Proposed deficit remedy: the healthcare ‘public option’

As both political parties worry about the growing federal deficit, an unlikely proposal is returning from last year’s divisive healthcare debate: the “public option.”

Creating a major government health insurance program was roundly rejected last year, but 128 House Democrats are pushing to reconsider the idea, contending that it would hold down federal spending.

Their bill, which faces long odds, would allow Americans who do not get insurance at work to choose a government health plan starting in 2014.

“There is all this concern about the deficit,” said Rep. Lynn Woolsey (D-Petaluma), a leading champion of the proposal. “Well, guess what: This would reduce the deficit because it saves so much money.”

Woolsey and her allies, including Rep. Pete Stark (D-Fremont), are armed with a new analysis by the nonpartisan Congressional Budget Office. Democrats say the CBO projects that the public option could save the government $68 billion between 2014 and 2020.

The government’s administrative costs would be lower than private insurers’, proponents say, and it could pay hospitals and doctors less. That would mean lower premiums — and lower government subsidies for policyholders who need them.

Insurance companies, hospitals and other businesses say a public option would undermine employer-provided insurance and set the stage for a so-called single-payer system, in which the government would be the only insurer.

Nor are Republican budget hawks likely to sign on — even though the projected savings coincidently match what the leading House GOP healthcare proposal would have generated, according to the CBO.

And with a full plate of legislative business, House Democratic leaders have little interest in restarting a healthcare debate that split their own ranks.

Woolsey said she is willing to wait. “This will be there for the next Congress,” she said.

noam.levey@latimes.com