Obama in Full Retreat on Healthcare Public Option Tuesday, August 11, 2009 7:41 PM By: David A. Patten  Article Font Size   President Barack Obama has apparently pulled the plug on public option government-run healthcare. His remarks at the town hall meeting held Tuesday in Portsmouth, N.H., echoed other Democrats' signals that any healthcare reform bill making its way out of Congress this fall will not include a taxpayer-subsidized insurance system – or at least, not one Democrats in Congress will admit to. People say, 'How can a private company compete against the government?' And my answer, the president said at Tuesday's town hall meeting, is that . . . if the public option has to be self-sustaining, meaning taxpayers aren't subsidizing it . . . then I think private insurers should be able to compete. With those words, Obama appeared to tacitly concede that the current healthcare proposals on the table can't withstand a growing tide of public opposition. One major criticism has been that their taxpayer-subsidized rates would drive private insurance companies out of business – thereby clearing the way for a government-run, single-payer system. Originally, Obama insisted that any reform legislation must include a government-sponsored insurance plan. In July, for example, while Obama was meeting with Russian leaders in Moscow, White House chief of staff Rahm Emanuel made the mistake of suggesting the administration was open to other approaches. Within hours, Obama issued a statement correcting him. I am pleased by the progress we're making on health-care reform, his statement read, and still believe, as I've said before, that one of the best ways to bring down costs, provide more choices, and assure quality is a public option that will force the insurance companies to compete and keep them honest. Now, facing rising opposition, Obama has decided to jettison what made public option public – taxpayer subsidies. So there's nothing inevitable about this somehow destroying the private marketplace, Obama said at the town hall meeting, as long as … it's not set up where the government is basically being subsidized by the taxpayers, so even if they're not providing a good deal, we keep on having to pony up more and more money. And I've already said that can't be the way the public option is set up. It has to be self-sustaining. On Tuesday, Obama sought to distance himself from government-run healthcare, strongly implying he had never advocated it in the first place. Now, the only thing that I have said is that having a public option in that menu would provide competition for insurance companies to keep them honest, he said. That statement flies in the face of the president's past statements, however. For example, in a June letter to Sen. Ted Kennedy, D-Mass., posted on Obama's Organizing for America Web site, Obama stated: I strongly believe that Americans should have the choice of a public health insurance option operating alongside private plans. This will give them a better range of choices, make the healthcare market more competitive, and keep insurance companies honest. The president's remarks in Portsmouth simply acknowledge what has become increasingly obvious: Healthcare reform that includes a government-run insurance plan faces a tough political battle. Although Democrats and the mainstream media have portrayed the recent town hall disruptions as artificial protests cooked up by GOP extremists, polls show that the growing animus against public-option healthcare clearly has taken a toll. On Sunday, Senate Majority Whip Dick Durbin signaled on CNN's “State of the Union” that he could live with a bill without a government-sponsored insurance plan: I support a public option but yes, I am open, he said, adding, It doesn’t' have to be a perfect bill. As the president's statements indicate, he will still call the new provision a public option. But now it will mean something else – and the big question is, what? The new territory Obama staked out on Tuesday involves establishing a plan that would operate without continued public financing. Some sort of start-up financing would probably be necessary, and presumably a federal bureaucracy would be necessary to design, organize, market, and manage the plan. And as with all federal programs, the question remains whether future budget shortfalls would be covered by taxpayer dollars. Assuming that the government-run insurance program that Obama and House Speaker Nancy Pelosi originally sought is now dead, the obvious question becomes what form the revised public-option would take. The main alternative under consideration is the healthcare co-op. But a true co-op is owned and operated for the benefit of its members – such as credit unions, which enjoy nonprofit status. And that appears to be a far cry from the system Democrats are eying. Nina Owcharenko, the deputy director of the Center for Health Policy Studies for the Heritage Foundation, tells Newsmax: The test will be whether the administration will truly abandon the public plan, or just try to re-package it with a different name, i.e., the co-op. If the government runs it, funds it, or controls it, it is still a public plan. No health co-op insurance provider currently exists, according to Heritage experts. Conceivably, a health-insurance company could be structured to operate like a nonprofit organization, such as a credit union. So far Congress has been unwilling to grant them tax exempt, non- profit status, however. Leading Democrats use the co-op term loosely and in a way that still appears to provide for federal underwriting. Sen. Charles Schumer, D- N.Y., has stated that any co-op must be national in scope, run by federal bureaucrats appointed by the president, and would require substantial start-up funding. GOP opponents consider that little more than public-option in disguise. I support a public option, but, yes, I am open. Senate Majority Leader Mitch McConnell, R-Ky., told Fox News Sunday that he's against the co-op proposal. It sounds a lot like Fannie Mae and Freddie Mac to me, he said. No, that's not acceptable.