Update: Daschle spokesperson tries to walk him back

Update II: Paul Blumenthal tracks down $1 million+ health industry business to Daschle-Dole-Baker law firm. Sam Stein has more at HuffPo.

Update III: The Hill, Centrist Dems unite to fight left on health care

If you want to understand how a so-called "bipartisan" health reform proposal can confuse just about everyone while giving away the store, just follow what’s happened since Mssrs. Dole, Daschle, Mitchell and Baker announced their "bipartisan compromise."

This is why I’m convinced scarecrows don’t have brains, because I can’t follow the emerging logic.

The argument starts with TNR’s Jonathan Cohn’s What Bipartisanship Actually Looks Like, gets picked up by WonkRoom Igor Volsky’s A Good Example of Bipartisanship, and settles with Matthew Yglesias’ How Many Votes Have Baker and Dole?

Cohn writes a piece noting some features that could be justified in a compromise, but he doesn’t consider the importance of what’s missing. Volsky quotes Cohn and half applauds the compromise, and Yglesias assumes they must be right, concluding "this would be better than what we have," but asking where’s the support from Republican Senators who actually vote?

Wrong question. Before liberals start whipping the vote for this mess, where’s the logic of how this makes things better? And what happens to the logic with the missing pieces, uh, missing? To unravel this mess, let’s go back to Cohn’s description and his argument that leads the flock over the cliff. First the description:

In its broad design, the bipartisan proposal looks a lot like the plans going through Congress. There is a requirement that businesses pay towards the cost of insurance for their employees, along with a requirement that everybody get insurance. To make coverage affordable and available to indivdiuals and small buisnesses that can’t get coverage now, the bipartisan group would set up an insurance exchange; there, insurers couldn’t deny people coverage or charge them more just because they have pre-existing conditions. People buying insurance through the exchange would also be eligible for subsidies, depending on their income levels.

Cohn then gives the plan the "good enough for bipartisan work" approval:

It’s not an ideal plan, from my perspective. Far from it. But it does demonstrate that when responsible conservatives want to be serious participants in the reform discussion, they can help produce reasonable legislation that would–at the end of the day–get pretty close to providing everybody with decent coverage while starting to restrain the rising cost of care.

I don’t have a clue how this can provide "everybody with decent coverage." But notice what’s missing? There’s no robust public plan that consumers can choose as an alternative to the private plans that would be eligible for purchase in the "exchange."

As I’ve said over and over, a public "exchange" is not a plan; it’s a market place where you choose between plans. It’s not one of the products, and it’s definitely not a public option product. You can only buy private plans in this exchange. So there’s no meaningful choice. Why is this so hard to grasp?

So what do we have left?

1. The insurance companies get the federal government to mandate that everyone must purchase insurance. (Insurance companies 1, consumers 0)

2. There are only private insurance plans available. (Private Insurers 2, consumers 0)

3. The federal government gets states who feel like it to create an exchange to help consumers shop for — and insurance companies sell — their private insurance. (Private insurers 3, consumers 0) [And insurance companies get an extra point in states that don't like federal intrusion]

4. The federal government then subsidizes consumers to help them pay the full premiums charged by the private insurance plans. Insurers win! 4-0!

Does this look familiar? Well, yes, because this is exactly what the private insurers proposed months ago, and are now salivating about. But that deal excluded what Obama and some Democrats proposed: a robust public plan option to compete with the private industry.

The so-called "bipartisan" proposal is exactly what the private industry developed to kill meaningful competion and avoid the possibility that consumers might actually leave the private insurance system and choose the public option.

And how does the insurance "bipartisan" proposal pay for the subsidies? Well since there’s no meaningful competition for the private industry, hence no incentive to cut costs by following the public model, the revenues get squeezed out of the public system and taxes:

They’d try to squeeze $500 billion out of Medicare and Medicaid, another $500 billion from new revenues including a cap on the exclusion for employer tax beneifts, plus $200 billion in some other effiency changes.

It’s one thing to tap those sources within a package that includes a well-designed public plan to create competition and the model for how savings occur while maintaining quality. But it’s quite another to drain the public systems when there’s no meaningful way to draw consumers and their associated revenues away from the private system and into the public system. Follow the money.

So this becomes a real Trojan horse — to cut benefits for Medicare and Medicaid, while causing a $1 trillion wealth transfer, backed by federal subsides from tax payer and public systems to enrich the private insurance industry.

Folks, this is shaping up as worse than the bank bailout. At least the arrogant banks are trying to give the TARP money back to avoid cutting their executive compensation. But here it’s just a government guaranteed tranfer of trillions with no offsetting benefits to the public.

Thank the dogs, dday gets it
Mike Lux/HuffPo, Daschle is dead wrong
E.J. Dionne, Bipartisanship of Fools
NYT Leonhardt chart, via Ezra Klein, More Money, Less Results
Ezra Klein, ideas to save reform, Health Care Reform in Danger (welcome back)
Sam Stein, Daschle statement, and walkback