The health care debate ripped the bandage from a long-festering wound in the Democratic party this week, splitting the progressives and the conservative Blue Dogs in the House of Representatives. After drawing a line in the sand on Thursday, progressive forces altered the course of the legislation, restoring a key provision.

    The fallout happened when conservative Democrats and Chairman of the House Energy and Commerce Committee Henry Waxman (D-California) struck a deal to move forward on stalled health care legislation. The deal would have reduced health care subsidies for lower- and middle-class Americans while increasing the amount of money the new public health insurance system would have paid to doctors and hospitals.

    Progressives objected on both fronts, saying that the increase in reimbursements would hurt the viability of a public plan and would do nothing to control costs. They insisted on keeping reimbursements at the same levels as current reimbursements under Medicare, an issue that they insisted was a deal breaker, which threatened to derail the legislation and further damage the relationship between conservative and progressive members of Congress.

    A deal brokered by Waxman would restore between 50 and 65 billion dollars in subsidies to the bill, according to press reports. The deal will allow the bill to pass out of committee, a major goal of Democratic leaders, who have been trying to maintain momentum going into their summer vacation.

    Democrats need to accomplish health care reform going into the 2010 elections. They will need a unified vote to pass legislation in the face of almost guaranteed unanimous Republican opposition.

    Public Option Under Fire

    Proposed legislation containing a so-called "public option" has been under assault by health industry allies, lobbyists with fat checkbooks, Republicans and conservative Democrats. Industry opposes the public option because it could create a competing health insurance program without the need to show a profit every quarter and with strong bargaining power over prescription drug makers.

    Wednesday, eager to get a health bill passed out of all relevant committees before Washington's mandatory summer vacation, Speaker Nancy Pelosi and Energy and Commerce Committee Chairman Henry Waxman compromised with conservative Democrats and reportedly watered down the health care bill, damaging the public option and reducing the low- and middle-class health care subsidies.

    Progressive members of Congress stood strong on Thursday, vowing to block any weakened bill.

    "We simply cannot vote for such a proposal," 57 members of the Congressional Progressive Caucus (CPC) explained in a letter to Pelosi, Waxman, and other committee chairmen involved in drafting health reform.

    At a press conference, California Rep. Lynn Woolsey, co-chair of the CPC, said the progressives had reached their limit. "We can compromise no more," Woolsey said.

    Health care is a central issue for the CPC. Their letter and public statements served as a warning shot to the party leadership at a critical point in the turbulent health care negotiations.

    The CPC has previously come under fire for backing down; the strategic timing of this dust-up is an indication that they may be willing to risk their necks.

    "Fifty [votes] is our threshold," CPC co-chair Rep. Raul Grijalva (D-Arizona) said while drumming up support for the letter, adding, "that'll kill anything."

    Report Says Single Payer to Get a Vote

    According to Politico, citing an anonymous Democratic aide, a separate deal brokered between progressives and leadership will give progressives a big win. A floor vote will be scheduled for a bill enacting a single payer health system, a long-held goal of progressives.

    Single payer would be a fully incorporated government health care organization similar to the Canadian system.

    While a single-payer bill will probably not gain the support of enough members to pass, it will clearly define where members stand on an issue that then-candidate for Senate Barack Obama previously endorsed.

    "I happen to be a proponent of a single-payer universal health care plan ... we may not get there immediately because first we've got to take back the White House, we've got to take back the Senate, and we've gotta take back the House," then State Senator Barack Obama famously said in 2003 while campaigning for his future Illinois Senate seat.

    Pelosi on Offense

    Speaker Pelosi is getting tougher in her confrontation with the health care industry forces, who have been engaged in an extraordinary lobbying effort to protect their profitability and total dominance of early and middle life health services.

    "They are the villains in this," Pelosi said Thursday, referring to private insurance companies. "They have been part of the problem in a major way. They are doing everything in their power to stop a public option from happening. And the public has to know that. They can disguise their arguments any way they want, but the fact is that they don't want the competition."

    Pelosi urged fellow Democrats to "take on a big special interest that has not made our country healthier, has made costs spiral upward, and for whom that is coming to an end."

    Friday, the Democratic Congressional Campaign Committee (DCCC) announced an August media campaign targeting two dozen Republicans on the issue of health reform.

    "Time and again, Republicans protect a broken system of skyrocketing costs, insurance companies making health care decisions, and record-setting insurance company profits instead of working with President Obama to bring real health insurance reform," DCCC Chairman Chris Van Hollen (D-Maryland) said.

    Congress, Blue Dogs Flush With Industry Cash

    An average of $1.4 million per day has been spent on lobbying by health care interest groups in 2009, according to a report from the nonpartisan group Common Cause.

    In other words, in 2009, the health care industry spent an average of $2,600 per day per member of Congress trying to influence legislation.

    According to the report, health industries have contributed roughly $373 million directly to members of Congress and have spent over $3 billion on lobbying since 2000.

    The Blue Dog coalition has played a central role in combating a public option and pushing the House version of health reform legislation in an industry-friendly direction. Their votes will be critical to passing legislation in the house. Blue Dogs have also been rolling in contributions from health care-connected donors.

    "The typical member [median not mean for accuracy] of the Blue Dog caucus in the U.S. House of Representatives has received $10,300 more from insurers than the typical non-Blue Dog Democrat in the House (including health and accident insurers, HMOs and other health services) and only $3,625 less than the typical House Republican," according to a report from the nonpartisan Center for Public Integrity, a group that specializes in tracking money in politics.

    The Blue Dog political action committee (PAC), the fund they can use to help the campaigns of fellow conservative Democrats, has raked in over $1.1 million this year through June. Over half of these dollars came from health and financial services-linked industry according to the report.

    "This is not really primarily a health care debate. It is a debate about the health care industry and the drug companies spending a huge sum of money to try to get their way," Sen. Bernie Sanders (I-Vermont), a avid backer of public health care, recently told reporters.