AP reports:

After days of secret talks, Senate Democrats tentatively agreed Tuesday night to drop a full-blown government-run insurance option from sweeping health care legislation, several officials said, a concession to party moderates whose votes are critical to passage of President Barack Obama’s top domestic priority.

In its place, officials said Democrats had tentatively settled on a private insurance arrangement to be supervised by the federal agency that oversees the system through which lawmakers purchase coverage, with the possibility of greater government involvement if needed to ensure consumers of sufficient choices in coverage.

Additionally, the emerging agreement calls for Medicare to be opened to uninsured Americans beginning at age 55, a significant expansion of the large government health care program that currently serves the 65-and-over population.

Some scathing comments on the “compromise” from Bob Moffitt at the Heritage Foundation:

In their relentless drive to overhaul one sixth of the American economy, Senators are obviously making it up as they go along. In the latest desperate search to find some form of government-run health plan to compete against private health plans that is somehow acceptable to Senate liberals and moderates alike, the Senate Democratic leadership is entertaining the idea of stripping the existing “public option” from the big Senate health bill ( H.R. 3590), and replacing it with a combination of public options: an OPM/FEHBP sponsored plan ( that will be “private” in name only) and an expansion of the two giant- and financially troubled or debt ridden- Great Society entitlements: Medicare and Medicaid. If the original idea of the public option was to keep costs down, As its champions have tiresomely insisted, a proposal to expand Medicaid and Medicare is curious to say the least: Both are major drivers of the health care spending curve upwards- well into the stratosphere.

More Debt. Medicare and Medicaid expansions are nothing new. The latest proposal to expand Medicare, a program for senior and disabled Americans, down the age scale was proposed by the Clinton Administration in the late 1990’s, after the collapse of its 1342 page health care bill. The same proposal is under consideration now, expanding Medicare to cover people between the ages of 55 and 64 years of age. Depending on how the amendment is written, this could jump start a massive enrollment of the Baby Boom generation before 2011, when the first wave of Boomers is set to retire. No details are available, nor is there any kind of cost estimate. Medicare already has a long-term debt of $38 trillion.

Higher State Costs. A major Medicaid expansion is already embodied in both the House and Senate bills. The Senate bill would expand Medicaid up the income scale to 133 percent of the federal poverty level, and the House bill would expand it to 150 percent of the poverty level; in both cases there would be massive erosion of private health insurance among families in these income categories. Which is the key point, apparently. For those who are enrolled in it, Medicaid delivers poor quality care compared to private health insurance. But Senate liberals are undeterred, and the issue of poor quality is rarely even discussed in the largest of the government’s health programs.. Of course, the problem with the massive Medicaid expansion is that it will also add to the already burdensome Medicaid costs on the states.

More Central Control. The more interesting element of this proposal is the creation of an “FEHBP Plan” administered by the Office of Personnel Management (OPM). OPM is the agency that runs the popular and successful Federal Employees Health Benefits Program (FEHBP) that covers members of Congress and federal workers and retirees. There are no details about any of this yet, beyond some discussion of broad concepts in the media. However, it appears that under the Senate Democrats’ compromise proposal, OPM would be given authority to contract with private, non-profit insurers( such as Blues and Kaiser ) to compete in the federally -designed health insurance exchanges that would be erected in each of the states under the Senate bill. It appears that the government would sponsor certain favored health plans to compete against the private health plans in the states. It is not clear how a restricted set of plans would add much to competition or to expand personal choice of benefits, particularly if the benefits are politically standardized.

And there’s more, as Moffitt explores the likelihood that the OPM will be setting premiums, too.  As Moffitt wonders, what exactly is the difference between the old public option and the new public option?

Finder’s Fee: National Review Online