Nancy_PelosiBoth Nancy Pelosi and Harry Reid released statements last night thanking President Obama for his renewed commitment to health care reform, and both vowed to get something done. But Pelosi made news earlier in the evening in a series of sit-downs with various journalists. She is now favoring a dual-track approach to health care, where the major deal is still done through the reconciliation sidecar process, and other pieces that cannot be added or fixed in reconciliation get done in standalone bills.

Pelosi continues to insist that the Senate bill, in its current version, could not pass her chamber. But with a separate bill, passed under reconciliation (which Pelosi prefers to call “majority vote”), she predicted, “it’s a whole different ball game … We’ll be able to come up with something that sufficiently addresses the concerns of the House members.” […]

The House is also eager to see a restructuring of other parts of the bill, but it is not clear that this could be done under the limitations of the reconciliation rules. Reconciliation can be used for provisions that have a direct effect on the federal deficit, but not for writing new policies, such as a repeal of the insurance industry’s antitrust exemption. Aides say, for instance, they have yet to figure out how to restructure the Senate bill’s health insurance exchanges, and make them national rather than state-based. As a result, Pelosi is also talking about a “separate track”–additional pieces of legislation to make these kinds of revisions.

Interestingly, she downplayed some of the hot-button issues that had dominated so much of the debate last year. Abortion, she said, “is not the subject of our conversations at this time.” And she dismissed any suggestion that the public option might be resurrected. “You can’t do that,” she said.

I think Pelosi is making a huge mistake trying to pretend the abortion issue doesn’t exist. And her entreaty that “you can’t do” the public option is curious – it reduces the deficit, so it’s open as a procedural matter. Is she saying the votes aren’t there for it? Since Jared Polis and Chellie Pingree are now whipping on it, we’ll certainly find out.

The major pieces of the reconciliation bill that Pelosi envisions still look to be fixing the excise tax, potentially going even further than the labor deal (“The easiest thing is to just get rid of the whole excise tax”); increasing affordability credits; adding some payroll taxes to offset the costs; and stripping some of the dealmaking like that of Ben Nelson’s kickback, which tainted the process. Reconciliation is a harrowing process, but these ideas appear to fit within the budgetary confines of the Byrd Rule.

The sequencing would go like this: the House would pass their reconciliation bill first, then the Senate, and only after that would the House pass the Senate’s health care bill. The President would sign them in reverse, so that the reconciliation fixes amend the Senate bill.

Still, none of this is etched in stone; Mark Pryor was not wrong in saying that nothing might get done all year. In particular, the whistling past the graveyard on the abortion issue seems to me very misguided. If anything, those votes need to be secured now.

UPDATE: Lynn Woolsey confirms that leadership isn’t considering the public option as part of any reconciliation sidecar, despite the budgetary implications. Woolsey has vowed to offer a standalone public option bill the day that health care passes. So even if it isn’t revived, we haven’t heard the last of the idea.

David Dayen

David Dayen