Public option likely to be removed from healthcare overhaul

Chances for a so-called "public option" -- under which the government would set up competitors to private health insurers -- appear to be dimming.

With recent hard-edged comments by Sen. Joe Lieberman (I-CT), who avers that he will vote to filibuster any bill that contains a public-run health insurer, moderates have been meeting to hammer out a deal. And a new alternative, according to Politico, has emerged.

Under the Democrats' new plan, the government would create a national health insurance plan similar to those offered federal employees. It would replace the so-called "opt-out" version of the public option advocated by Sen. Majority Leader Harry Reid (D-NV).

“Seems to me it would be in lieu of the public option,” Sen. Bill Nelson (D-FL) -- a public option opponent and former insurance executive -- is quoted as saying. He added that Reid’s “opt-out” idea “is no longer being talked about.”

The plan would be run by the Office of Personnel Management, which currently manages the federal plan offered to members of Congress. All of the insurance plans would be offered by not-for-profit private healthcare companies.

A Democratic aide quoted by Politico suggested that the new proposal could be used to sway progressives, who might be "tricked" into believing that a government plan run by private companies was a public option.

“The proposal under consideration can be said to provide access to the same type of insurance plans that members of Congress and federal employees get. People think of that as government health insurance; progressives could portray this in the same vein,” a Democratic Senate aide was quoted as saying. “But moderates can simultaneously point to the fact that the government isn’t the payer and say competition was enhanced without growing the government.”

Even so, the opt-out public option probably wouldn't have been a public option after all, even though it would have been more damaging to insurance company's bottom lines. In October, the Washington Post reported that the public option was likely to be managed by private insurers.

"The public option would effectively be just another insurance plan offered on the open market," the paper said. "It would likely be administered by a private insurance provider, charging premiums and copayments like any other policy. In an early estimate of the House bill, the Congressional Budget Office forecast that fewer than 12 million people would buy insurance through the government plan."