Is it curtains for the strong public option? Over the past week, the White House has taken a lot of heat for not going to bat for it, and Senate Majority Leader Harry Reid has reportedly just decided that the Senate bill will include a watered-down proposal that would allow states to opt out of a national public plan. And, in a speech today, Christina Romer, head of the president’s Council of Economic Advisers, expressed only circumspect support for a strong public option, instead calling the excise tax on high-cost plans the “number one item” that would curb health care costs.

Speaking at the Center for American Progress today, Romer said that President Obama believes the public option is a “potentially important source of cost-containment … especially in rural states,” where insurance markets are heavily concentrated and don’t face much competition. Yet her remarks framed the proposal as a possibility rather than a prerequisite. “Personally, I have been quite persuaded that the public option can be an important source to cost-containment,” Romer said, citing an example from California’s experience contracting with HMOs to provide care for Medicaid patients:

In some counties, we have two private plans, [in] some counties we have one public and one private. … The interesting thing is that cost growth in the counties where there is a public and a private is indeed slower than in counties with two privately run plans.

In other words, the inclusion of a public insurance plan increased competition and drove down costs--exactly what liberal advocates for the strong public option are arguing now in Congress. However, Romer admitted that the California case was “a small sample” and that her support for a strong option remains preliminary. “It’s one of the things that’s given me a sense that it could be something that could ultimately slow the growth rate of costs,” she said.

Romer’s qualified support for the public option stood in sharp contrast to her unequivocal support for the excise tax--as a means not only to pay for reform, but also to bring down long-term health care costs. “A policy such as this is probably the number one item that health economists across the ideological spectrum believe is likely to stem the explosion of health care costs,” Romer said. She emphasized the importance of designing the plan to avoid penalizing older people, high-risk workers, and states where insurance costs are higher--though she didn’t specify whether or what exemptions should be included for these groups, which have vehemently pushed back against the excise tax.

But, by framing the excise tax as the most important cost-containment measure that could achieve bipartisan consensus--if not in Congress, than at least among economists--Romer made it clear that Obama would push for the measure. And, by calling the excise tax “the Kerry policy,” Romer indicated that the White House is going to frame the provision as a liberal measure that will increase workers’ wages over time. “It will discourage insurance companies from offering high-priced plans that would otherwise eat up larger and larger shares of workers’ wages,” she said.

There’s no doubt that it will be an uphill battle to get the excise tax into the final plan: Just an hour before Romer spoke, AFL-CIO president Richard Trumka blasted the excise tax as “a bad policy, bad politics, and totally unacceptable to put the cost of healthcare on the backs of working families.” But, in contrast to its qualified stance on the public option, the White House seems quite willing to take on the fight.