Special Interest Money Means Longer Odds for Public Option

As I lamented yesterday, health care is one of those areas where both popular opinion and sound public policy seem to take a backseat to protecting those stakeholders who benefit from the status quo. But can we actually see — statistically — the impact of lobbying by the insurance industry on the prospects for health care reform? I believe that the answer is yes.

Some 37 senators are listed by Howard Dean’s website as supporting the public option so far: 36 Democrats plus Olympia Snowe. To Dean’s list I add Arlen Specter as a ‘yes’ vote, based on a recent public statement.

I decided to build a model to explain and predict whether a particular senator supports the public option. The variables in the model are as follows:

— The senator’s ideology, as measured by his DW-NOMINATE score;
— Per capita health care spending in the senator’s home state;
— Lobbying contributions received by the senator from health insurance PACs since 2004.

Below the jump, I explain each of these in a bit more detail.

Ideology. DW-NOMINATE scores measure a senator’s ideology on a scale that generally runs from -1 (extremely liberal) to +1 (extremely conservative), although scores slightly less than -1 or slightly greater than +1 are possible under unusual circumstances. These days, the average Democratic senator has a score of -.44, and the average Republican senator a score of +.48.

DW-NOMINATE data has not yet been published for the 111th (current) Congress, so I use data from the 110th Congress instead. For freshman senators, I extrapolate DW-NOMINATE scores by translating (via regression analysis) Progressive Punch scores. Extrapolated scores for freshmen members of the Senate are as follows:

Merkley     -.495Burris      -.494Kaufman     -.494Gillibrand  -.483Udall, T    -.472Udall, M    -.420Warner      -.398Begich      -.390Bennet      -.384Hagan       -.353Johanns     +.532Risch       +.534

In addition, a special score is required for Arlen Specter, who recently switched parties. Specter’s score is extrapolated based on a recent analysis we did of his voting behavior since becoming a Democrat. Specter’s score according to this analysis is -.255. This makes Specter the fifth most conservative Democrat, slightly to the left of Evan Bayh and slightly to the right of Tom Carper.

Per Capita Health Care Spending. As estimated by the Department of Health and Human Services. We use data from 2004, which is the most recent available. Health care spending varied in 2004 from $3,972 per head in Utah to$6,683 per head in Massachusetts.

PAC Contributions. Based on data downloaded from OpenSecrets.org, a.k.a. the Center for Responsive Politics. Contributions were tallied from two industry codes: F3200 (Accident & Health Insurance) and H3700 (HMO’s). Data covers the 2004, 2006 and 2008 and 2010 campaign cycles. The fundraising data is adjusted based on the number of cycles that the senator has participated in as a Congressman (including time spent in the House of Representatives) or as a candidate, where 2010 is treated as 1/8th of a cycle since one quarterly report has so far been filed from the two-year period. So, for example, a senator that ran for and won office in 2006 is treated as participating in 2 1/8th out of a possible 3 1/8th cycles: 2006 as a candidate, and then 2008 and the fractional cycle in 2010 as a senator.

Top recipients of PAC money from these industries since 2004 are as follows:

Senator            Cycles     PAC $Baucus (D-MT) 3.125$141,250McConnell (R-KY)   3.125      $110,750Nelson (D-NE) 3.125$106,123Kyl (R-AZ)         3.125      $106,000Gregg (R-NH) 3.125$103,500Grassley (R-IA)    3.125      $95,000Lincoln (D-AR) 3.125$91,000Enzi (R-WY)        3.125      $87,000Chambliss (R-GA) 3.125$86,750Ensign (R-NV)      3.125      $85,750======================================AVERAGE SENATOR$37,267

The model employed is a standard logistic regression with these three variables: ideology, lobbying and health care costs. Ideology is statistically significant at the 99th percent level, PAC contributions at the 95th percent level, and health care costs — senators in states with more health care spending are more likely to support the public option — at the 90th percent level. The R-squared for the model is .61, which means that these three variables alone give us 61 percent of the information that we need to predict a senator’s position on the public option. The model guessed the senator’s position correctly in 87 out of 99 instances.

There are several neat things we can do with this. One is to evaluate the impact of insurance industry money on a senator’s likelihood of supporting the public option, holding ideology and health care spending in the senator’s home state constant. The chart below presents these estimates for a liberal (DW-NOMINATE score of -.6), mainline (-.4) and centrist (-.2) Democrat, as well as for a centrist (+.2) Republican:

Lobbying contributions appear to have the largest marginal impact on middle-of-the-road Democrats. Liberal Democrats are likely to hold firm to the public option unless they receive a lot of remuneration from health care PACs. Conservative Democrats may not support the public option in the first place for ideological reasons, although money can certainly push them more firmly against it. But the impact on mainline Democrats appears to be quite large: if a mainline Democrat has received $60,000 from insurance PACs over the past six years, his likelihood of supporting the public option is cut roughly in half from 80 percent to 40 percent. (One caution: It’s possible that we’re confusing cause and effect: perhaps senators receive a lot of money from the insurance industry because they hold conservative positions on health care, rather than the other way around. Although I believe that accounting for ideology should correct for most of this, I’m open to suggestions on an alternative model design that would better be able to disentangle these effects.) Note that PAC money spent on Republicans is completely wasted insofar as the public option goes. Someone like Jim DeMint is almost certainly not going to support the public option to begin with; you don’t need to give him any further incentive to oppose it! Of course, the insurance industry may get its money’s worth in other ways, such as by generating more vigorous opposition from these Republicans to more “bipartisan” versions of health care reform. What happens if we set the lobbying variable to zero for all senators? That is, suppose that the health care insurance industry were prohibited from making political contributions? In that case, the model predicts, 47 senators would currently support the public option, as opposed to the 38 who actually do. In other words, the insurance industry’s influence appears to swing about 9 votes against the public option. Whatever number of senators wind up supporting the public option, add 9 to it, and you’ll have a decent ballpark estimate for what the level of support might be if not for insurance industry contributions. Note, however, that we haven’t attempted to model the impact of contributions from other interest groups, including both pro-health reform organizations such as labor unions or other stakeholders like pharmaceutical companies. We can also estimate which particular senators are most likely to have been influenced by lobbying money. The following chart presents the model’s estimates of the net decrease in a senator’s probability of supporting the public option based on the quantity of insurance PAC money that he has received: The single senator who’s position on the public option is most likely to have been changed by lobbying money is Mark Warner of Virginia, who has already raised$69,000 from insurance industry PACs in spite of having been in the Senate for less than six months. Absent industry money, the model estimates about a two-thirds likelihood that Warner would support the public option; with it, the model thinks the chances are very low. Indeed Warner has been mum on the public option to date.

Ranking next on the list is Harry Reid, who has taken some \$78,800 from insurance industry PACs and who has also yet to articulate a position on the public option in spite of his status as Majority Leader. If the model is right, Reid’s noncommittal stance on the issue might be better conceived of as tacit, if somewhat soft, opposition. Following Reid is Kent Conrad of North Dakota, who has floated a compromise bill that would replace the public option with a co-op system, a version of which the Senate Finance Committee appears likely to adopt.

Some traditional progressive villains, on the other hand, do not rank as highly on the list as you might think. Ben Nelson of Nebraska, for instance, has taken a lot of money from insurance industry PACs, but as a very moderate Democrat from a state with low health care costs, he was not terribly likely to support the public option to begin with. Max Baucus, who leads all current senators in money accepted from the insurance industry, was also somewhat unlikely to support the public option in the first place, but he almost certainly won’t be an advocate for it given the money he’s received. Taken in this context, one wonders whether Baucus was ever a sincere supporter of the public option, or rather, whether he used the poor CBO score that the Senate Finance Committee’s draft bill received (a draft that did not include a public option!) as an excuse not to have to bother with it.

There are 21 senators, all Democrats, who are currently on the fence on the public option; Mary Landrieu, according to Dr. Dean’s website, is the only Democrat who has come out more or less officially against it. (Dean’s website also lists many Republicans as “undecided”, but since all Republicans except Olympia Snowe sent a letter to President Obama stating their opposition to the public option, it is safe to assume they are against it). We can rank these senators according to their modeled likelihood of supporting the public option, in order to give us some sense for who the most likely converts might be.

If the Democrats are operating in a 50-vote environment on health care (which is debatable) then they need to find 12 additional votes for the public option. The easiest pickup, not listed here, is Al Franken, who will almost certainly support the public option and who will probably be seated by the time the Senate votes on health care. The next 11 easiest converts are, in order, Senators Begich, Byrd, Cantwell, Dorgan, Tester, Wyden, (Bill) Nelson, Hagan, Lieberman, (Mark) Udall, and Carper. One also imagines that if a bill with a public option wins the race to the floor, Senator Reid will at some point have grit his teeth and signed off on it.

The other senators on the bottom half of this list are liable to be tough gets. Keep in mind, however, that these probabilities reflect the chances of a senator having come out for the public option already and not necessarily the probability that he will do so in the future. There are a couple of potential game-changers that could shift the momentum on the issue, one of which would be successful intervention by the President and the other of which would be a favorable CBO score on the House’s version of the health care bill, which does include a public option.

To repeat myself slightly, given the following three contingencies…

1. A good CBO score for the House (public option) bill;
2. Successful intervention on behalf of the public option by Obama;
3. The willingness and/or ability to proceed in a 50-vote environment, a.k.a. reconciliation

…I believe Democrats need at least two of these three things to occur to make the public option a realistic possibility, and perhaps all three to make it a likelihood.

If none or one of these things occur, progressives are probably better off devoting their energies to deciding whether they prefer Wyden-Bennett or some other “outside-the-box” alternative to the sausage that the Finance Committee winds up making.

To be clear, not all of the opposition to the public option is the result of special interest money. Most Republicans probably oppose it on general principle, and there are a couple of Democrats, like Maria Cantwell of Washington, who have yet to come around to it even though they’ve taken almost nothing (in Cantwell’s case, literally nothing) from the insurance industry. But the money is why, even with 59-60 votes in the Senate and a President with high approval ratings, Democrats are facing an uphill battle on the issue.

Nate Silver is the founder and editor in chief of FiveThirtyEight.