WASHINGTON — Senate Majority Leader Harry Reid sided with his party's liberals on Monday and announced that he would include a government-run insurance plan in health care legislation that he plans to take to the Senate floor within a few weeks.
His proposal came with an escape hatch: A state could refuse to participate in the public insurance plan by adopting a law to opt out. Even so, the announcement was a turning point in the debate over how much of a role government should play in an overhauled health care system, and it set the stage for a test of Democratic party unity.
With Republicans united for now in opposition to any bill including a public option, Reid needs support from all members of his caucus — 58 Democrats and two independents — to take up the legislation. Aides said that he appeared to be short of that goal.
However, reluctant moderates could vote with their leadership to overcome procedural blocks, then oppose the legislation on a final vote, which would allow it to pass with a simple majority.
Should Reid prevail, both houses of Congress would be poised to act on bills including a government-run plan to compete with private insurers. The House is still weighing the details of its approach, but Democratic leaders there have made clear they will include a government plan in their version of the legislation.
Just weeks ago, the prospects for such an approach seemed remote, reflecting all-out opposition from conservatives to what they considered an excessive government role in the economy and a lack of enthusiasm from many moderate Democrats. But the idea has consistently drawn strong support in national polls and has the White House's backing though not its particularly active public support.
President Barack Obama said at a fundraiser in Miami on Monday that America has to overhaul the health care system to make insurance cheaper for families, businesses and the government.
He predicted success, but warned that major industries such as insurance companies will fight hard to prevent it.
"It's going to get harder," he said. "Now's the time when all the special interests are saying, 'Oh, this is really going to happen, we might lose some of our profits.' And they start paying big lobbyists, and they start twisting arms."
"The best way to move forward is to include a public option with the opt-out provision for states," said Reid, D-Nev. "I believe that a public option can achieve the goal of bringing meaningful reform to our broken system."
Reid's decision was acclaimed by liberal organizations like MoveOn, Families USA and Health Care for America Now, a coalition that includes labor unions and civil rights groups.
But he lost the one Republican who had given Democratic efforts a tinge of bipartisanship, Sen. Olympia Snowe of Maine. She has been pushing for a different approach in which a government plan would become available only if states did not make progress in reducing insurance premiums and covering more of their people.
"I am deeply disappointed with the majority leader's decision to include a public option as the focus of the legislation," Snowe said.
Democratic moderates were largely mum Monday on Reid's plan, but a few suggested that there's room for compromise. Sen. Mary Landrieu, D-La., said she remained "very skeptical" of a public option, but that "I look forward to reviewing the specific language" of the legislation and learning more about its cost.
Reid and his aides provided few details of his proposal. They said the public plan would be national in scope and would be available on the first day that major provisions of the health care legislation take effect, in 2013.
The debate over the public option has highlighted a divide among Democrats. The Senate health committee included a public plan in the bill it approved in July. The Senate Finance Committee rejected two versions of the public plan when it considered its bill this month.
Republicans and insurance companies assailed the decision. "No matter what you call it or how you dress it up, the Democrats' proposal is government-run insurance," said Sen. Jon Kyl of Arizona, the No. 2 Republican in the Senate.