WASHINGTON BUREAU — Obama administration suggestions that a public health insurance plan “is not essential” to health reform efforts are generating cautious optimism in the health insurance industry.

Kathleen Sebelius, the secretary of the U.S. Department of Health and Human Services, suggested on several television talk shows over the weekend that moves to cut the “public option” from a broad health reform bill might not be a deal breaker.

“We are encouraged by the comments … that a public plan is not an essential element of healthcare reform,” says Robelynn Abadie, president of AHIA – NAIFA Health and Employee Benefits, Falls Church, Va. “We have maintained that meaningful and cost-effective healthcare reform can be achieved without the public plan option.”

The National Association of Health Underwriters, Arlington, Va., also is welcoming Sebelius’ remarks.

“Sebelius’ comments that a government-run public health insurance plan is “not the essential element” of comprehensive health reform-if this is indeed the administration’s new position-is a welcome recognition of what Americans have been conveying for months and more recently during town hall discussions,” NAHU says.

America’s Health Insurance Plans, Washington, notes that, despite Sebelius’ comments, all 4 bills now on the table call for a public plan.

“We share the concerns that doctors, hospitals, employers have all raised about the unintended consequences a government plan would have,” says Robert Zirkelbach, a spokesman for America’s Health Insurance Plans, Washington. “Accordingly, if we do the type of market reforms and consumer protections that our industry has proposed and which have broad support, a government-run plan in any form is not necessary.”

The Council of Insurance Agents and Brokers, Washington, has issued a “yellow alert” to its members, cautioning that Sebelius’ explicit support for health care cooperatives in her talk show appearances “is going to lead to a frenzied, push-and-pull lobbying campaign to define the contours of such coops.”

WHAT THEY SAID

Sebelius said on CNN that the critical areas in health reform are “coverage for all Americans; lowering the crushing cost for everyone; making sure that we have new rules for insurance companies, that they can’t dump people out of the marketplace if you get sick, that they can’t drop your coverage based on a pre-existing condition, that you can’t be priced out because you’re a woman instead of a man, and [that] gender discrimination won’t be allowed to continue anymore.”

Several of the major health bills include provisions concerning compensation for doctors who provide end-of-life consultations. Sebelius said on ABC that moves to delete the public option and end-of-life consultation provisions are “not deal breakers.”

An administration priority “is to stabilize the employer marketplace,” Sebelius said.

“Small-business owners right now are dropping coverage because they can’t any longer afford it,” she said. “They can’t stay in the market…. With the new tax incentives that are part of health reform, small-business owners would be encouraged to actually stabilize their insurance plans, to offer coverage to their employees. They’d have tax credits. They’d have some help for the low-income employees to be able to afford the coverage.”

Another key player in the health bill efforts — Sen. Kent Conrad, D-N.D., a participant in the bipartisan talks now under way at the Senate Finance Committee — said Sunday on Fox News that hope for a government-run public option being included in a final reform bill is all but dead.

“The fact of the matter is there are not the votes in the United States Senate for the public option,” Conrad said. “There never have been. So to continue to chase that rabbit, I think, is just a wasted effort.”

NAHU: REFORMS ALREADY IN WORKS

“Americans want our elected officials to work in a bipartisan fashion to forge real solutions to reduce costs, improve quality and expand access and choice,” NAHU says. “Most Americans like their private health insurance coverage and want health reform to strengthen and build upon what is working, and address those areas where there are shortcomings.”

Negotiators already are talking about ways to add new consumer protections and market rules for guaranteeing coverage for pre-existing conditions, ending the practice of basing premiums on a person’s health status or gender and adding a personal coverage requirement, NAHU says.

“A government-run public insurance scheme would undermine employer-sponsored coverage and pile on significant and unnecessary costs to reform compared to these common-sense approaches,” NAHU says.

CIAB: WHAT WOULD COOPS LOOK LIKE?

The CIAB alert says lobbying over the coop proposal could delay House action on the House health proposal.

“There will be continuing ups and downs for the next couple of months on reform,” the alert says.

House members could compromise by agreeing to create a “coop on steroids” that would be enough like a government-run plan to mollify the liberals needed to pass a bill, the CIAB alert says.

In comments to members, Joel Kopperud, a CIAB congressional relations director, reports that Conrad has said coops would be funded by states, the federal government and coop members.

“The government could provide seed money, perhaps as loans, but the coops would run independently after that,” Kopperud says.

Each would likely have a minimum of 500,000 members, and a national board would likely oversee the system.

“If coops are limited to small businesses and individuals, and can be marketed through traditional distribution channels, they might well be a welcome element of comprehensive health reform that increases availability and affordability of coverage,” Kopperud says.

But the CIAB remains concerned that “any public insurance option – whether a full option available to all, or a more discreet cooperative approach – may use its built-in advantages to eventually dominate the market, for example, by adopting government payment rates for providers,” Kopperud says.