Fittingly close to Halloween, Senate Majority Leader Harry Reid (D-Nev.) resurrected the possibility of a government-run insurance option when he announced on Oct. 26 that he intends to include in the Senate bill a public plan with the option for states to opt out. 

The move was not a surprise to EBA’s health reform panelists who have been reading the tea leaves in the past few weeks. “Once Sen. Snowe talked about the opt-out in a favorable manner, I thought that this would be in the Senate bill. It also looks like the Senate liberals, like Sen. Rockefeller, can live with the opt-out,” says Bill Sweetnam, principle with Washington, D.C.’s Groom Law Group.

Cyndy Nayer, president of the Center for Health Value Innovation, took her cue from America’s Health Insurance Plans. “The rising of the public option from the ashes was a bit of surprise, that is, until the noise level rose at AHIP. Then, it was almost unavoidable,” she says. “The public option is growing in popularity.

The bigger question now is what barriers will be put into the employer side of the equation: Will ERISA regulations erode, will innovation be too hard to accomplish, or will the states, employers and the public option figure out how to live in harmony? At this moment, it's anyone's guess.”

As for including the provision for states to opt out of the public plan, Ronald Jerro of Virginia’s REJ Associates, Inc., isn’t sure what Sen. Reid was thinking: “How is that going to accomplish anything? The Congress needs some more input from those in the industry, and I am not referring to the chief executives of insurance companies and lobbyists, but to those in the field who deal with these issues every day of the year.”

For example, Jerro cites the fact that 35 states now have risk pools. “The only thing missing is that these plans are not necessarily going to be cheaper than one which is subject to underwriting.” If a public option passes, Jerro believes the states should have the responsibility of running it. “We already have 35 that offer coverage, so why not require all states to have risk pools and call them whatever sounds good?” he says.

By requiring all states to offer standardized plans, as the federal government does for Medicare supplement plans, it would be possible to cut administrative and other expenses — “especially if reimbursement levels were tied into a national reimbursement scale for providers, as Medicare currently provides,” adds Jerro.

He envisions a role for brokers in such a scenario as well: “I believe some states do allow commissions to be paid for enrolling someone in a risk pool. Maybe there could be an option for the insured to select a product with or without commissions in exchange for a broker helping the person select the right product and helping them with claims or administrative issues.”

With the way the health reform process has played out so far, Tom Schuetz, co-president of Iowa’s Group Services, is not at all surprised by the return of the public plan.

“Isn’t it interesting, however, that it was resurrected behind the cloak of secrecy,” he says. “What happened to all the transparency that was supposed to be coming to Washington with the new administration? I think the goal now is to just get something passed before the 2010 election cycle begins because it can be built upon in the future. However, if nothing is passed it becomes much more difficult to bring the issue back up in the future. This is not about health care reform; it’s about controlling health care, which represents the single biggest component of our domestic economy.”