Prospects Fade For Public Health-insurance Option

WASHINGTON (MarketWatch) -- Odds are growing longer for the public health-insurance option that the White House has pushed as part of an overhaul of the U.S. health-care system, with President Barack Obama saying over the weekend that such an option doesn't represent the "entirety" of health-care reform.

"The public option, whether we have it or we don't have it, is not the entirety of health-care reform," Obama said on Saturday in Grand Junction, Colo. "This is just one sliver of it."

Bucking a bearish Monday trend in the broader stock market, shares of health-insurance companies including UnitedHealth Group Inc. (UNH) and Aetna Inc. (AET) rose after the comments by Obama as well as members of his administration over the weekend. Health insurers have fought a public plan.

Republicans, long opposed to a public plan, seized on comments made Sunday by Health and Human Services Secretary Kathleen Sebelius. In an interview on CNN's "State of the Union" program, Sebelius said a government-run health-insurance option is not "essential."

There should be choice and competition in the health-insurance market, but a public option is not critical, Sebelius said.

House Republican Whip Eric Cantor said that he was pleased by what Sebelius said.

"I am heartened by what the secretary of health and human services said yesterday, that she doesn't think necessarily that a government takeover of health care is a necessary component of what the Obama administration is trying to do," said Cantor in a CNBC interview.

Also over the weekend, one top Democrat involved in health-care negotiations said that there have never been enough votes in the Senate for a public option.

"So to continue to chase that rabbit, I think, is just a wasted effort," said Sen. Kent Conrad, D-N.D., on "Fox News Sunday."

Earlier this year, Conrad proposed setting up non-profit health-insurance cooperatives, in which members join together and purchase insurance for themselves. Obama has never ruled out co-ops, which are expected to be a source of intense debate when Congress returns after Labor Day.

Republicans may be more open to co-ops than a public plan, since co-ops wouldn't be government-run but are aimed at injecting more competition into the health-insurance marketplace.

On CNBC, Cantor said Republicans want to see more people have health care.

"We want to see a reduction in costs so that we can provide more access. We want to see people who have health care, who like it, able to keep that health care," said Cantor.