Public Option Shows Signs of Life

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maneuvering for maximum leverage

On the other end of the spectrum, a more limited public plan would come to life only if it were "triggered" in a few years if current reforms don't lead to increased affordability or access to health care. That's the idea Snowe has proposed—and one which many analysts have assumed would be included in the final reforms, at minimum, in order to keep her on board. But health reform advocates and more liberal Democrats warn that the trigger approach could prove nearly useless.

Still, those options leave a lot of territory in between. Fiscally conservative Blue Dogs in the House say they'll consider a public option, but only if the government plan could negotiate rates with health-care providers, much as private-sector insurers do. That would lead to much higher reimbursement rates than if the public plan paid a fixed rate based on Medicare fees. "There's enormous concern that a public option combined with Medicare rates will really harm health-care providers in certain parts of the country," says a key adviser to a leader of the Blue Dog coalition. "The savings achieved through below-market rates would eviscerate the health-care structure."

Another proposal under consideration would let individual states decide right away whether to offer a public option, rather than making it a mandatory federal choice. They could either craft their own plans, as long as they met certain guidelines, or subscribe to a program run by Uncle Sam. Or nonprofits could get federal help setting up cooperatives to offer insurance where the market stumbles. Senator Maria Cantwell (D-Wash.) has raised the possibility of letting states create a basic health plan for residents who don't qualify for Medicaid, but still fall below certain income thresholds.

Ultimately, of course, the bills voted on in Senate and in the House must be reconciled. That means much of the current, very aggressive positioning over the public option is maneuvering to gain the most leverage in those final negotiations between the two chambers. And, short of a victory, starting out with a strong position should help lawmakers who ultimately lose out persuade their supporters that they pushed hard for their priorities and secured the best possible compromise. That, far more than the possibility that a robust public option is likely anytime soon, explains why the House bill Pelosi is shepherding through will so heavily favor the idea.

Francis is a correspondent in BusinessWeek's Washington bureau. Sasseen is Washington bureau chief for BusinessWeek.