Some states already poised to opt out of government-run public health plan

At least 11 states intend to forge ahead in the coming months with bills and ballot questions designed to block some of the healthcare reforms Democrats are trying to pass this year.

Their efforts could be a harbinger of trouble for the staple feature of Senate Majority Leader Harry Reid's (D-Nev.) newly unveiled healthcare plan: a public option that allows states the ability not to participate. Starting as early as this summer, state lawmakers began introducing bills that would shield their citizens from individual or employer mandates, among other key reforms in Democrats' healthcare proposals, according to the National Council of State Legislatures.

Movement on those issues is not likely for a few more months, as most state legislatures are not in session. Some state constitutions also require ballot measures in order to approve changes of that magnitude, further delaying any local action on the healthcare front.

However, these legislatures' early moves still offer crucial hints about how many states would similarly exempt themselves from the public option, should the Senate bill's “opt out” clause remain intact.

Already, the Congressional Budget Office estimates about one-third of states would back out of the system, limiting the public option insurance pool to about 3 or 4 million Americans. That would make the public plan's enrollment about 1 million smaller than the House's version of the program, according to a cost analysis of the Senate proposal.

Among those states likely to bow out first could be Virginia and New Jersey, which both recently elected Republican governors.

Both Virginia Governor-elect Bob McDonnell and New Jersey Governor-elect Chris Christie signaled a willingness to exempt their states from a public plan during their respective campaigns, and they could revive their opposition once they assume office in January.

“Turning over the best doctors, the best hospitals, the best pharmaceutical research and development system to the federal government for a co-op or a public option is [an idea] I don't hear Virginians very excited about,” McDonnell, then a candidate, told Fox News in October.

Similar battles could play out across the country, especially in the 13 states where Republicans dominate both the governor's mansion and the legislature, or the 10 states now under split-party control.

Bigger still for Democrats to consider: The possibility that states could have some say in the public option debate months before voters head to the polls is likely to inject a serious dose of national politics into otherwise local races.

Thirty-seven governors seats -- and vast number of seats in most states’ legislatures -- will be contested in 2010, and all might have to answer the daunting question of how they would side on an optional government plan.

The CBO did not provide any concrete numbers about how opt-out states would affect public option premiums, but analysts have long maintained that a small pool -- coupled with the possibility most of its beneficiaries might need expensive care -- is likely to raise prices.

“Congress has been focused on health and energy legislation that will cost millions of jobs,” Mississippi Gov. Haley Barbour (R), head of the Republican Governors Association, stressed during a radio address last week.

“Hopefully, Tuesday’s fire alarm will get Washington’s eye back on the ball: back on job creation and economic growth," he said, noting the GOP's wins in Virginia and New Jersey had a lot to do with growing dissatisfaction over Democrats' healthcare bills.

However, that has led public option's staunchest proponents to carp that unnecessary political grandstanding could cause Senate Democrats' bill to backfire.

The public option's ability to drive down costs, these lawmakers argue, depends greatly on the number of people in the pool, and purchasing power is severely diminished when states are afforded the ability to opt out of it.

“I’m getting tired of saving Obama’s can in the White House,” said a frustrated Rep. John Conyers (D-Mich.) earlier this week.

“I mean, he only won by five votes in the House, and this bill wasn’t anything to write home about,” he said, suggesting that bill was too centrist for his taste. “The public option is only available — which is the only way you manage cost and give some competition to 1,300 other health insurance companies — the only way he could have got that through is that progressives held their nose and voted for the plan anyway.”