The Huffington Post has broken the news that yet another incarnation of the public could be coming into favor with Senate Democrats: a plan that would begin with a robust, national public plan, but allow state governments to “opt out” of the system should they chose. It’s worth noting that the compromise carries echoes of the Cass Sunstein-Richard Thaler school of policy design—the government would try to nudge things in the right direction by making the public plan the default option, but gives states the ability to opt out if they had the impetus, energy, and will to exclude themselves. It seems like the kind of choice that might appeal to Peter Orszag, the White House’s resident disciple of behavioral economics.

That being said, state governments are not individuals: they are actively subject to lobbying and internal wrangling that’s far messier than a person’s choice whether or not to participate in a 401(k). As Ed Kilgore pointed out on The Plank, a state-based strategy would transfer all the tension of the current health care debate to the states “just in time for the 2010 elections.” The political complications of the choice—like any of the compromises—is why the “opt out” plan is still just one of many public option variations currently being considered, including Tom Carper’s alternative to let states “opt in” and Olympia Snowe’s trigger. “Virtually all imaginable permutations of public option possibilities are under discussion,” says one health care policy analyst.  

But what’s encouraging how the debate seems to have shifted from whether or not a public plan will be included, to what the public plan will actually look like. Perhaps it’s just because the “public plan” under discussion has transformed from its original, Jacob Hacker-designed incarnation to the host of watered-down compromises that are now on the table. But the fact that we’ve moved from discussing the viability of having a bill at all to trying to hammer out the details is a promising sign overall.