Senate Finance Committee Chairman Max Baucus and ranking Republican Chuck Grassley released a draft jobs bill yesterday that would cost about $85 billion. It “would give employers a payroll tax exemption for hiring those who have been unemployed for at least 60 days. The bill would also provide a $1,000 income tax credit for new workers retained for 52 weeks.” Click here to read a copy of the draft bill.

A bipartisan jobs bill would be great if that bill would create a significant number of new jobs. Unfortunately, analysts agree that many of the measures in the Baucus-Grassley bill would do little on that front. More details are after the jump.

Following up on the diary I posted this morning, this post compiles links to Bleeding Heartland’s coverage of national politics from July through December 2009. Health care reform was again the number one topic. I wish there had been a happy ending.

Senate Democrats have not given up on passing health care reform through normal procedures requiring at least 60 votes to overcome a Republican filibuster. The problem is, several conservative Senate Democrats are on record opposing a public health insurance option. Meanwhile, a bill with no public option will have trouble passing the House of Representatives, where the overwhelming majority of the Democratic caucus supports a robust public option tied to Medicare rates.

The obvious political solution is to include some watered-down public option in the bill, giving cover to Progressive Democrats who insist on a public option while placating House Blue Dogs and Senate conservatives who want to protect private insurers’ market share.

The “triggered” public option favored by many industry allies didn’t fly, because most Democrats understand that the trigger would never be pulled. This past week, a new possible compromise emerged:

It was pulled out of an alternative idea, put forth by Sen. Tom Carper (D-Del.) and, prior to him, former Senate Majority Leader Tom Daschle, to give states the power to determine whether they want to implement a public insurance option.

But instead of starting with no national public option and giving state governments the right to develop their own, the newest compromise approaches the issue from the opposite direction: beginning with a national public option and giving state governments the right not to have one.

I consider this idea’s pros and cons after the jump.  

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.  

For months, White House officials and Senate leaders praised the “gang of six” negotiations toward a bipartisan deal on health care reform, even as other observers doubted the Republicans in that group were negotiating in good faith. At the beginning of the summer recess in August, Senator Jay Rockefeller (who was shut out of the deal-making) warned:

Changes to the bill have been frustrating, Sen. Jay Rockefeller (D-W.V.) told reporters at a press conference, particularly given that the Republicans — Mike Enzi of Wyoming, Chuck Grassley of Iowa and Olympia Snowe of Maine — are, in his opinion, just stalling for time.

“You just watch as the bill diminishes in its scope, in its coverage, in its ferocity to try to attack the problem. I don’t know where it will come out,” Rockefeller said. “My own personal view is that those three Republicans won’t be there to vote it out of committee when it comes right down to it, so that this all will have been a three-or-four-month delay game, which is exactly what the Republicans want.”

No Republicans stood with Senate Finance Committee Chairman Max Baucus last week as he finally unveiled what David Waldman described as “a plan that amounts to capitulating to every Republican demand, and then adding a heaping pile of political suicide on top of it.” The bill is in markup this week, and CA Berkeley WV has been blogging the Senate Finance Committee meetings for Congress Matters (day one, day two and day three).

Where does ranking Finance Committee member Grassley stand after Baucus bent over backwards to keep negotiating with him all summer? After the jump I’ve posted the relevant portion of a transcript from Grassley’s September 24 telephone news conference with Iowa reporters. The short version is, he’s against the bill because:

1. The individual mandate to buy health insurance amounts to “[q]uite a steep tax for people that maybe don’t pay a tax.”

2. Democrats supposedly were “not willing to go far enough” on enforcement to make sure illegal immigrants wouldn’t be covered.

3. Democrats supposedly “weren’t willing to go far enough to make sure that the subsidy through the tax credit was not used to finance abortions.”

4. You shouldn’t be “increasing taxes and cutting Medicare” when “we’re in depression.”

I told Iowa Republicans not to worry about Grassley voting for any health care reform bill. Senate Democrats should reject the concessions Baucus made to win GOP votes that are now off the table.

Senator Jay Rockefeller was excluded from the bipartisan group of Finance Committee members who worked on the bill Chairman Max Baucus unveiled on Wednesday, so he spent part of his summer vacation researching the fake public option favored by some “gang of six” members. He reported on his findings in an open letter to Baucus and ranking member Chuck Grassley. You should click through and read Rockefeller’s whole letter, but here are some excerpts:

“First, there has been no significant research into consumer co-ops as a model for the broad expansion of health insurance. What we do know, however, is that this model was tried in the early part of the 20th century and largely failed. As the USDA states in its response letter, ‘Government support for the cooperative approach to delivering universal health care was reduced during [World War II] and terminated afterward.’ This is a dying business model for health insurance. Moving forward with health insurance cooperatives would expose Americans, who are hoping for a better health care system, to a health care model that has already been tried and largely failed in the vast majority of the country.

“Second, there is a lack of consistent data about the total number of consumer health insurance cooperatives in existence today, and there have been no analyses of the impact of existing health insurance cooperatives on consumers.

“Third, all of the consumer health insurance cooperatives identified by the [U.S. Department of Agriculture] and [National Cooperative Business Association] operate and function just like private health insurance companies. Therefore, it is unclear how expanding consumer health insurance cooperatives would actually achieve greater affordability for consumers or bring about greater competition in the private market…

The Congressional Budget Office doesn’t expect the co-ops to affect the cost of the Baucus bill:

(The proposed co-ops had very little effect on the estimates of total enrollment in the exchanges or federal costs because, as they are described in the specifications, they seem unlikely to establish a significant market presence in many areas of the country or to noticeably affect federal subsidy payments.)

The failure of co-ops to provide competition in Iowa bears out the CBO’s expectations:

In the 1990s, Iowa adopted a law to encourage the development of health care co-ops. One was created, and it died within two years. Although the law is still on the books, the state does not have a co-op now, said Susan E. Voss, the Iowa insurance commissioner.

Wellmark Blue Cross and Blue Shield collects about 70 percent of the premiums paid in the private insurance market in Iowa and South Dakota.

It’s past time for President Obama to stop sending out White House staff and cabinet secretaries to signal that Obama might accept cooperatives as an alternative to a public health insurance option.

Here’s hoping that even in the absence of presidential leadership, Rockefeller can get strong amendments attached to the Baucus bill or make sure it never gets out of the Senate Finance Committee.

President Barack Obama goes before Congress this evening to urge passage of health care reform this year. I will update this post later when the prepared text of the speech becomes available. White House officials say Obama will make the case for a public health insurance option, but it sounds as if he will still leave the door open for Congress to take a different approach. That doesn’t look like a strong negotiating position to me.

Various polling firms will survey people who watch Obama’s speech tonight. Mark Blumenthal of Pollster.com discusses the methodology of instant reaction polls and gives a few reasons for you to be skeptical of their findings.

Speaking of polls, I was disappointed to learn from Greg Sargent that a recent White House memo omitted results from polls showing strong nationwide support for a public health insurance option. (Multiple polls earlier this summer also found majorities in favor of a public option. In fact, Republican pollster Rasmussen has found that support for health care reform drops sharply if there is no public option.

Still, expect to hear Republicans demagogue against government-run “Obamacare.” Yesterday The Iowa Republican blog hyped a new poll from the Winston Group showing that a plurality of Iowans oppose “Obama’s plan” for health care (whatever that is). I wasn’t surprised to read that the head of the Winston Group

has served as a strategic advisor to Senate and House Republican leadership for the past 10 years. He was formerly the Director of Planning for Speaker of the House Newt Gingrich, and advises center-right political parties throughout Europe. Additionally Winston was a senior fellow at the Heritage Foundation where he did statistical policy and econometric modeling. He has served in a senior staff role to four RNC Chairmen.

Gee, I’m shocked that the Winston Group would produce a poll indicating that Obama’s plan is unpopular.

The president’s support has declined quite a bit among Democrats and independents recently. The obvious way for him to turn this situation around is to get behind a real health care reform package that doesn’t give away the store to corporate interests.

Speaking of giving away the store, Senate Finance Committee Chairman Max Baucus finally made his health care plan public this week. Turns out K Street lobbyists had the draft before Baucus showed it to fellow senators or White House officials. Also, a Baucus staffer who used to work for WellPoint is the author of the document.

Ezra Klein thinks the Baucus plan isn’t as bad as you may have heard, but Chris Bowers explains why it is very, very bad. I’m keeping my fingers crossed that Chuck Todd and Andrea Mitchell are correct, and the White House is sick of dealing with Baucus. But like Bowers, I am skeptical that Obama would push for any law encountering objections from the major industry it affects. Consequently, I have no confidence in Obama to reject the Baucus approach outright.

Post any thoughts about the president’s speech or health care reform in this thread.

UPDATE: The full text of the speech as prepared is after the jump. I didn’t watch, but I did read the speech and I am very disappointed. He made a big deal about the moral case for reform, then defended the public option by saying don’t worry, hardly anyone will sign up for it. The only veto threat he made was, “I will not sign a plan that adds one dime to our deficits – either now or in the future.”

If we did health care reform right, we would save money and not add to the deficit. But on principle, I reject the idea that providing universal health care at reasonable cost is not worth doing if it adds to the deficit. Obama doesn’t mind expanding our commitment in Afghanistan, providing an open-ended bailout to Wall Street, extending most of the Bush tax cuts and any number of other things that add to the federal deficit. But for some reason, health care reform isn’t as important. Pathetic.

Corrupt Democrats will make sure that no real public option remains in the bill, which will drive up the cost, allowing Republicans to complain that Obama is breaking his promise not to add to the deficit. To keep costs down, Congress will probably reduce the subsidies available to citizens who will be forced to purchase private insurance. Huge bonanza for insurance companies, nothing to keep costs down, political suicide for the Democratic Party.

I don’t care what the instant reaction polls say; in my view this speech was a failure.

Fed up with the conservadem approach to slowly killing healthcare reform, a coaltion of Unions have taken their gloves off and launched radio ads in Montana, Iowa, North Dakota, and Arkansas asking key Senators from those states What Side Are You On?

Senator Jay Rockefeller speculated two weeks ago that the Republicans working with Senate Finance Committee Chairman Max Baucus on a health care bill were only trying to delay reform and diminish the bill as much as possible before voting against it. On Monday, “gang of six” member Senator Chuck Grassley went on MSNBC and in effect admitted Rockefeller was right:

“I am negotiating for Republicans,” he said. “If I can’t negotiate something that gets more than four Republicans, I’m not a good negotiator.”

When NBC’s Chuck Todd, in a follow-up question on the show, asked the Iowa Republican if he’d vote against what Grassley might consider to be a “good deal” — i.e., gets everything he asks for from Senate Finance Chairman Max Baucus (D) — Grassley replied, “It isn’t a good deal if I can’t sell my product to more Republicans.”

Grassley’s problem isn’t not being a good negotiator, it’s his failure to negotiate in good faith. Remember, three months ago he was dangling the possibility of 70 to 80 Senate votes for health care reform if only Democrats would take a bipartisan approach to the bill.

Up to now, Baucus and the White House could use Grassley as cover for giving away the store to corporate interests. (Republicans conveniently insist on the same things the drug and insurance lobbies want in or out of the bill.) But if Grassley won’t even commit to voting for a bill that contains everything he wants, what is the point of continuing this charade?

Unfortunately, negotiating with Grassley has already done considerable harm. His comment at a town-hall meeting last Wednesday was telling:

“…If (Democrats) do go ahead (on their own), this is what I fear.  They get done what they want, they’re going to change our health care system forever. You understand I feel a little bit like the boy sticking his finger in the dike, trying to stop the ocean from coming in…If I had not been at the table, there would have been a bill through the (Senate Finance) Committee the week of June 22 and it would have been through the senate by now because there’s 60 Democrats so I think that I have, by sticking my finger in the dike, I’ve had an opportunity to give the grassroots of America an opportunity to speak up as you’re seeing every day on television and I think that’s a good thing.”

Iowa Republicans who can’t see how much Grassley is helping their cause amaze me.

UPDATE: Some White House officials told Marc Ambinder that Sebelius misspoke, or the media misinterpreted her remarks. I would prefer a clear statement from the president.

Health and Human Services Secretary Kathleen Sebelius waved the white flag on Sunday:

Sebelius said the White House would be open to co-ops instead of a government-run public option, a sign Democrats want a compromise so they can declare a victory on the must-win showdown.

“I think there will be a competitor to private insurers,” she said. “That’s really the essential part, is you don’t turn over the whole new marketplace to private insurance companies and trust them to do the right thing. We need some choices, we need some competition.”

Sen. Richard Shelby, R-Ala., said co-ops might be a politically acceptable alternative as “a step away from the government takeover of the health care system” that the GOP has assailed.

(continues after the jump)

Via the Iowa Senate blog, I saw this post by Amy Sullivan at Time magazine’s Swampland blog. She re-read the 2003 Medicare prescription drug bill, which passed with the votes of most Republicans, including our own Senator Chuck Grassley:

Anyone want to guess what it provided funding for? Did you say counseling for end-of-life issues and care? Ding ding ding!!

Let’s go to the bill text, shall we? “The covered services are: evaluating the beneficiary’s need for pain and symptom management, including the individual’s need for hospice care; counseling the beneficiary with respect to end-of-life issues and care options, and advising the beneficiary regarding advanced care planning.” The only difference between the 2003 provision and the infamous Section 1233 that threatens the very future and moral sanctity of the Republic is that the first applied only to terminally ill patients. Section 1233 would expand funding so that people could voluntarily receive counseling before they become terminally ill.

At his Winterset town-hall meeting on Wednesday, Grassley said this:

You shouldn’t have counseling at the end of life.  You ought to have it done 20 years before you’re going to die.  You ought to plan these things out. I don’t have any problem with things like living wills, but they ought to be done within the family. We should not have a government program that determines you’re going to pull the plug on grandma.”

Some of the current draft health care reform bills would cover counseling to help people create living wills before they ever get sick, which is what Grassley says should happen. In contrast, the 2003 bill he voted for only covered such counseling for people who were already terminally ill.

How interesting that Grassley only recently, under fire from conservative Republicans, decided that counseling on end-of-life options might allow someone “to decide grandma’s lived too long.”

By the way, Grassley convinced Senate Finance Committee Chairman Max Baucus to drop the end-of-life provisions from that committee’s draft bill. I didn’t think it was possible for Baucus to prove himself to be any more of a tool for Republicans. Talk about negotiating from a position of weakness. I hope Howard Dean is right in predicting that those provisions will be restored in the final version of the bill.

Speaking of Grassley, he now has two likely Democratic opponents. Bankruptcy attorney and former State Senator Tom Fiegen announced his candidacy today and has a campaign website here. His priority issues are full employment and health care for those without. James Lynch interviewed Fiegen for this piece in the Cedar Rapids Gazette.

Bob Krause has been exploring a Senate bid for several months. You can learn more about his campaign at KrauseforIowa.com.

Neither Fiegen nor Krause is going to beat Grassley next year, but it’s important to have Democrats committed to making the case against him. That could reduce the number of Democratic and Democratic-leaning independents who cross over to vote for the incumbent, and we need as much straight-ticket voting in 2010 as possible.

UPDATE: Dueling statements from Representative Bruce Braley (IA-01) and Grassley are after the jump.

SECOND UPDATE: I missed this story on Wednesday–Grassley was promoting Glenn Beck’s book in Winterset. Great partner in constructive bipartisan negotiations!

Iowa conservatives are becoming increasingly concerned by Senator Chuck Grassley’s refusal to “just say no” to President Obama’s health care reform plans. Grassley is part of a group of six Senate Finance Committee members who are working on a compromise bill. While some Republicans are hoping that defeating health care reform will become Obama’s “Waterloo,” Grassley has warned Republicans should could pay a price for blocking reform.

Now it’s not just Bill “crazier than Steve King” Salier who is floating the idea of a primary challenge against Grassley. Craig Robinson wrote at the Iowa Republican blog on Thursday,

The longer Sen. Grassley strings along Iowa Republicans, the more difficult his re-election effort may become. At the beginning of the year, it would have been absurd to suggest that Sen. Grassley could face a legitimate primary challenge. Now, with each and every passing day that Grassley flirts with supporting some version of health care reform, the possibility of a primary challenge grows. In fact, some Republican sources have told TheIowaRepublican.com that if Sen. Grassley votes for President Obama’s healthcare proposal, Grassley will indeed face a serious primary challenge.

Republicans needn’t worry about the game Grassley is playing on health care. I’ll explain why after the jump.

I’m no negotiating expert, but I know that if you’re not willing to walk away from a bad deal, no one will take your demands seriously.

Americans overwhelmingly want a public health insurance option and need that option for any number of reasons. Who you are and where you live strongly affects the kind of health insurance and health care you receive. Most Americans live in communities where one or two private companies dominate the health insurance market. Rural residents often have very limited access to health care providers. People of color also are shortchanged by our current system.

Despite all these problems, Senate Finance Committee Chairman Max Baucus has done his best in recent weeks to show that The Onion was right about him eight years ago. Baucus has continued to pursue a bipartisan agreement on health care containing a fake public option.

It’s time to cut Baucus off, and a great idea floated by Iowa’s own Senator Tom Harkin offers part of the solution. (continues after the jump)

Senator Chuck Grassley laid out his case against a “government-run” health care plan on the Senate floor yesterday. He used some of the same arguments he’s been making in conference calls with reporters and in his guest editorial at Politico.

I don’t know whether Grassley and the insurance lobby will be able to scare Senate Finance Committee Chairman Max Baucus away from supporting a public health insurance option.

However, after reading the highlights from recent opinion research that Richard Kirsch summarized at the Health Care for America Now blog, I am confident that the American public will not buy rehashed Republican talking points from 1993. For more on this point, follow me after the jump.

Iowa Independent posted a piece by Congressional correspondent Mike Lillis today: “Grassley leaves door open for government health care plan.” Lillis was on Grassley’s conference call with reporters today and heard the senator say this about a public health insurance option:

I think right now there’s a lot of people, including me – I’d prefer it not to be in [the bill]. Then there’s a lot of people that say, well, it’s got to be in or [there’ll be] no bill. And then there’s a dozen ways to look at possible compromises. And I think before I would write [it] off completely, I would want to look at what those possible compromises are.

I do not interpret this comment as a sign that Grassley is open to a government health plan. It sounds to me like he is working with Senate Finance Committee Chairman Max Baucus on a compromise that might be called a “public plan” but would not force private insurers to compete against a government plan like Medicare for All.

As Bleeding Heartland user ragbrai08 has noted, lots of things that could be characterized as a “public option” fall short of what we need.

Perhaps Americans would be allowed to buy into the health insurance program for federal employees, which is provided by various private insurance companies.

Lillis noted that during today’s conference call, Grassley suggested the federal government is not competent to “run a government-run health insurance plan in competition with the private sector […].” I read this to mean that Grassley is still working overtime to keep a public health insurance option out of the Senate’s health care legislation.

Here’s hoping Senate Democrats who understand the need for a public option are able to prevail with Baucus.

As the ranking Republican on the Senate Finance Committee, Senator Chuck Grassley will influence the shape of health care reform. For that reason, he and Senate Finance Committee Chairman Max Baucus of Montana were invited to lunch at the White House on Wednesday with President Barack Obama and Vice President Joe Biden.

Grassley’s message to the president and vice president, as well as to every journalist who’ll listen, is that health care reform should be done through a bipartisan bill that can receive 70 or 80 votes in the Senate. (See also Grassley’s recent guest editorial at Politico.)

Many Democrats want to include a health care bill in the budget reconciliation process, which would prevent a Republican filibuster. Grassley warns that it would be a mistake to reform such a large part of the U.S. economy without broad support from members of Congress in both parties.

After the jump I’ll explain why Grassley is wrong, wrong, wrong about health care reform.

Congress will begin making important decisions on health care policy very soon. The Senate Finance Committee began drafting a health care bill a few days ago.

I was glad to see two Iowans among the representatives and senators who urged colleagues this week to include a strong public option in any health care reform plan.

After the jump I have more on where Congressman Dave Loebsack and Senator Tom Harkin stand on health care, as well as the benefits of creating a public health insurance option.

UPDATE: Thanks to Populista for reminding me that all Iowa Democrats in Congress (Bruce Braley, Dave Loebsack, Leonard Boswell and Tom Harkin) have signed on to support Health Care for America Now’s core principles for health care reform.

Iowa Independent reports that Senator Arlen Specter’s decision to become a Democrat leaves Iowa’s own Chuck Grassley with a difficult choice. He is currently the ranking member of the Senate Finance Committee, but with Specter’s departure he appears to be first in line to become ranking member of the Senate Judiciary Committee instead. According to Iowa Independent,

GOP conference rules forbid him from serving as ranking member of both panels at the same time, a Senate aide said Tuesday. Theoretically, he could get a waiver to serve on both, but that’s unlikely, the aide said.

So very shortly, Grassley has a tough choice to make: Either he can remain the senior Republican on Finance – a powerful spot this year with comprehensive health reforms looming, but also a position he’ll have to give up at the end of 2010 because of GOP term-limit rules – or he can accept the top GOP spot on Judiciary.

Judiciary will consider many important matters this year and next, possibly including a Supreme Court nominee. However, if I were Grassley I would stay at Finance for sure.

President Barack Obama wants health care reform to happen this year and is willing to use the budget reconciliation process to make it happen. The health care reform bill may become one of the most important pieces of legislation this decade. By all accounts Grassley has a strong working relationship with Senate Finance Committee Chairman Max Baucus.

I don’t think Judiciary will consider anything of comparable importance this year, and I doubt Grassley and Senate Judiciary Committee Chairman Pat Leahy would quickly develop the same kind of rapport Grassley has with Baucus.

At the end of 2010, Grassley’s term as ranking member of Finance will be up, and he can choose whether to become the ranking member of Judiciary or Budget. He has expressed a preference for Judiciary in the past.

If you were Grassley, would you take the chance to become the ranking member at Judiciary this year? If Grassley did give up his current position, it appears that Orrin Hatch would become the ranking member at Finance.

By the way, David Waldman reported yesterday at Congress Matters that Specter’s switch throws off the Judiciary Committee’s ratio of Democrats and Republicans. A new Senate organizing resolution will have to be adopted, and Democrats may use that opportunity to secure more seats on the Senate committees.

UPDATE: Grassley’s press secretary Beth Pellett Levine told me on Wednesday that the senator has not made any statement about whether he would consider becoming the ranking Republican on the Judiciary Committee.

I’ve been consistently worried that Barack Obama would not set an ambitious domestic policy agenda if elected president. His post-partisan rhetoric has given me the impression that he would move toward compromising with the Republican position on various issues before negotiations with Congress have begun. Specifically on health care, I agreed with Paul Krugman of the New York Times that Obama’s proposal was not as good as the plans John Edwards and Hillary Clinton advocated during the primaries.

Obama hasn’t been sworn in yet, and the new Congress won’t meet for more than a month, but already there are signs of growing momentum for truly universal health care reform (and not just incremental progress toward that goal).

On Wednesday Senator Max Baucus of Montana, who chairs the Finance Committee, released a “white paper” on health reform. You can get the gist by reading this diary by TomP or this one by DemFromCT. Ezra “Momma said wonk you out” Klein dived into the details in a series of posts this week.

The key point is that Baucus embraced the concept of mandatory health insurance, but with a public plan any American could choose to join. So, if private insurers kept jacking up premiums while covering less and less medical care, people could “vote with their feet” by paying into a public plan that would work like Medicare (the patient chooses the doctor).

This story explains Baucus’ line of thinking:

Baucus, of Montana, chairman of the Senate Finance Committee, said in a health-care blueprint released today that only a mandate could ensure people didn’t wait until they were ill to buy health insurance, forcing up the price for everyone.

The 89-page proposal revives a debate from the Democratic presidential primaries about how to overhaul the U.S. health- care system. Obama supported requiring coverage only for children, saying adults would buy coverage voluntarily if it were affordable. Senator Hillary Clinton of New York said insurance must be mandated for everyone.

“Requiring all Americans to have health coverage will help end the shifting of costs of the uninsured to the insured,” Baucus said today in his plan. The requirement “would be enforced possibly through the U.S. tax system or some other point of contact between individuals and the government,” he said, without spelling out possible penalties. […]

Because of the urgency of health-care reform, Congress should move on legislation in the first half of next year, Baucus said at a press conference today in Washington.

“There is no way to solve America’s economic problems without solving health care,” he said. The $2.2 trillion health-care system “sucks up 16 percent of our economy and is still growing,” Baucus said.

It’s hard to exaggerate the significance of this development. First, as many others have noted, if Baucus runs health care reform through the Finance Committee there is a good chance it will be the kind of bill not subject to a filibuster. That means the Democrats would need only 50 votes (not 60) to pass it in the Senate.

Second, Baucus is among the more conservative members of the Senate Democratic caucus (check out his Progressive Punch ratings here). If he is ready for big, bold health care reform, the ground has shifted.

Third, this development could be very discouraging for Iowa’s own Senator Chuck Grassley, the ranking Republican on the Finance Committee. Traditionally, Grassley and Baucus have had a close working relationship. But this past summer Grassley was annoyed when Democrats rejected a deal he thought he had cut with Baucus on a Medicare bill, and Baucus denied having reached any prior agreement with Grassley.

This report from Wednesday quotes Grassley expressing skepticism about finding the money to pay for a big health care initiative.

If Baucus moves away from the habit of compromising with Grassley now that the Democrats will have a solid Senate majority, could Iowa’s senior senator decide to step down in 2010? We all know that Grassley’s seat is safe for Republicans unless he retires. He seems to like his job, but perhaps facing defeat after defeat in a Democratic-controlled Congress would diminish his desire to hang around for another six years.