Updated at 5:45 p.m. ET with more information.
Senate Majority Leader Harry Reid announced today he is including in the Senate's health care bill a government-run health insurance plan, or "public option," from which states could opt out.
"I think it's the fairest way to go," Reid said in a press conference. "A public option can achieve the goal of bringing meaningful reform to our broken system."
Reid is submitting to the Congressional Budget Office a number of different variations on health care legislation that bring together different elements of the Senate Finance Committee's health care bill and the Senate Health, Education, Labor and Pension Committee's bill. Whichever version is chosen, however, will have the public option, Reid said.
As to whether a bill with a public option could win the 60 votes necessary to overcome a Republican filibuster, Reid said that as soon as the CBO provides a cost estimate, "we clearly will have the support of my caucus to move this bill and start legislating."
"I feel good about the consensus that was reached within our caucus and with the White House," Reid said. "And we're all optimistic about reform because of the unprecedented momentum that now exists."
Reid said he concluded a public option with an opt-out provision was the best way to move forward with the support of the White House. Reports that President Obama had expressed preference for a more moderate plan had some liberal groups up in arms over the weekend. Reid, who faces a tough re-election campaign next year, had also been under considerable pressure to include the public option in the bill.
White House Press Secretary Robert Gibbs said in a statement that Mr. Obama is pleased with today's progress.
"He's also pleased that the Senate has decided to include a public option for health coverage, in this case with an allowance for states to opt out," Gibbs said. "As he said to Congress and the nation in September, he supports the public option because it has the potential to play an essential role in holding insurance companies accountable through choice and competition."
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States will have until 2014 to opt out of the national public program. The bill will also include a proposal from the Senate Finance Committee to establish nonprofit cooperatives to manage health insurance, Reid said.
The senator acknowledged the inclusion of a public option would mean the bill would lose the support of Sen. Olympia Snowe of Maine, the one Republican who may have supported the Democrats' plans.
"There will come a time, I hope, where she sees the wisdom of supporting a health care bill after having an opportunity ... to offer amendments," he said.
"I am deeply disappointed with the Majority Leader's decision to include a public option as the focus of the legislation," Snowe said in a statement today. "I still believe that a fallback, safety net plan, to be triggered and available immediately in states where insurance companies fail to offer plans that meet the standards of affordability, could have been the road toward achieving a broader bipartisan consensus in the Senate."
Reid said Republicans were "making a big mistake" in choosing to not help Democrats pass legislation that is "important to the American people." He said said he will continue to look for their support on health care reform and other issues.
"I'm always looking for Republicans... it's just a little hard to find them," Reid said. "When I came here to the Senate we had a lot of moderate Republicans... But, of course, now, the moderates are extremely limited. I could count them on two fingers."