Public Option Dead in Senate...For Now

The Senate Finance Committee on Tuesday dealt a setback to  efforts to create a government-run insurance plan, a cause celebre for many liberal Democrats for years.

And it gets a bit worse.

Senior Senate Democratic leadership sources tell Fox that Senate Majority Leader Harry Reid, D-NV, will not include a so-called "public option" in a healthcare reform bill he will create once the Finance Committee completes its action this week, a decision first reported by The New York Times.

Reid must meld that more conservative product with the more liberal one crafted by the Health, Education, Labor & Pensions Committee once headed by the late Sen. Ted Kennedy, D-MA.   Kennedy's bill, which was sheppherded by his longtime friend, Sen. Chris Dodd, D-CT, called for the creation of a public plan.

That puts the ball squarely in the court of House Speaker Nancy Pelosi, D-CA, who is currently working with her leadership team to craft a bill that many believe will include some version of a public option.

The fight would then turn to a House-Senate conference where differences must the be reconcilied.  It is unclear what would happen if a final House-Senate conference product included a government-supervised plan. No doubt, though, the White House will be called upon to play an integral role.

Reid does retain the right to use a controversial budgetary tactic, used over the years by both parties, called "reconciliation" - which permits him to get a bill passed with just 51 votes. This tool, however, is not easy to use and would likely blow any chance to gain GOP support, not to mention create a situation that would make it very difficult to pass broader healthcare reform.