I'm surprised this hasn't gotten more attention. But imagine for a moment that the opt-out public option passes and becomes law (I give it a 65 percent chance at this point). Then what happens? Well, there has to be a debate in every state in which Republicans, where they hold a majority or the governorship, will presumably decide to deny their own voters the option to get a cheaper health insurance plan. When others in other states can get such a plan, will there not be pressure on the GOP to help their own base? Won't Bill O'Reilly's gaffe - when he said what he believed rather than what Roger Ailes wants him to say - be salient? Won't many people - many Republican voters - actually ask: why can't I have what they're having?
This is why this is lethal. The argument against new entitlements requires a macro-level perspective. You have to argue that although a measure may help an individual get something she wouldn't otherwise have - like adequate and reliable, if barebones, health insurance - its consequences will come back to haunt us all. You have to remind people that money doesn't grow on trees, that in the long run, more government involvement might hurt healthcare excellence, that you just need to rely on the wonderful private sector to deliver the goods in a more market-friendly way. This is always a tough sell because it requires voters to put abstract concerns over practical short-term gains. It's why conservatism always has a tough time in welfare state democracies.
But with health insurance companies, the GOP may not only have to make this argument, they may be onto a defining alliance they really, really don't want or need.
Imagine Republicans in state legislatures having to argue and posture against an affordable health insurance plan for the folks, as O'Reilly calls them, while evil liberals provide it elsewhere. Now, of course, if the public option is a disaster in some states, this argument could work in the long run. But in the short run? It's political nightmare for the right as it is currently constituted. In fact, I can see a public option becoming the equivalent of Medicare in the public psyche if it works as it should. Try running against Medicare.
The genius of the opt-out is that it coopts the states' rights argument (just as ending the prohibition on marijuana does); it has the potential to make "liberalism' popular again; it has easily demonized opponents - the health insurance industry; and it forces Republicans not to rail against socialism in the abstract but to oppose actual benefits for the working poor in reality.
It's a brutal, Chicago-style political maneuver. And Obama appears not to be the person really pushing it.