COMMENTARY:

Why Lieberman Blocks a Public Option

With the health-reform bill’s “public option” truly reduced to the “sliver” that President Barack Obama once called it – and indeed having become a feature that mostly benefits the insurance industry – the next question must be: why is it still being opposed by industry defenders like Sen. Joe Lieberman?

As the health bill has moved through Congress, the public option has been whittled down from an expansive alternative that might have enticed 119 million Americans to sign up, according to an industry-backed study, to a tiny remnant that the Congressional Budget Office believes will attract only six million customers, including many sick people whom private insurers don’t want anyway.

Put crudely, the public option in its current form would vacuum up the chronically ill and thus spare the insurance industry not only the expense of paying for their care but also the administrative costs of figuring out new creative ways to deny these sick people medical coverage.

According to the CBO, the planned “insurance exchanges” thus would give private insurers an estimated 24 million new – and relatively healthy – customers, many with government subsidies that would go directly into the coffers of the insurance industry. Without the public option, the industry might get six million more customers but they would include lots of sick people.

That means the current legislation with a weak public option is a win-win-win for the insurance industry.

It’s most lucrative market – large employers providing group benefits for employees – would be protected from competition from the public option; the surviving public option for individuals and small businesses would be barred from achieving savings by tying payments to Medicare rates; and the public option thus would get stuck charging higher premiums than private insurers because it would end up with the sickest part of the population, the CBO says.

So, from the perspective of an insurance executive, what’s not to like?

One obvious concern for private insurers would be that after the public option becomes available in 2013 through the insurance exchanges, Congress might be pressured by dissatisfied Americans to expand it into a real alternative to the harsh, profit-making practices of the insurance industry. That is called the “camel’s nose under the tent” theory.

Yet, while it’s hard to predict the future, it seems equally plausible that the industry would be worse off if it succeeds in eliminating the public option or killing health-care reform outright. As the U.S. health-care crisis worsens, private insurers and their political defenders could be blamed – and a more radical change might become possible.

That is the view of some progressives, such as Rep. Dennis Kucinich, D-Ohio, who believe the House-passed bill is so thoroughly compromised that it makes more sense to vote it down and start over, seeking either a “robust” public option tied to Medicare rates or a full-scale single-payer system that could prove the death knell for the insurance industry.

On balance, therefore, it would seem that the House-passed legislation and a similar bill in the Senate would represent a fairly safe – and reasonably profitable – bet for the industry, at least relative to the risks of stripping out the public option or simply blocking reform.

Which brings us to the question of why industry defenders are determined to sink the bill.

For the Republicans, the answer is easy: they want Obama to fail. Sen. Jim DeMint, R-South Carolina, put it bluntly in July when he declared that “If we’re able to stop Obama on this, it will be his Waterloo. It will break him.”

For conservative Democrats, the answer is slightly more complex. Operating in districts or states where right-wing media is particularly powerful and largely unchallenged, they may think they can achieve some safety by positioning themselves as independent-minded critics of Obama’s agenda.

For someone like Lieberman, however, the political equation is more troubling.

An independent from Connecticut who caucuses with the Democrats and who kept his Homeland Security Committee chairmanship despite campaigning for Republican presidential nominee John McCain in 2008, Lieberman seems eager to let his opposition to the public option be traced to a crass calculation of protecting Hartford-based insurance companies.

However, it’s harder to explain why Lieberman – who portrays himself as a social reformer – would vow to join a Republican filibuster against a bill that, for all its faults, would guarantee insurance for tens of millions of uninsured Americans, especially if the bill also stands to be a multi-billion-dollar boon for his constituent insurance companies.

Suspicions are growing among some Democrats that Lieberman has remained the ideological turncoat that many progressives viewed him as when he aggressively supported George W. Bush’s war in Iraq and urged Americans to reject Obama as someone with dubious patriotism.

On the stump with McCain in August 2008, Lieberman even questioned Obama’s commitment to the United States, calling the election a choice “between one candidate, John McCain, who has always put the country first, worked across party lines to get things done, and one candidate who has not.’’

So, maybe Lieberman wants to punish Obama for his perceived failure to take a harder line against Islamic militants in Afghanistan, Iraq and elsewhere.

As a neoconservative, Lieberman also has long ranked as one of Israel’s most devoted backers in the United States. Mark Vogel, chairman of the pro-Israel National Action Committee, once said, “Joe Lieberman, without exception, no conditions ... is the No. 1 pro-Israel advocate and leader in Congress. There is nobody who does more on behalf of Israel than Joe Lieberman.”

Given Lieberman’s staunch support for Israel, his resistance to Obama’s health-care initiative could be tinged by a desire to weaken the President’s ability to pressure Israel’s hawkish Likud government regarding concessions on Middle East peace.

Much like the Republicans who hope that defeat of health reform will lead to their political revival in 2010 and 2012, Lieberman may foresee neocons returning to power as well or at least a hobbled Obama unable to compel Israeli Prime Minister Benjamin Netanyahu to halt expansion of West Bank settlements or to take other steps that might lead to a Palestinian state.

If that’s the case, Democratic Majority Leader Harry Reid may find that Lieberman won’t budge on the public option – even if the bill is sweetened to help Hartford-based insurance companies ensure bigger profits.