POLITICS
03/18/2010 05:12 am ET | Updated May 25, 2011

How Reid Found His Silver Bullet: Opt-Out Pitched Just Three Weeks Ago

Two months ago, the public option for insurance coverage was being read its last rites. On Monday, it was alive and well after Senate Majority Leader Harry Reid announced that he would include the provision as part of a broader health care bill.

The announcement was a dramatic triumph for the progressive community, which had howled and hissed for months as the prospects for a government-run plan dimmed. But the story behind Reid's decision has more to do with backroom negotiations behind a hastily proposed idea than with a change in political temperament.

The compromise proposal that turned out to be the senator's solution for the public option impasse -- allowing states to opt-out of the system -- first came to his attention only three weeks ago, an aide confirmed.

In the weeks after the Congress came back from the August recess it was clear that reform in general -- and the public option in particular -- had lost inertia as a result of systematic attacks from boisterous town-halls protesters. In the Senate, the prospects of corralling the 60 votes needed to break a Republican filibuster seemed out of reach.

Democrats began kibitzing with each other to find a solution. Conservatives in the party were not on board a public plan, but liberals were equally sour on a bill without one. Former Senate Majority Leader Tom Daschle had proposed allowing state governments to set up their own government-run systems back in June. But that too had been ridiculed among progressives.

Around the time that the Senate Finance Committee was slated to vote on (and ultimately reject) two variations of a national public option, two of its members -- Sens. Tom Carper (D-Del.) and Chuck Schumer (D-NY) -- began informal talks about how to bridge the divide within the caucus.

Carper went first. The Delaware Democrat proposed a variation of Daschle's state-run entity -- in which states would instead be able to opt in to a national public plan.

"It caught on," said one Democratic Senate aide who was privy to the early conversations. "[Carper] started talking about it with other moderates. It seemed inoffensive. [Schumer] recognized it had potential with the moderates and tried to meet them halfway in terms of the having a state option."

Days after the first discussions took place, Schumer brought back a counteroffer. Instead of having states opt in to the system, invert it: allow them to opt out. "If you are at the point of supporting an opt in then it is not much of a stretch to support an opt out," the aide said. "But on a practical level it makes a worlds worth of difference. It removes the barrier of creating a public option and makes the barrier getting out of one."

Significant hurdles remained. At the most basic level, there was nothing on paper to distribute to colleagues. Schumer and Carper began recruiting members behind closed doors and over the phone. Much of the attention was spent on the party's conservatives. But there was also a recognition that if they went too far, progressives would be offended. Sen. Jeff Merkley, a freshmen Democrat from Oregon, became a voice of support and a key player in the negotiations.

"We started talking about the idea of using the federal approach, about using a bridge to get our caucus together. Every single more moderate Democrat felt there was something promising in that approach, that it might be a bridge they could live in," Merkley told the Huffington Post. "It was a federalist approach. States become a laboratory. Some will chose one direction. Others another. This will allow members to go home and say 'no one, no state has have to be part of this if they don't want to.'"

It also didn't offend liberals like Sen. Jay Rockefeller (D-W.V.) and Sherrod Brown (D-Ohio), both of whom, congressional aides said, were supportive of the idea. And after the first report surfaced that it was being discussed -- in the Huffington Post -- the blogosphere was unexpectedly receptive. "It was almost too good," said an aide involved in putting the proposal together. "It almost created the sense that people on the left were endorsing it too quickly. It began to look less like a compromise."

And yet, even after the positive initial reviews, leadership remained skeptical. Staffers in Reid's office privately discouraged reporters from trumpeting the opt-out as a solution to the public option bypass, worried that expectations were exceeding political realities.

Schumer and Carper kept discussions going and brought the idea up in caucus meetings, aides say. And then, roughly a week and a half ago, they pitched another element to make it more alluring. Instead of allowing the Senate to vote on whether to write the proposal into health care legislation, Reid would simply include it as part of the merged product between the Senate Finance and Health, Education, Labor and Pensions committee. No longer would 60 votes be needed to pass the public plan. Instead, 60 votes would be needed to remove it.

"Rather than see if they would endorse it, we asked them: 'If we did an opt-out would that be the end of the world? Would it be a deal breaker?'" said the aide involved in putting the proposal together. "The ones who didn't like the idea signaled they wouldn't hold up the bill."

Reid ended up surveying his members and reaching the same conclusion: more than just bringing together the ideological camps inside the caucus, the opt-out (at least at the onset) wasn't objectionable enough to persuade members to support a Republican filibuster.

"The more he looked into it the more he thought it was a compromise that he thought could be supported by the caucus," said a leadership aide. "It's not everything he wants. It is not the silver bullet. But it is a way to thread the needle."

Towards the end of last week, after working the phones and talking with members, Reid settled on including the opt-out as part of the Senate's final health care package.

"We've spent countless hours over the last few days in consultation with senators who've shown a genuine desire to reform the health care system. And I believe there's a strong consensus to move forward in this direction," Reid said Monday.

His decision came despite the private worries of the Obama administration, which remains concerned that the 60 votes aren't there.

But skepticism from the White House isn't the only hurdle that remains. While a host of Democrats, including the administration, publicly praised Reid for standing by an opt-out public option, internal whip counts indicate that there are approximately 57 votes for the proposal. Convincing the remaining three caucus members that the bill should be allowed to get an up-or-down vote remains an uphill lift. Having a president that iis non-committal in the process makes it even harder. Meanwhile, the likelihood that the proposal will not have a single Republican member's support removes the bipartisan cover that some conservative Democrats are demanding.

Still, the emergence of the opt-out option and its ultimate embrace by Reid has provided a major boost to health care reform and breathed new life into the prospects of a government-run insurance alternative.

"I think there has been a big change in momentum since the late summer and a growing belief in the caucus that this is a reasonable compromise," said Merkley. "We think it is going to sell itself."