The debate over health-care reform in Congress and across the country is increasingly focused on the "public option" — whether the government should offer health coverage in direct competition with the insurance industry.

The debate over health-care reform in Congress and across the country is increasingly focused on the "public option" — whether the government should offer health coverage in direct competition with the insurance industry.

President Obama's plan provides for it.

Republicans argue that it would be unfair to expect private insurers to compete with the entity that makes the rules. Ultimately, their argument goes, a public option will lead to government-run, single-payer health care as private insurers are driven from the market.

That raises all the bogeymen familiar to anyone who has followed the debate: health-care decisions made by government bureaucrats, not doctors; rationing of procedures to get the most bang for the buck; and patients given no choice of providers.

Meanwhile, Oregon Sen. Ron Wyden continues to tout his Healthy Americans Act, first introduced last year and reintroduced in this session of Congress. Wyden's plan — dubbed "Wyden's Third Way" by Wall Street Journal editorial writer Collin Levy — does not include the "public option." It would, however, fundamentally change how health care is delivered and, if fully implemented, would cover everyone in the country for less money than we are spending now.

Wyden's approach recognizes the political reality that government-provided health care has virtually no chance of making it through Congress. The insurance lobby is too powerful and Americans too suspicious of government for that to happen.

Wyden's plan takes the employer-provided health insurance that has been the model in this country for generations and turns it on its head. He would first require every American to have coverage. Then he would require employers to take the money they now spend on employee health insurance and pay it directly to workers — what Wyden has called "the biggest wage raise in American history." Employers who don't provide insurance would pay an assessment based on revenue per worker.

Employees would use the money to purchase their own coverage, which would follow them from job to job and even during periods of unemployment. If they found coverage for less than their pay increase, they would keep the difference. Insurers would be forbidden to deny anyone coverage based on pre-existing conditions or claims history.

There are many more details, but the basic idea is to create a much larger pool of insured people, driving down costs. Insurers would no longer be able to shift costs by covering only healthy people, forcing them to emphasize disease prevention and wellness rather than treating illness.

Wyden's liberal constituents are demanding that he embrace the public option. Organized labor has weighed in as well, attacking Wyden in an Oregon ad campaign for wanting to undermine one of their members' most prized benefits.

As Wyden told the Journal's Levy, unions have every right to bargain for the best deal they can get, "But nobody, be it a CEO or a labor member ought to be getting what anmounts to gold-plated coverage with the tax subsidies paid for by somebody who is a modestly compensated woman at a small business who doesn't have a health plan."

Much has been made recently of the Congressional Budget Office's estimate that the health-care reform plan currently under consideration in Congress would cost as much as $1.6 trillion. The same agency says Wyden's plan would break even in its first year, and begin saving money in three years.

It's little wonder Wyden's bill has attracted Republican and Democratic co-sponsors. That ought to be a signal that he's on to something that could attract enough support to reach the president's desk.