Chuck Schumer says that the public option will be included in the Senate bill, and that the opt-out option is "being very seriously considered."
From a political standpoint, this is a better "compromise" to be negotiating from than Snowe's triggers and Conrad's co-ops. The rough premise is that the reform enact a "robust" public option that states could choose to opt-out of, either by legislative vote, referendum, or governor's decree. Again, politically, what this would do in the Senate negotiations is remove the fig leaf the ConservaDems have been using to oppose a public option, saying that it's too politically dangerous for them back home. Blanche Lincoln and Ben Nelson wouldn't have an excuse for opposing the legislation any more. Additionally, the toehold of a robust public option in the Senate bill going into conference makes the chances of the House public option--without any kind of trigger or qualification--emerging from conference that much stronger.
In terms of policy, there are some serious issues. I'd argue that the highest bar possible should be placed on the opting out mechanism--vote by the state legislature. The health insurance industry would pour millions and millions and millions into referendum campaigns to encourage states' citizens to vote against the option. The opt-out should require the legislature to pass a law, like any other law, signed by the governor. Make that bar as high as possible. Make inclusion in the public option the default position, and make getting out of it a serious, deliberative process.
It's also possible that few states would actually end up opting out, if the Medicaid experience is a guide. Igor Volsky points to a diary by Kossack Turtle Bay.
In fact, after complaining that Medicare/Medicaid would lead to socialism in America during the 1960s, all 50 states have chosen to participate in the Medicaid program — a jointly funded venture between the states and the federal government, which gives states the option to opt out. "Every state has been in Medicaid since 1982. None have ever dropped out," Turtle Bay writes on Daily Kos. "True, Arizona wasn’t in until 1982, but that’s partly because for a state to get in, they had to actually set up a program."
That said, leaving any people out of the system should be of vital concern to lawmakers. There's a relatively simple fix to that--make uninsured citizens of those states who choose to opt out eligible to enroll in Medicare. Of course, that might create huge citizen lobbies in every state to get their state to opt out so that everyone could join Medicare, but it would be critical fix for covering more of the uninsured.
The opt-out option is by no means the optimal policy solution for healthcare reform. The only choice for progressives and those who want real reform is the robust public option. But if the opt-out robust public option is the public option that gets into the Senate bill, we're politically ahead of where we were just a few weeks ago, when the Snowe trigger appeared to be the inevitable Senate choice.
Update: a couple of interesting developments for the opt-out option. An aide to Max Baucus tells Greg Sargent that Baucus is open to the idea "as part of an overall package as long as it achieved his health care reform goals while getting 60 votes."
And Howard Dean told Sam Stein that while it is
not his ideal conception of what a health care overhaul should be. But he granted that the proposal would produce "real reform" and said that, if there were no other vehicle for getting a bill through the Senate, he would support it.
"If I were a member of the U.S Senate I wouldn't vote for the [Senate Finance Committee] bill but I would vote for this," Dean said, "not because it is necessarily the right thing to do but because it gets us to a better conversation about what we need to do."