White House appears ready to drop 'public option'

WASHINGTON – Bowing to Republican pressure and an uneasy public, President Barack Obama's administration signaled Sunday it is ready to abandon the idea of giving Americans the option of government-run insurance as part of a new health care system.

Facing mounting opposition to the overhaul, administration officials left open the chance for a compromise with Republicans that would include health insurance cooperatives instead of a government-run plan. Such a concession probably would enrage Obama's liberal supporters but could deliver a much-needed victory on a top domestic priority opposed by GOP lawmakers.

Officials from both political parties reached across the aisle in an effort to find compromises on proposals they left behind when they returned to their districts for an August recess. Obama had wanted the government to run a health insurance organization to help cover the nation's almost 50 million uninsured, but didn't include it as one of his core principles of reform.

Health and Human Services Secretary Kathleen Sebelius said that government alternative to private health insurance is "not the essential element" of the administration's health care overhaul. The White House would be open to co-ops, she said, a sign that Democrats want a compromise so they can declare a victory.

Under a proposal by Sen. Kent Conrad, D-N.D., consumer-owned nonprofit cooperatives would sell insurance in competition with private industry, not unlike the way electric and agriculture co-ops operate, especially in rural states such as his own.

With $3 billion to $4 billion in initial support from the government, the co-ops would operate under a national structure with state affiliates, but independent of the government. They would be required to maintain the type of financial reserves that private companies are required to keep in case of unexpectedly high claims.

"I think there will be a competitor to private insurers," Sebelius said. "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."

Obama's spokesman refused to say a public option was a make-or-break choice.

"What I am saying is the bottom line for this for the president is, what we have to have is choice and competition in the insurance market," White House press secretary Robert Gibbs said Sunday.

A day before, Obama appeared to hedge his bets.

"All I'm saying is, though, that the public option, whether we have it or we don't have it, is not the entirety of health care reform," Obama said at a town hall meeting in Grand Junction, Colo. "This is just one sliver of it, one aspect of it."

It's hardly the same rhetoric Obama employed during a constant, personal campaign for legislation.

"I am pleased by the progress we're making on health care reform and still believe, as I've said before, that one of the best ways to bring down costs, provide more choices and assure quality is a public option that will force the insurance companies to compete and keep them honest," Obama said in July.

Lawmakers have discussed the co-op model for months although the Democratic leadership and the White House have said they prefer a government-run option.

Conrad, chairman of the Senate Budget Committee, called the argument for a government-run public plan little more than a "wasted effort." He added there are enough votes in the Senate for a cooperative plan.

"It's not government-run and government-controlled," he said. "It's membership-run and membership-controlled. But it does provide a nonprofit competitor for the for-profit insurance companies, and that's why it has appeal on both sides."

Sen. Richard Shelby, R-Ala., said Obama's team is making a political calculation and embracing the co-op alternative as "a step away from the government takeover of the health care system" that the GOP has pummeled.

"I don't know if it will do everything people want, but we ought to look at it. I think it's a far cry from the original proposals," he said.

Republicans say a public option would have unfair advantages that would drive private insurers out of business. Critics say co-ops would not be genuine public options for health insurance.

Rep. Eddie Bernice Johnson, D-Texas, said it would be difficult to pass any legislation through the Democratic-controlled Congress without the promised public plan.

"We'll have the same number of people uninsured," she said. "If the insurance companies wanted to insure these people now, they'd be insured."

Rep. Tom Price, R-Ga., said the Democrats' option would force individuals from their private plans to a government-run plan as some employers may choose not to provide health insurance.

"Tens of millions of individuals would be moved from their personal, private insurance to the government-run program. We simply don't think that's acceptable," he said.

A shift to a cooperative plan would certainly give some cover to fiscally conservative Blue Dog Democrats who are hardly cheering for the government-run plan.

"The reality is that it takes 60 percent to get this done in the Senate. It's probably going to have to be bipartisan in the Senate, which I think it should be," said Rep. Mike Ross, D-Ark., who added that the proposals still need changes before he can support them.

Obama, writing in Sunday's New York Times, said political maneuvers should be excluded from the debate.

"In the coming weeks, the cynics and the naysayers will continue to exploit fear and concerns for political gain," he wrote. "But for all the scare tactics out there, what's truly scary — truly risky — is the prospect of doing nothing."

Congress' proposals, however, seemed likely to strike end-of-life counseling sessions. Former Alaska Gov. Sarah Palin has called the session "death panels," a label that has drawn rebuke from her fellow Republicans as well as Democrats.

Sen. Orrin Hatch, R-Utah, declined to criticize Palin's comments and said Obama wants to create a government-run panel to advise what types of care would be available to citizens.

"In all honesty, I don't want a bunch of nameless, faceless bureaucrats setting health care for my aged citizens in Utah," Hatch said.

Sebelius said the end-of-life proposal was likely to be dropped from the final bill.

"We wanted to make sure doctors were reimbursed for that very important consultation if family members chose to make it, and instead it's been turned into this scare tactic and probably will be off the table," she said.

Sebelius spoke on CNN's "State of the Union" and ABC's "This Week." Gibbs appeared on CBS' "Face the Nation." Conrad and Shelby appeared on "Fox News Sunday." Johnson, Price and Ross spoke with "State of the Union." Hatch was interviewed on "This Week."