Administration shifts on public health option

The first casualty of the August healthcare debate increasingly looks to be the public health insurance option prized by liberals.

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Health and Human Services Secretary Kathleen Sebelius on Sunday said it is not “essential” that a public option be in legislation, while White House press secretary Robert Gibbs, speaking on a different Sunday morning talk show, stopped far short of insisting on a public plan.

“What the president has said is in order to inject choice and competition ... people ought to be able to have some competition in that market,” Gibbs said on CBS’s “Face the Nation.”

Asked if he was hedging on support for a public plan, Gibbs said, “The president has thus far sided with the notion that that can best be done with a public option.”

The shift comes as a series of town hall debates takes place across the nation. Democratic plans for healthcare reform, including a public health insurance option, have come under fire at those meetings from people worried about a government takeover of healthcare.

Criticisms that a government-run insurance plan would be costly and would drive private insurers out of business have become common place at the events.

President Barack Obama himself on Saturday suggested he won’t insist on a public option.

“The public option, whether we have it or we don’t have it, is not the entirety of healthcare reform,” Obama said at a town hall event in Colorado. “This is just one sliver of it. One aspect of it. And by the way, it’s both the right and the left that have become so fixated on this that they forget everything else.”

Sebelius said Sunday that what the president sees as essential is to set up competition to private insurers in the healthcare system. But she said that doesn’t have to come from a public health insurance option.

“Well, I think there will be a competitor to private insurers,” she said on CNN. “That’s really the essential part, is you don’t turn over the whole new marketplace to private insurance companies and trust them to do the right thing. We need some choices, we need some competition.”

The shift away from a public option will give a boost to those advocating the creation of health insurance cooperatives that would receive government funding but would be managed as private entities.

Sen. Kent Conrad (D-N.D.), the leading advocate of the co-op option, on Sunday said the pursuit of a public option is all but a lost cause.

“Look, the fact of the matter is there are not the votes in the U.S. Senate for the public option, there never have been,” Conrad said in an interview on “Fox News Sunday with Chris Wallace.”

“So to continue to chase that rabbit is, I think, a wasted effort,” Conrad said.

Conrad is one of six senators on the Finance Committee trying to forge a bipartisan healthcare reform bill. The group of three Democrats and three Republicans has previously signaled a reluctance to accept a public option, and is looking closely at setting up cooperatives instead.

Senators in both parties have suggested co-ops could win more votes in the Senate for a healthcare bill, and Sen. Richard Shelby (R-Ala.), who joined Conrad on Fox, said moving to co-ops would be a “step in the right direction.”

The problem with dropping the public option would come from liberals, particularly in the House. The left wing of the Democratic Party has been irritated by concessions its leaders already have made to centrists in the party, and it is pressing its leadership to stick to a public option.

Rep. Eddie Bernice Johnson (D-Texas) told CNN it would be “very difficult” for her and other liberals to support legislation that does not include a public option.

“The only way we can be sure that very low-income people and persons who work for companies that don’t offer insurance have access to it, is through an option that would give the private insurance companies a little competition,” she said.

Johnson added that House liberals have already told Speaker Nancy Pelosi (D-Calif.) that she should insist on White House support for a public option.

Still, liberals might have a hard time dropping their support for landmark legislation reforming healthcare over the lack of a public plan, particularly if a final bill does set up co-ops. In addition, the dropping of a public option could make it easier for the bill to attract support for conservative Democrats and Republicans.