Yesterday, Senate Majority Leader Harry Reid (D-Nev.) attempted to appease some of the chamber’s most ardent public option supporters, vowing to hold a separate vote on the issue later this year, the Huffington Post reported today. In a letter to Sens. Jeff Merkley (D-Ore.) and Bernie Sanders (I-Vt.), Reid said he was “very disappointed” that the Democrats didn’t have the votes to keep the provision as part of the reform bills.

“I remain committed to pursuing the public option,” Reid wrote.

While I believe that the legislation we are considering does much to provide affordable coverage to millions of Americans and curb insurance company abuses, I also believe that the public option would provide additional competition to make insurance even more affordable. As we have discussed, I will work to ensure that we are able to vote on the public option in the coming months.

Unmentioned, of course, is the tiny inconvenience that, if Democrats didn’t have the votes to pass the public option by reconciliation (which requires just a simple majority), they certainly won’t have the votes to pass it later in the year, when the filibuster will be back requiring 60 votes to pass anything.

I know many people view this as a partisan issue, but both parties have found plenty of areas where we agree. And what we’ve ended up with is a proposal that’s somewhere in the middle — one that incorporates the best ideas from Democrats and Republicans.

Also consistent in Obama’s speech was the argument — grown louder from the White House in the last week — that the private insurance industry is responsible for much of what’s wrong with the nation’s health care delivery system. What’s not to like, Obama asked, about a reform bill that would prohibit companies from denying coverage for pre-existing conditions? Or dropping coverage when patients get sick? Or hiking premiums for no reason outside of profit motive? He invoked memories of his mother, “in the last six months of her life, on the phone in her hospital room arguing with insurance companies when she should have been spending time with her family.”

We cannot have a system that works better for the insurance companies than it does for the American people. We know what will happen if we fail to act. We know our government will be plunged deeper into debt. We know millions more people will lose coverage. And we know that rising costs will saddle millions more families with unaffordable expenses — and will force many small businesses to drop coverage altogether.

House Speaker Nancy Pelosi (D-Calif.) this morning outlined the Democrats’ strategy for passing the Senate bill by not passing it. The question remains whether she can rally 216 Democrats behind the reconciliation bill said to “fix” the upper-chamber’s proposal. Should be quite a week.

Last night, in a statement to liberal groups, the office of the Illinois Democrat clarified: “Sen. Durbin and the rest of the Senate Leadership will be aggressively whipping FOR the public option if it is included in the reconciliation bill the House sends over.”

That, according to those same liberal groups, puts “the fate of the public option … in Nancy Pelosi’s hands.” From the statement issued this morning by the Progressive Change Campaign Committee, Democracy for America and Credo Action:

The votes and the leadership are there in the Senate, and the public option will live or die based on Nancy Pelosi’s next moves. She’s been a hero on this issue in the past, and we hope that she steps up at this historic moment.

This creates a fascinating new dynamic, not least of all because Pelosi has never wavered in her support for the public option. Indeed, unlike the Senate health reform proposal, the House-passed bill would create one.

We’ll know the outcome soon enough. The Democrats say they want to pass health care reform before the end of the month.

Senator Harry Reid’s office says that if a final decision is made to pass health reform via reconciliation, the Majority Leader would support holding a reconciliation vote on the public option.

The actual statement from Reid’s office, though, is an odd one:

If a decision is made to use reconciliation to advance health care, Senator Reid will work with the White House, the House, and members of his caucus in an effort to craft a public option that can overcome procedural obstacles and secure enough votes.

It’s a wonderful use of the passive voice  (always popular on Capitol Hill) to imply that the decision whether or not to use reconciliation will come down from Mt. Olympus or somewhere — as if the Senate majority leader doesn’t have any power to control these things. Sargent addresses this a bit, pointing out that Senate aides (1) maintain that the House would have to pass a reconciliation bill first, (2) want assurances that the White House will help to whip votes from fearful Democrats, and (3) fear that parliamentary rules to begin with might not allow the public plan to pass by reconciliation.

That’s a lot of unknowns for this late stage in the debate. You start to wonder if this public option push isn’t intended simply to shield Democrats from the liberal critics who thought all along that the Senate didn’t fight hard enough for the provision.

Democratic Sens. Michael Bennet (Colo.), Barbara Boxer (Calif.), Dianne Feinstein (Calif.), Sherrod Brown (Ohio), Roland Burris (Ill.), Al Franken (Minn.), Kirsten Gillibrand (N.Y.), John Kerry (Mass.), Frank Lautenberg (N.J.), Jack Reed (R.I.), Sheldon Whitehouse (R.I.), Pat Leahy (Vt.), Bernie Sanders (Vt.), Jeff Merkley (Ore.), Barbara Mikulski (Md.) and Tom Udall (N.M).

“The congratulations that Democrats are giving themselves in Washington DC are not shared by voters across the country who overwhelmingly want a public option and oppose being required to buy insurance from companies that put profit ahead of people’s health,” said Adam Green, PCCC co-founder, in a written statement. “Bernie Sanders can be a hero at this historic moment by declaring that any final bill must have a public option to win his support.”

Both Sanders and Feingold are adamant supporters of the public option, though both also voted last week in favor of the Senate bill, which doesn’t include such a plan. (The House bill does.)

House and Senate leaders are hoping to merge the two bills and have the final product on the president’s desk sometime next month.

Shares of Aetna rose $1.81, or 5.6 percent, to $34.32; Cigna gained $2.15, or 6 percent, to $37.95; Humana added $1.71, or 3.9 percent, to $45.24; UnitedHealth traded up $1.35, or 4.3 percent, to $32.89; Wellpoint Inc. jumped $2.19, or 3.8 percent, to $60.51. All hit 52-week highs, except for Humana, which was a little more than a dime short of its 12-month high.

Wellcare also rose $1.47, or 4 percent, to $38.41; Health Net rose 73 cents, or 3.1 percent, to $24.28; Molina rose 61 cents, or 2.7 percent, to $23.02; and Amerigroup rose 49 cents to $26.28. Wellcare and Health Net hit 52-week highs as well.

Nate Silver parsed these figures yesterday, reaching the verdict that they don’t necessarily mean that the industry’s profit margins would be higher under the bill, though millions more customers would increase the companies’ volume considerably. OK — fine. But it still means the industry will fare well (with more than $450 billion $430 billion in government subsidies thrown in for good measure). And it still means that the task of screening claims for medical services remains in the hands of the same folks who have a perverse economic incentive to deny those claims.

These are the rewards of spending millions lobbying Congress.

Sen. Ben Nelson (D-Neb.)(WDCpix)

Unveiling a modified health reform bill on Saturday, Senate Democratic leaders appear to have cobbled together the 60 votes they’ll need to pass the most expansive overhaul to the nation’s health care system in generations. But winning that support comes at a steep cost.

To satisfy Democratic moderates, Senate Majority Leader Harry Reid (D-Nev.) had to drop the public option, the government-run insurance plan many experts argue is necessary to keep insurance costs down, and he had to add an abortion provision that reproductive rights groups say will leave millions of women without comprehensive health coverage.

[Congress1] The compromises are emblematic of the political pickle Democratic leaders have faced all year. Despite commanding the 60-seat majority needed to defeat Republican filibusters, party leaders have quickly discovered that uniting the disparate ideologies and regional interests represented by the diverse troop of Democratic senators is no simple task. The disagreements within their own caucus have led party leaders to dilute some of their top legislative priorities — like credit card reform — and drop others altogether, as was the case with mortgage bankruptcy reform. As The Washington Post’s Joel Achenbach wrote Saturday, “Life at 60 has been awkward for the Democrats.”

Nowhere has that statement rung more true than in the debate over health care reform, where conservative-leaning Democrats have had much greater success watering down the bill than all Republicans combined. For example, to satisfy Sen. Joe Lieberman (I-Conn.), who caucuses with the Democrats, the bill scraps the public option, instead proposing the creation of national insurance plans to be contracted by the government to private companies. Lieberman, representing the insurance-industry hub of Connecticut, has said the public plan would be too costly for the government at a time when federal deficits are already at record heights. For many months he’s hinged his support for the underlying bill on the absence of a public option — in any form.

Liberals have long said that a public plan is vital for creating competition in the largely uncompetitive insurance market, lowering costs and keeping the private insurers honest. Allowing private insurers to continue unchecked, they argue, is to empower the very industry that’s largely to blame for the ills plaguing the nation’s dysfunctional health care system

“Any measure that expands private insurers’ monopoly over health care and transfers millions of taxpayer dollars to private corporations is not real health-care reform,” Howard Dean, former head of the Democratic National Committee, wrote last week in The Washington Post.

In a huge concession to another moderate holdout, Democratic leaders included a provision that would allow states to ban abortion coverage for women receiving federal subsidies on proposed new, government-organized private insurance marketplaces, dubbed exchanges. Included to win the support of Sen. Ben Nelson (D-Neb.), that provision would also force women seeking abortion coverage to write two separate premium checks to their insurance company, ensuring that no federal funds pay for abortion services by separating the insurance payments. To entice Nelson, Democratic leaders also hiked federal Medicaid payments to Nebraska by $45 million over the next decade.

The abortion provision drew the immediate condemnation of women’s reproductive rights groups. NARAL Pro-Choice America issued a statement Saturday saying that the compromise is “outrageous,” and the Planned Parenthood Federation of America issued another calling the two-check system “unworkable.”

“There is no sound policy reason to require women to pay separately for their abortion coverage other than to try to shame them and draw attention to the abortion coverage,” said Planned Parenthood President Cecile Richards. “Moreover, it is highly unlikely that insurance companies will be willing to follow such an administratively cumbersome system, leaving tens of millions of women without abortion coverage.”

Nelson, for his part, accepted the criticisms without regret.

“I know these limits on abortion are hard for some people to accept, and I respect those who disagree,” Nelson said in a statement after the compromise language was agreed to. ”But I would not have voted for this bill without them.”

The sticking points aside, Democratic leaders cheered the overall bill as an effective means to provide health coverage for millions of uninsured Americans while also controlling skyrocketing health-care costs, both public and private. The compromise bill, according to the Congressional Budget Office, will cut deficit spending by $132 billion over the next decade, and $1.3 trillion in the decade following.

“By creating strong competition, we’ll reduce skyrocketing health care costs that stop thousands of Nevadans and millions of Americans from getting the best possible health care,” Reid said in a statement. “When we pass this bill, we will cultivate a health care system that values quality of care over profits — ensuring that patients receive the care they need and deserve.”

Republicans couldn’t disagree more. Sen. Judd Gregg (N.H.), senior Republican on the Budget Committee, issued a statement Saturday blasting the new bill as “nothing more than a re-hash of expensive and unpopular ideas.”

“The lesson to be learned here is that to secure 60 votes in the Senate, you have to produce legislation that spends more, taxes more, and borrows more,” Gregg said. “A majority of Americans don’t want this kind of new expense, taxation, debt, or intrusion of government. We should step back and come up with a bipartisan plan that will be more effective and affordable.”

With Democratic senators united behind the legislation, however, the GOP opposition is largely inconsequential. Rather, it will likely be House Democrats who will present the next real hurdle to Reid’s bill. Indeed, House leaders have their own ideas about what health reform should look like, and in many areas they differ significantly from the provisions found in the Senate compromise, including the approach to the public option, restrictions on coverage for illegal immigrants, the children’s health insurance program, and even abortion. In fact, reports suggest that Rep. Bart Stupak (D-Mich.) — who sponsored stringent abortion restrictions in the House bill — was working behind the scenes with Senate Republicans to make the Nelson restrictions even stronger. Stupak has denied knowledge of contacts between his office and Senate Minority Leader Mitch McConnell (R-Ky.). These issues set the stage for another showdown within the Democratic Party when the leaders of the two chambers meet to iron out the differences between the bills.

A full year into the fight over health reform, that part of the debate hasn’t even started.

Think again.

In negotiations with the White House and Senate leaders this week, Nelson is warning that there are a host of issues outside of abortion that could keep him from supporting the bill. Roll Call reports:

This Democratic source said Nelson is “worried” about what might be hidden in the bill. The source also indicated that Nelson views all of his concerns with the bill equally, as opposed to the widely held notion that assuaging the Nebraskan on abortion is enough to secure his vote. The source said Nelson will not support the legislation unless he’s happy with the final language.

Among Nelson’s other concerns is a broad expansion of Medicaid, which only happens to be the central element of both the House and Senate bills. If he’s not willing to agree to that, then this debate will still be raging in March.

“There are no liberals left to get” in the Senate, Emanuel said in an interview, shrugging off some noise from the likes of Sen. Bernie Sanders (I., Vt.) that a few liberals might bolt over the compromises made with conservative Democrats.

As the White House leans on conservative Democrat Sen. Ben Nelson of Nebraska for the 60th health care vote, Emanuel has made the case that this generation of liberal political figures will not make the mistake of their predecessors. The late Sen. Edward M. Kennedy’s greatest regret was not cutting a deal with Richard Nixon on universal health care. Former President Bill Clinton has forever rued the day he did not take moderate Republican Sen. John Chafee up on a compromise that could have secured a health care bill early in his presidency.

“Every time they’ve gotten close to the deal, they’ve passed up the opportunity and chosen to walk away from a particular where they’ve lost the forest for the trees,” Emanuel said.

Awaiting the liberals’ response …