On Tuesday, we grappled with the political problems of an otherwise-promising public option compromise should the Senate fall short of the votes needed to pass a real public option this fall. Today, the Huffington Post's Sam Stein reports that Senate Democrats are thinking of offering a slightly different concessionary proposal:

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.

Essentially, this flips an amendment offered by Sen. Tom Carper (D-Delaware) on its head. Instead of giving states the power to implement their own public insurance option -- with the caveat that they could not tie reimbursements to federal Medicare rates -- the federal government would establish the structure of a robust national public option and then allow state governments (or perhaps a governor or voters by referendum) to exclude the option from their health insurance exchange. The Wyden Amendment would largely lose its relevance as well, unless state legislators wanted to fundamentally restructure their own system (think single-payer).

If Centrist Democrats don't have the political courage to support the public option proposals included in the House bills and favored by the president and the American people, this could be a decent back-up plan. A national plan would be considerably larger than any single state plan, meaning it could negotiate deeper discounts and keep premiums lower while also promoting substantive delivery system reforms. If the public option is anything like Medicaid, the Wonk Room's Igor Volsky argues, states would be reluctant to turn it away. Conservative states had the same opportunity when Medicaid was established; all 50 still utilize the program today. And while it's true that rural states would be more likely to deny its citizens the opportunity to purchase government-run insurance, even if rural residents need it more acutely than people in cities and suburbs, it's not like those states would opt to create a state-based plan on their own either.

Yet the politics of the opt-out proposal, in which cowardly Democrats pass the buck to statehouses across the country, could get dicey. Ed Kilgore offers a pessimistic take at The Plank:

Most of the fears about health reform that state officials have expressed up until now have, understandably enough, focused on the fiscal impact of Medicaid mandates.  But governors and legislators, not to mention candidates for state offices, may soon be grappling with the entire range of controversial health care issues.  They better get ready, and their representatives in Washington better start talking to them.

One could imagine how such a scenario would play out in Illinois, where Republicans have been eager to nail Democrats on the rising cost of Medicaid, even if they don't quite understand how the system is set up or acknowledge that delivery reforms have already been implemented. That being said, very few Democratic legislators in the Land of Lincoln would take a political hit for supporting a key portion of their former colleague's primary legislative priority. Because of that, it's certainly an approach that deserves consideration as a last resort.

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