By Jane Norman, CQ HealthBeat Associate Editor

August 17, 2009 – Obama administration officials insisted Monday they are not backing away from support of the public option in the health overhaul, despite Health and Human Services Secretary Kathleen Sebelius' comment on a CNN talk show that it's "not the essential element" for providing consumers with choice and competition in insurance plans.

That combined with President Obama's own remarks at a town hall meeting in Grand Junction, Colo., on Saturday brought an avalanche of headlines suggesting that the public option, a key but controversial element of the bill (HR 3200) approved in the House by three committees, is ready to be junked by a White House facing falling poll numbers when it comes to health care.

Democrats, though, quickly lined up to show Obama just how difficult that might be, with defenders ranging all the way up to the speaker of the House.

"A public option is the best option to lower costs, improve the quality of health care, ensure choice and expand coverage," said House Speaker Nancy Pelosi, D-Calif. "The public option brings real reform to lower costs over the 10-year period of the bill."

Obama, in Colorado, mentioned the public option while explaining the benefits the overhaul would have for those who already have insurance coverage, many of whom have been found in polls to be comfortable with the coverage they now have.

"The public option, whether we have it or we don't have it, is not the entirety of health care reform. This is just one sliver of it. One aspect of it," Obama said, as he explained how the overhaul could solve problems with insurers who deny coverage for pre-existing conditions or raise premiums.

White House officials said the remarks by Sebelius and Obama were being taken out of context and misunderstood. "Nothing has changed," said Linda Douglass, spokeswoman for the White House Office of Health Reform, in a statement. "The president has always said that what is essential is that health insurance reform must lower costs, ensure that there are affordable options for all Americans and it must increase choice and competition in the health insurance market. He believes the public option is the best way to achieve those goals."

Whether the White House was really preparing to scrap the public option or just floating a trial balloon in the time-honored Washington fashion, the reaction from Democrats was swift.

Pelosi pointed out that the president stated in March that "the thinking on the public option has been that it gives consumers more choices and it helps keep the private sector honest, because there's some competition out there."

Said Pelosi: "We agree with the president that a public option will keep insurance companies honest and increase competition. There is strong support in the House for a public option. In the House, all three of our bills contain a public option, as does the bill from the Senate HELP Committee."

The co-chairman of the 80-member House Progressive Caucus said he and a majority of caucus members could not support a health care overhaul lacking the public option. Some members of the caucus are more interested in a single-payer system and have only reluctantly accepted the public option as a substitute.

"The public option is central to health care reform," said Rep. Raul M. Grijalva, D-Ariz., the caucus co-chairman.

"Real reform, which lowers costs and ensures all Americans get the quality, affordable health care that they deserve, cannot be accomplished without a robust public," he said in a statement. "As we have stated repeatedly for months now, a majority of the members of the Congressional Progressive Caucus will oppose any health care reform legislation that does not include a robust public option. Our position has not, and will not, change. As co-chair of the Progressive Caucus, I look forward to working with my colleagues to develop comprehensive legislation that allows all Americans to choose the health care plan that's right for them and their families. But I will not support any bill that does not include a public option."

Jacki Schechner, a spokeswoman for Health Care for America Now, which has launched a major national campaign on behalf of change in the health system, said the president has been very clear about the need for a public option and has been consistent in his support. She said that Obama is now trying to broaden the conversation with the public about the overhaul to explain all the changes needed, including for people who already have insurance, and there was "a poor choice of words" in the process.

"I think there's a media narrative that emerged that's not 100 percent accurate," she said. "It's hard for me to tell what exactly their intentions are but I would say that (dropping the public option) would be a very, very bad idea."

Appearing on the morning talk shows on Monday, former Democratic National Committee Chairman Howard Dean said the public option is essential for House approval. "I don't think it can pass without the public option," Dean said on "The Early Show" on CBS. "There are too many people who understand, including the president himself, the public option is absolutely linked to reform."
On the "Today" show on NBC, Dean said that getting rid of it won't assist in gaining a bipartisan bill because Republicans will continue to be opposed no matter what. "I don't think the Republicans are interested and in order to have a bipartisan bill, you've got to have both sides interested," said Dean.

Robert Reich, former secretary of labor in the Clinton administration, said in a post on the liberal Web site Talking Points Memo that the public option is essential. "Without a public, Medicare-like option, health care reform is a band-aid for a system in critical condition," Reich wrote. "There's no way to push private insurers to become more efficient and provide better value to Americans without being forced to compete with a public option. And there's no way to get overall health-care costs down without a public option that has the authority and scale to negotiate lower costs with pharmaceutical companies, doctors, hospitals, and other providers—thereby opening the way for private insurers to do the same."

And John Sweeney, head of the AFL-CIO, said the public option is a must and "we will continue to relay that message forcefully to the Senate and the White House." He said that "unfortunately, the usual suspects opposed to reform are trying to hijack the reform process and attack the public health insurance option because they are afraid of competition and they want to keep gouging working families."

While the public option has seemed to take second place to worry over end-of-life provisions among the crowds protesting the health care overhaul at town hall meetings, it is one of Democrats' toughest political problems as the overhaul moves through the House and Senate. Sen. Charles E. Grassley of Iowa, the top Republican negotiator among the bipartisan "gang of six" engaged in discussions on the Senate Finance Committee, has remained opposed to any insurance plan run by the government, and most other Senate Republicans as well as some Democrats appear against it.

On Sunday, Sen. Kent Conrad, D-N.D., another of the six negotiators, also said the idea will never fly in the Senate and that's why he has pushed the idea of member-run co-operatives instead.

"Well, there are not the votes in the United States Senate for the public option, and that's why I was asked to come up with an alternative," said Conrad on Fox News. "And I want to just make a tweak to what you've referred to as the cooperative plan. You could call it a public cooperative plan. It's not a public plan at all in the sense that government runs it. Government has nothing to do with it. Once it's established, it is run by the members. That's why it is appealing to some on the Republican side."

Insurance companies also have been strongly opposed to the public option, saying it would destroy employer coverage and harm patient care, and didn't seem distressed to hear of its possible demise.

"Unfortunately, the debate about a government-run plan has become a distraction and overshadows the many areas where there is broad consensus," said Robert Zirkelbach of America's Health Insurance Plans. "The same goals can be achieved by enacting insurance market reforms with a personal coverage requirement, expanding the safety net, providing one-stop-shopping for individuals and small businesses, and giving a helping hand to low and moderate income families to purchase coverage."