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Status on the Public Option (Updated)

Thursday was as crazy a day as I've seen in Washington. The flurry of legislative activity over the public insurance option--and the flurry of media coverage it generated--made it difficult to keep up and, at times, to separate truth from rumor or hyperbole.

But over the course of the day, one thing became increasingly clear. At least for the moment, the debate isn't over whether to include a public option. It's over what kind.

Brian Beutler and Carrie Budoff Brown have the essentials on the Senate situation. In a nutshell, Harry Reid thinks he has the votes to sustain a bill that includes some sort of public option compromise, whether it's a trigger or an opt-out. Max Baucus is not happy about this and, perhaps to a lesser extent, neither is Olympia Snowe. But other centrists, most notably Ben Nelson, are making pretty clear they can find a way to live with at least some versions of the public insurance compromise. That's news.

Over in the House, according to several sources, the drama began in the morning when Speaker Nancy Pelosi addressed a meeting of the Democratic caucus and laid out two main possibilities. One was the "Medicare-plus-five" version--that is, a government-run plan that would pay physicians at roughly Medicare rates with an extra five percent on top. (It'd pay hospitals standard Medicare rates without the additional five percent.) The other possibility was a "negotiated" version--that is, a government-run plan that bargained with doctors and hospitals over rates.

There were, Pelosi explained, political virtues to both approaches. Med+5 was, obviously, a more ambitious idea. And the more ambitious the idea, arguably, the more likely a final compromise with the less ambitious Senate bill would be something most House Democrats would like. But the negotiated version, Pelosi noted, was likely to get more votes. And with more votes on board, Pelosi said, the House might have more leverage for negotiations.

But the Med+5 model had one clear advantage over its competitor: It would save a lot more money, most likely $60 to $80 billion over ten years. So if the House Democrats preferred the negotiated rates version, Pelosi said, they'd have to sign off on another shift--expanding Medicaid eligibilty to 150 percent of the poverty line, rather than 133 as originally envisioned. The reason is that it's cheaper to insure people through Medicaid than other means. Moving more people over to Medicaid would make up for the lost savings.

Pelosi made clear her preference for the Med+5 version. But, she said, she needed to see what the caucus would support. And so the rest of the day was spent counting up votes. Early on, the buzz was that Pelosi had, or would have, the support she needed to get the Med+5 public option. By late evening, confidence had diminished substantially, although not entirely.

Friday morning brings another caucus meeting and there, perhaps, the House Democrats will make a final decision about which way to go. There isn't much time, given the schedule Pelosi wants to keep. She wants to unveil a bill early next week and, perhaps, have a floor vote the week after that. The leadership has already sent language over to the Congressional Budget Office for scoring. As one staffer says, "it's all locked in--except for the public plan."

Note: Whatever the decision about the public plan, it's clear that the House's reform bill will be, like the versions passed out of committee, far more generous than the Senate counterpart. For more on why--and the smart way Pelosi has framed the choices here--see Ezra Klein's dispatch from earlier in the day. He has, among other things, a tentative run-down of the subsidies and affordability protections likely to end up in the House legislation.

Oh, and one more thing. As good as things look for the public plan today, don't dismiss the possibility of a complete reversal fortune. It woudn't be the first time in this debate that's happened.

Updated: Like I was saying, things are changing by the minute. Mike Allen reported early this morning that the votes for the strong public option aren't there. As I wrote originally, my sources last night were pretty pessimistic, as well.  And it seemed likely that the House would end up with with the negotiated rates plan. But now Pelosi's office is denying that the count is finished. So I guess we'll just have to wait and see.