Now that Martha Coakley has lost, it seems that there are only two paths to passing health care reform–and both use reconciliation. One path would be a new, redesigned bill passed using reconciliation. The other would be to force the House to pass the Senate bill as is. Given that the Senate bill is unlikely to gain majority support in the House, the only way House Democrats would accept passing the Senate bill without changes is with a promise to fix the bill using a separate piece of legislation passed through budget reconciliation.

The top issue that would need to be “fixed” is the so-called “Cadillac” excise tax on health insurance, which is, in reality, a teacher tax. The “fix,” negotiated by the labor unions, would reduce revenue for the bill by $60 billion over ten years. It would also be safe to assume that the House Democrats would like the reconciliation “fix” to spend more money on several other segments of health care reform, such as increasing affordability tax credits, fully closing the Medicare Part D donut hole, providing more money to community health centers, adding additional funding to state insurance regulators, sending more money to state Medicaid programs. All these changes would cost several billion dollars.

Since the reconciliation instructions for health care reform require the measure to reduce the deficit by some amount, fixing the teacher tax and all the other above improvements would need to be paid for. These could be paid for either with additional tax increases, or with other popular progressive cost control ideas, like the public option and drug re-importation. The strong public option that would pay Medicare rates plus 5% is projected by the Congressional Budget Office to save $110 billion. Removing the Medicare provider opt-out clause would save an additional $91 billion, for a total savings of roughly $200 billion.

A public option designed to pay Medicare rates plus 5% probably would be unable to garner majority support in both chambers, but the evidence strongly indicates that the “level playing field” public option–which would pay negotiated rates–could get majority votes in both the House and Senate (through budget reconciliation). The CBO has determined that even this weaker public option would still save the government $25 billion. There are several ways to slightly strengthen the public option to enhance cost reduction. For example, a trigger could be designed that would be pulled if costs on the exchange increased too quickly; the public option could then begin charging Medicare rates plus 5%. One such trigger on payment change for the public option has been projected to save the government an additional $25 billion.

Besides the public option, there are several other progressive cost control improvements that could accompany the Senate bill through use of reconciliation. Expanding Medicaid eligibility from 133% FPL to 150% FPL would save around $25 billion. Some form of Medicaid buy-in for people between 133%-200% FPL could also be designed to save billions.

Drug re-importation and direct Medicare drug price negotiations are both potential progressive sources of savings. Drug re-importation would save the government $19.4 billion and save consumers $100 billion over ten years, according to the CBO. Additional prudent purchasing powers for the exchanges, and higher minimum medical loss ratios for insurance companies are two ideas that could potentially be scored by the CBO as saving money. Shortening the exclusivity period of biosimilars would save the government money, although it may or may not run afoul of the Byrd rule.

These are all popular progressive cost control ideas that were not adopted in the Senate bill because they could not get 60 votes–but they could get a simple majority. These progressive, money-saving ideas (like the public option and Medicaid expansion) could be used to pay for the necessary improvements to the Senate bill that would cost money (like fixing the teacher tax and increased affordability tax credits).

Having the savings from the very popular public option pay for fixing the excise tax on health care benefits would be the politically smart thing to do. It would look like reconciliation was being used to improve cost control in the bill, and make the reform more popular in general. The only other option is to pay for the fix to the excise tax with other new tax increases. That would be a very bad political move. This would make the reconciliation measure look like a corrupt give-away to labor unions, with new tax increase to boot.

Democrats in Congress have a stark choice. If they want to pass the Senate bill as is in the House, but fix many of its worst problems using reconciliation, they will need to pay for some of these improvements. They can pay for these changes with smart, progressive cost control ideas, like the public option, supported overwhelmingly by the American public, or the can pay for them with more new taxes. If this decision is not a political no-brainer for Democrats, then they don’t deserve to win re-election.