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Congress Considers Several Choices for the Public Option

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As leaders in the Senate and the House prepare to present a single health care bill in each chamber, they are not only considering whether or not to include a government-sponsored health insurance plan, or "public option" -- but also what kind of public option.

There are a variety of ways Congress could structure a public option -- and the small differences could have tremendous consequences. The form the public option takes could, for example, impact the payment rates doctors receive for their services, whether doctors in different regions of the country end up getting different rates, how much money the government could save by using the plan, or how many people sign up for it.

House Speaker Nancy Pelosi (D-Calif.) has insisted the House health care bill will include a public option, and Thursday she said the House is sending three different public option proposals to the Congressional Budget Office (CBO) to assess their financial impact. The three plans vary in the way medical provider reimbursement rates are handled.

The three options are:

1. A "robust" public option, favored by progressives and Pelosi: Medical providers would be reimbursed at Medicare rates, plus 5 percent.

2. A public option with "triggered" rates: The government would negotiate payment rates with providers, meaning the government would be "on a level playing field" with the private sector and would likely have to pay rates higher than Medicare rates. However, if costs rose to a certain point, the reimbursement rate would revert to Medicare rates plus 5 percent.

3. A public option with negotiated rates -- and also expanded Medicaid eligibility: The government would negotiate payment rates with providers, meaning the public option would not save the federal government as much money. To offset the added costs, more lower-income people would be eligible for Medicaid rather than tax credits. The current House proposal would raise Medicaid eligibility from 100 to 133 percent of the poverty line, but this compromise would expand it to 150 percent of the poverty line.

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Another important option that is now on the table as a way to cover the expense of reform is taxing the windfall profits of insurance companies, in addition to imposing a surtax on wealthy Americans. This is the latest idea the House has come up with to make up for the shortfall they have by raising the surtax on wealthy American from impacting families making $350,000 to families making $1 million.

"I thought that there was more that the insurance companies could contribute to this health care reform, because, after all, they're going to get 50 million new consumers, many of them subsidized by the taxpayer, and we think they can put more on the table," Pelosi said Thursday.

The speaker said the House will decide what option to include after receiving the CBO's score, which could be ready within 10 days.

Meanwhile, the Hill newspaper reports the House may be 10 votes away from having enough votes to pass a "robust" public option.

In the Senate, Majority Leader Harry Reid (D-Nev.) may include a public option in the bill he brings to the floor, even though the Senate Finance Committee rejected two variations of the idea. If he does not, it is almost certain to be proposed as an amendment on the Senate floor.

Senate leaders have considered another form of compromise, in which states would be able to opt out of a "robust" public option, the Huffington Post reports. Sen. Chuck Schumer (D-N.Y.), a strong proponent of the public option, said Thursday the opt-out plan is being "very seriously considered" and that he is "very optimistic" there will be some form of a public option in a bill that makes it to the president's desk.

CBS News Capitol Hill Producer Jill Jackson contributed to this report.

Updated at 4:50 p.m. ET to reflect that the Blue Dogs have not as a group specifically endorsed the second public option plan.

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