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Dems Discussing Public Option With Opt-Out Clause: The Silver Bullet?

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Senate Democrats have begun discussions on a compromise approach to health care reform that would establish a robust, national public option for insurance coverage but give individual states the right to opt out of the program.

The proposal is envisioned as a means of getting the necessary support from progressive members of the Democratic Caucus -- who have insisted that a government-run insurance option remain in the bill -- and conservative Democrats who are worried about what a public plan would mean for insurers in their states.

"What folks are looking for is what gets 60 votes," said a senior Democratic Hill aide. "The opt-out idea is very appealing to people. It has come up in conversations. I know personally that a handful of members have discussed it amongst themselves."

In conversations with the Huffington Post, sources have said that while the opt-out approach to the public plan is in its nascent stages it has been discussed with leadership in the Senate. It was pulled out of an alternative idea, put forth by Sen. Tom Carper (D-Del.) and, prior to him, former Senate Majority Leader Tom Daschle, to give states the power to determine whether they want to implement a public insurance option.

But instead of starting with no national public option and giving state governments the right to develop their own, the newest compromise approaches the issue from the opposite direction: beginning with a national public option and giving state governments the right not to have one.

"It is being discussed," said one progressive strategist who has been working on reform with both the White House and Congress. "In the end obviously, the goal and near-term exercise is to get to the bargaining table and get to the conference committee between the Senate and House with the strongest position [on the public plan] possible."

How such a system would work is still being debated, according to those with knowledge of the proposal. But theoretically, the "opt-out" approach would start with everyone having access to a public plan. What kind of public plan isn't yet clear. States would then have the right to vote -- either by referendum, legislature, or simply a gubernatorial decree -- to make the option unavailable in their health care exchanges.

For conservative Democrats -- especially those from states with major private health insurance industry interests -- this concession could be key, allowing them to punt a vote on a public plan to local governments. For progressives, it would not be the hardest pill to swallow.

"It is clearly much better than triggers and [Carper's] opt-ins," said Richard Kirsch, executive director of the group Health Care For Americans Now. "A trigger option is a way to kill the public option and these opt ins are not effective because it leaves it up to state legislatures to set it up..."

Another Democrat working on reform legislation added, "If everyone gets a plan, and states have to affirmatively vote, preferably by referendum, to opt out. I really don't see a lot of states opting out, for one. And, for two, you get your national [public plan] available everywhere. If a few holes start appearing, it's not nearly as fatal as if you went with the Carper plan, which after a few years might mean 10 or 20 [state-based] public options. If you go the other way, you'll probably have like 47 states. It's a big difference."

Naturally, there are still major question marks about the opt-out approach. For starters, will all progressives be on board? With 60 caucusing members in the Senate, the argument has been made that the liberal wing of the party has already compromised enough to stop the Republicans from filibustering legislation. Moreover, the House of Representatives seems all but certain to pass legislation that includes a robust public plan. Would legislators in that chamber be willing to add a opt-out provision for the sake of picking up Senate votes?

Down the road there are also obvious concerns. As Kirsch notes, private insurance companies are major players in state politics as well as on the national level. A slew of lobbying campaigns could erupt to push state governments to opt out of a government-run plan.

Finally, there are still doubts that the opt-out approach would have the votes needed to pass through the Senate. As one somewhat exacerbated Democratic aide noted, "There are people who are very uncomfortable with the public option generally and this won't necessarily deviate their concern."

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