Health Public Option Fight - Symbol Over Substance

WASHINGTON (Reuters) - The fight over a U.S. government-run public insurance plan may be getting louder and noisier, but for now the program's political symbolism far exceeds its practical impact on expanding health coverage.

The Senate's version of a public option would serve just 3 million to 4 million of the 46 million uninsured living in the United States, and charge slightly higher premiums than private plans, according to non-partisan budget analysts.

But the limited impact has not eased the raging debate over the option, which has split the Democratic Party and threatened prospects for a sweeping healthcare overhaul, President Barack Obama's top domestic priority.

The public plan has gained prominence because opponents and supporters of government intervention in the healthcare market see it as a convenient symbol -- and a possible downpayment on a bigger public option in the future.

"It really has become a proxy fight between two very different philosophies," said Ed Howard, executive vice president of the non-partisan Alliance for Health Reform.

Four moderate Democratic senators have threatened to oppose the healthcare overhaul if it includes the government-run insurance option, and at least two liberal Democratic senators say they might oppose a bill that does not include one.

The desertion of even one Democrat would sink the plan in the 100-member Senate, where Democrats control 60 votes, the exact number needed to overcome united Republican opposition.

The dispute has made the public option a high-profile feature of Obama's drive to rein in costs, extend coverage to more than 30 million uninsured people and bar practices like refusing to cover individuals with pre-existing conditions.

The public plan would compete with private plans on exchanges that give consumers access to a range of insurance choices. Obama and liberal Democrats have backed it as a way to create competition, but critics say it would be a first step to a government takeover that would cripple private industry.

'A BEACHHEAD'

"They see this is a beachhead for having a public program as a long-term competitor in the United States," said Bob Blendon, a health policy and political analyst at Harvard. "But advocates are going to be a bit disappointed ... For an issue that is so prominent, it will not have much impact."

The public option passed by the House of Representatives on November 7 would cover 6 million people, the Congressional Budget Office estimates, slightly higher than the Senate's version.

The CBO said Senate Democratic leader Harry Reid's inclusion of a provision allowing states to decline to participate in the public option means only about two-thirds of Americans would have access to the program.

Reid included the "opt-out" to appeal to moderate Democrats who oppose the option and he is exploring other compromises to win over Mary Landrieu, Blanche Lincoln, Ben Nelson and Joe Lieberman when the Senate takes up the bill next week.

"Harry Reid is trying to find that sweet spot, that position that brings 60 votes together," Senator Dick Durbin, the No. 2 Democrat and a public option supporter, told reporters last week.

"We understand this is the art of the possible," he said. "I wish it were a bigger public option, but I think there will be an effect as long as there is competition."

Obama has signaled he is willing to jettison the option as long as the plan contains some form of insurance competition, and Health Secretary Kathleen Sebelius said in August it was "not the essential element" of any overhaul.

Lieberman has said he will oppose any public option, but the others have not ruled out compromises such as Republican Olympia Snowe's "trigger." That plan would activate the option only in states where affordable insurance was not available.

Another compromise being developed by Democrat Tom Carper would create government plans run by non-profit boards in states where affordable insurance is not available.

"We're trying to find something that addresses concerns about government-run and government-funded plans but still addresses the need for more competition in states that don't have it," Carper said.

If Reid is forced to jettison the public option he could face fallout from liberal senators like Bernie Sanders and Roland Burris, who have said they will reconsider their support for any plan without a government-run insurance option.

But some question whether liberals would bring down a healthcare overhaul that would expand coverage to more than 30 million uninsured people because it did not include a public option that would serve only 3 million to 4 million.

"I would be hard-pressed to walk away from a bill that covers 30 million new people," said Howard of the Alliance for Health Reform. "I really don't know when we'll get another chance at a bite that big at the problem of the uninsured."