Healthcare reform: The End Game Begins

President Obama's efforts to compromise on a government health care plan is aimed at drawing moderate Democrats into the fold and mirrors a measure included in Medicare reform passed earlier this decade.

The White House reportedly is in talks with Republican Senator Olympia Snowe about a proposal to create public insurance plans on a state by state basis and only as a safety net in the event market reforms don't extend coverage to almost every uninsured person.

Obama aims to diffuse the idea of a government takeover of the health care system, a theme central to Americans' distrust of the reform plan. That uneasiness extends to members of his own party and it seemed unlikely the public option was going to make its way into a Senate reform bill.

The compromise makes sense, says Ira Loss, senior health analyst for Washington Analysis, a research firm for institutional investors.

The idea is similar to a provision in the 2003 law that extended prescription-drug insurance coverage to Medicare recipients. At the time the bill was being debated most insurers didn't have drug insurance policies, so Congress wrote in a provision that created a public option in states in which there weren't at least two private plans, Loss says. As it turns out, insurers like Humana Inc. jumped into the business.