Ezra Klein explains:

The Wyden folks quietly slipped in an amendment giving states enormous flexibility to experiment upward. Essentially, states can ask the federal government for a waiver that allows them to keep the federal funds they're receiving and do pretty much anything they want with them, so long as the coverage they provide is "at least as comprehensive as required under the Chairman’s Mark" and will "lower health care spending growth, improve the delivery system performance, provide affordable choices for all its citizens, expand protections against excessive out-of-pocket spending, provides coverage to the same number of uninsured and not increase the Federal deficit."

That could be used for a public option. But it could also be used for single-payer. The potential problem, as Jon Cohn points out, is that a Republican statehouse could use it to ratchet back coverage in existing public programs. But since the amendment doesn't allow anything to drift beneath the levels envisioned in the bill itself, it's hard to imagine a conservative state using it to be any less generous than the state would otherwise be.

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