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Will the Dems Back Away from the Public Option?

For the moment, at least, House liberals still aren't backing away from their push to strengthen the public option in the reform bill. Raul Grijalva, co-chair of the Congressional Progressive Caucus, sent a letter to Pelosi on Friday that demanded an up-or-down vote on the Medicare-plus-5 rates--the strong public option that was passed up in favor of negotiated provider rates. The next best thing? Setting another pre-determined price "ceiling" for the weaker plan's negotiated rates, which Grijalva proposes in a separate amendment. "If the Secretary is forced to negotiate provider reimbursement rates in the public plan, a ceiling shall be determined and set for such rates," he wrote in Friday's letter, which also called for language that would explicitly criticize the "opt out" and trigger proposals and stronger anti-trust measures against insurance companies.

Either of Grijalva's proposed rate caps would give the public option a fighting chance to actually deliver on what liberal have been promising all along. As it stands, the Congressional Budget Office has determined the public plan--under the House's negotiated rates--the premiums are actually higher than those in private insurance, for reasons that Brian Beutler explains in detail. Given CBO's analysis, capping provider payments seems like one of the only effective ways to make the public plan work--which would theoretically strengthen Grijalva's argument for a more robust option, in terms of its policy merits.

Politically speaking, however, the CBO score seems likely to have the opposite effect, giving the bill's critics new ammunition to attack the legislation. (Joe Lieberman is already leading the charge, citing the CBO score this Sunday in his teardown of the public plan on "Face the Nation.") There are still ways to improve the public option without dealing with the pricing issue--through reforming the risk-adjustment measures in the exchanges, as Ezra points out. But it's also easy to imagine moderate Democrats who were persuaded to support the public plan on its cost-saving merits losing heart, when even liberals are asking themselves if the public option is "a big dud."