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The Public Option is a public healthcare insurance agency that would still charge premiums like any other insurance agency, and would survive on it's own profits.
It was originally part of the Affordable Care Act, but it got cut before the act was passed.
What was the rationale for cutting the Public Option?
I'm merely summarizing the info in the Wikipedia article that was linked to (anyone please edit my summary if you feel I misinterpreted some points):
http://en.wikipedia.org/wiki/Public_health_insurance_option#Criticism
Some of the issues (real or perceived) were:
having the government compete with the private sector but also regulating said sector was a conflict of interest
It's unfair for government to compete directly with private insurance
Because the public option didn't necessarily allow for things like the government to negotiate prices with the pharmaceutical industry, it wouldn't be an affordable solution.
It appears there was some abortion-related language in the bill (which is always controversial)
In the end, the public option would end up with a disproportionately large number of elderly and otherwise 'uninsurable'.
While the article goes on to show that a majority of the public supported a public option, it appear that there was simply too much controversy in congress for it to stay in with any hopes of passing health care reform.
Short answer: Because "politics". ;)
private option next to your bullet points, did you actually mean public option? because as it stands, your answer is confusing
Apr 19, 2013 at 21:17
It was cut in order to entice the for-profit hospitals, whose support Obama and the White House believed was necessary to pass the ACA. A public option would reimburse them at lower rates than private insurers, and so was a threat to their bottom lines.
In his book, Daschle reveals that after the Senate Finance Committee and the White House convinced hospitals to to accept $155 billion in payment reductions over ten years on July 8, the hospitals and Democrats operated under two “working assumptions.” “One was that the Senate would aim for health coverage of at least 94 percent of Americans,” Daschle writes. “The other was that it would contain no public health plan,” which would have reimbursed hospitals at a lower rate than private insurers.
Obama Is Taking an Active Role in Talks on Health Care Plan
Several hospital lobbyists involved in the White House deals said it was understood as a condition of their support that the final legislation would not include a government-run health plan paying Medicare rates — generally 80 percent of private sector rates — or controlled by the secretary of health and human services.
“We have an agreement with the White House that I’m very confident will be seen all the way through conference,” one of the industry lobbyists, Chip Kahn, director of the Federation of American Hospitals, told a Capitol Hill newsletter..
It should further be noted that this was done in secret, while Obama was still promising the public option to the public.
Several bloggers and reporters compiled the evidence but my search started with this post by Glenn Greenwald, which has a comprehensive compilation of evidence, or links to compilations of evidence, or links to links: Truth about the public option momentarily emerges, quickly scampers back into hiding.
(I don't know whether it is faux pas to respond to really old questions but I think this answer is more direct and accurate than all the rest.)
Short version - because too many congresscritters objected to it either due to disagreeing with the idea or simply as a political liability. It was cut it out or risk not having enough votes for ACA.
The public option wasn't included in the Senate bill because some moderate Democrats in the Senate, particularly Ben Nelson and Joe Lieberman, were against it because they saw it as being too liberal or government-centric. And the Democrats in the Senate had a bare filibuster-proof majority at the time, so if even a single Senate Democrat opposed the bill, it wouldn't get past the filibuster. They tried to replace the public option with a Medicare buy-in, but Lieberman was against that too. So finally, as a compromise solution, they didn't include a federal public option, but they did allow states to make their own public options (which is how Vermont was able to institute a single-payer healthcare program).
