Senate Democrats appear on the verge of dropping a scaled-backed public plan that would make people 55 to 64 without healthcare coverage eligible for Medicare.

Among other provisions the plan would have allowed people without healthcare coverage access to the insurance plan for federal employees. That plan would have been administered by the federal Office of Personnel Management, which runs the federal plan.

That decision was regarded as a good one by John Greene, vice president of congressional affairs for the National Association of Health Underwriters. He said the public option is being misrepresented and would be an administrative nightmare.

He described the component of the plan that would provide access to the insurance plan for federal employees as an “employer plan with a single entry and exit point designed for a specific pool of individuals and not solely for the purpose of gaining insurance coverage.”

He called it “frustrating” to see reports that ignore this distinction.

“The federal government provides significant assistance with the premium and the rate increases that have occurred despite their size,” he explained.

Greene said that allowing people to buy into the federal program would be “an administrative nightmare.” Separating employees of the federal government from everyone else would “add significant administrative burdens for a purpose not associated with employment in the government.”

The Democrats appeared to back off from the public option during a Dec. 14 caucus. They faced public opposition from Sen. Joe Lieberman, I-Conn., and concern by moderate Democrats.

The part of the plan that Lieberman objected to was the Medicare component.

Sen. Harry Reid, D-Nev., Senate majority leader, was prepared to deal with Lieberman’s opposition by narrowing the framework of the plan, walling it off from the Medicare program while substantially reducing the pool of potential beneficiaries.

Sen. Max Baucus, D-Mont., chairman of the Senate Finance Committee, confirmed that the plan was in danger when he said after he left the meeting that “it’s just a matter of getting support from 60 senators.”

Sen. Tom Harkin, D-Iowa, chairman of the Senate Health, Education, Labor and Pensions Committee, confirmed Baucus’ view.

But NAHU’s Greene said he thought that created other problems for Democrats. “If there is no public option, then Sen. Reid has to do something else to placate the liberals who are strong supporters of a public plan,” Greene said.

He said that employers are worried that Sen. Ron Wyden, D-Ore., will demand that Reid accept his employee free choice amendment. Under that proposal, employees would choose and pay for their own health insurance, and in return, employers would give them a pay raise equal to the cost of the health care they had previously provided the workers.