“Blue Dogs make a deal with Dems” — the headline on the Huff Post ‘s latest story on health care, says it all about the American party system. It barely exists. The Blue Dogs, as hitherto noted, are the Congress Democrats who are centrist or to the right, mostly those in Republican states.

But they actually are Democrats, so the fact that they can be negotiating with the party leadership as if they were a separate unit, suggests that they can be regarded as both inside and outside of the party — something more than a faction, and less than a party. This revolting development is Obama’s biggest headache, but also a tribute to his success — the Dems are so dominant they can generate their own opposition, and negotiate with themselves, hence leaving the GOP out of the loop.

The deal in question refers to the House of Reps Blue Dogs, negotiating a deal on the House bill on health care. There is also a separate Senate bill on health care, the origination of entirely separate bills — which must then be reconciled — another feature of the US’s exciting experiment in running a 21st century society with an 18th century form of government.

The House bill on health care was more radical than the Senate, insistent on the public option, and more importantly tying its fees to the Medicare schedules (Medicare being the US system of free health care for the very poor, i.e. the one that leaves your average minimum wage worker uninsured). This provision was a very clever way of getting front end health care costs down, because it meant that the public health insurer could have – would have had to – undercut the prices of Big Private Health.

Guess which provision the Blue Dogs, most living off the drip feed of health industry donations, are negotiating with the leadership to excise? Without the Medicare tie, it will take much more stringent effort to use the public provider to keep health care costs down — since it will have to operate as a quasi-autonomous body, the temptation will always be to float fees upwards, rather than make efficiency savings.

The Medicare tie-in was Obama’s way of getting a real public option, without having both the political and culture war that sunk Hillary Clinton’s plan in the 90s. Looks like that war is happening anyway — the right and its tame media is already convincing people that they will have to transfer to the public provider, that costs will rise, that they will lose choice of doctor etc.

This is all staggeringly untrue, and the idea that some competition against the collusive private health care industry would raise prices just has one resorting to the dark thought that Americans as a polity really are dumber than your average nation.

The upside is a bill with a public option getting closer — a September vote rather than an August one in the House, later in the Senate, on bills that may be close enough together to reconcile or combine with some ease.

That would mean Obama could go into 2010 with a health care bill public option attached that he can begin rolling out. Instantly he would have achieved more than most Presidents achieve in one or even two terms, in terms of the daily lives of Americans. Politically, the hope is that a public option would build up its own constituency; so that tens of millions of people could be told that a Republican victory would mean that their health care provider would be sold off, pitching them back into the private sector morass.

Effectively that is inventing a huge voting bloc that wasn’t a ‘pre-existing condition’ so to speak, and moving things permanently to the left. If the stimulus package begins to kick in with a rise in employment — if, if, if — Obama’s sagging ratings (approval now dipping below 50%, on polls that nevertheless require scrutiny) the Dems would be well-placed for the midterms, and Obama for rolling out further reform.

If there is still a party which can reasonably be called the Democrats at the end of the process. Hair of the Blue Dog.

Peter Fray

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