose – and that the Senate would pass it as well. We simply cannot see a scenario in which anyone could reasonably expect this Congress, before and much less after it got what it wanted on healthcare, to pass restrictions on choice. The immigration issue is much less politically charged, but the dynamics are similar – we can’t see how CHC members can rely on a promise to pass modifications to the Senate bill’s relevant provisions if this has to go through normal Senate voting procedures.

Not only are abortion and immigration almost certainly out of scope for a reconciliation measure, keep in mind that reconciliation is such a narrow-bandwidth and uncertain legislative channel that other key provisions in the reconciliation measure may not survive, and so might never pass into law. All of which means that any House member that doesn’t like the Senate bill – which means most of them – would be forced to face the risk that modifications they deem essential are cut from the Senate bill during floor debate[3].

Finally, we note that reconciliation, while designed to prevent a minority from filibustering budget measures, can in theory allow for a comparable tactic. Reconciliation rules limit floor debate to 20 hours, but place no limits on the number of amendments[4] that can be offered – including by the minority. And, the amendments have to be voted on – potentially even read aloud. The prospect of the minority offering an endless river of amendments to a reconciliation measure it opposes has existed since reconciliation first went into effect, though it’s never been done. The threat has been made; Senator Dole once appended the entire text of the US code to such an amendment, clearly signaling his willingness to stall the related measure – and withdrew the amendment after his demands were met.

Summary

We continue to believe that large scale reforms are more likely to fail than pass. Interestingly, we believe that if Congress goes all-in to pass the Senate bill that this consumes any remaining capacity the Congress has for substantive healthcare legislation, for quite some time. Accordingly, this path appears quite binary – everything or nothing. If this effort fails, as we expect, we would be quite surprised to see further legislative attempts in this Congress, even for much smaller scale reforms.

  1. Reason #1: Presumably the Senate cannot muster 60 healthcare votes, and so presumably cannot pass anything healthcare related without using reconciliation procedures to circumvent the 60 vote requirement. And, recall that reconciliation is unfriendly to large complex bills. As such, if Congress is going to pass a large and complex reform package, it’s going to have to be the one the Senate has already passed. Reason #2: reconciliation measures are required to originate in the House.
  2. See Brandice Canes-Wrone’s work from the Woodrow Wilson School at Princeton.
  3. For more details on reconciliation and its history in the Senate, please see our September 8, 2009 report, available at www.sector-sovereign.com.
  4. Limits are placed on the type of amendments – they too must be budget relevant – but in practice this leaves tremendous scope of subject matter from which amendments might be drawn.
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