Tom Daschle’s admission that the public option was tossed in a deal with the hospital industry may come as news to a lot of people, if it gets wide attention. It’s significant that Daschle tried to clarify his statement to Igor Volsky at The Wonk Room, even though his book contains the same information:

In his book, Daschle reveals that after the Senate Finance Committee and the White House convinced hospitals to accept $155 billion in payment reductions over ten years on July 8, the hospitals and Democrats operated under two “working assumptions.” “One was that the Senate would aim for health coverage of at least 94 percent of Americans,” Daschle writes. “The other was that it would contain no public health plan,” which would have reimbursed hospitals at a lower rate than private insurers.

In addition, this acknowledgement lines up perfectly with the admittedly scant public record we have on the subject. Miles Mogulescu pursued this story at the Huffington Post for months, and Ed Schultz got an on-the-record confirmation from a reporter at the New York Times.

On Monday, Ed Shultz interviewed New York Times Washington reporter David Kirkpatrick on his MSNBC TV show, and Kirkpatrick confirmed the existence of the deal. Shultz quoted Chip Kahn, chief lobbyist for the for-profit hospital industry on Kahn’s confidence that the White House would honor the no public option deal, and Kirkpatrick responded:

“That’s a lobbyist for the hospital industry and he’s talking about the hospital industry’s specific deal with the White House and the Senate Finance Committee and, yeah, I think the hospital industry’s got a deal here. There really were only two deals, meaning quid pro quo handshake deals on both sides, one with the hospitals and the other with the drug industry. And I think what you’re interested in is that in the background of these deals was the presumption, shared on behalf of the lobbyists on the one side and the White House on the other, that the public option was not going to be in the final product.”

The timing of Kirkpatrick’s story about the health care negotiations covers exactly the same time frame as Daschle does – the summer of 2009, specifically July. This article is from August 13 of that year:

Early last month, for example, hospital officials were poised to appear at the White House to announce a deal limiting their industry’s share of the costs of the overhaul proposal when a wave of jitters swept through the group. Senator Max Baucus, the Finance Committee chairman and a party to the deal, had abruptly pulled out of the event. Was he backing away from his end of the deal?

Not to worry, Jim Messina, the deputy White House chief of staff, told the hospital lobbyists, according to White House officials and lobbyists briefed on the call. The White House was standing behind the deal, Mr. Messina told them, capping the industry’s costs at a maximum of $155 billion over 10 years in exchange for its political support.

I don’t know that there’s a piece of paper laying out the terms, or an audio tape of the meeting, or anything other than a handshake deal. But this is a fairly badly kept secret in Washington, and now Daschle went ahead and put it in a mass market book.

The hospital industry was an unsung player in the health care debate, but it was almost certainly their pressure, and their unwillingness to accept a public option which could have bargained down their profits, that led to its demise. In the next round of health reform, and there has to be a next round, the influence of the hospital industry must be taken into account.

Despite this chain of evidence laying around, from the NYT to Daschle, nobody has really run with this and delved into the nature of the WH/hospital deal, though we know most of the broad outlines. And I don’t think anyone can deny its existence at this point.

UPDATE: It should be noted that one person who denied this deal is the man who asserted it before, Chip Kahn, the hospital industry lobbyist. He says that there never was an explicit or implicit agreement, though he acknowledges that the industry opposed the public option and made a deal for $155 billion in scoreable give-backs, all of which is in the public record.

UPDATE II: I didn’t actually print Daschle’s walkback because it’s so pathetic I feel sorry for him:

“In describing some of the challenges to passage of the public option in the health reform bill, I did not mean to suggest in any way that the President was not committed to it. The President fought for the public option just as he did for affordable health care for all Americans. The public option was dropped only when it was no longer viable in Congress, not as a result of any deal cut by the White House. While I was disappointed that the public option was not included in the final legislation, the Affordable Care Act remains a tremendous achievement for the President and the nation.”

Keep in mind this is 100% opposite what he wrote in his own book.

David Dayen

David Dayen