RACHEL MADDOW: Joining us now is that man that you just saw there, Democratic Senator Ron Wyden of Oregon. He sits on the Senate Finance Committee, which today began the arduous task of marking up the Baucus health reform plan and debating about 564 amendments.

Senator Wyden, thanks very much for taking the time to be with us on this busy day.

WYDEN: Thanks for having me back.

MADDOW: You described real choice, real reform as being able to choose something else if you don‘t like what you have now. That‘s the idea behind your "Free Choice Act" amendment, which is getting a lot of attention. Can you explain to us how that would work?

WYDEN: You‘ve summed it up, Rachel, and it sits pretty darn well with the public option.

Look, all over America people are carrying these signs, public option, public option or bust. They‘re wonderful activists, but a lot of folks haven‘t been told that the Congressional Budget Office says only about 12 million people in America would actually get to choose the public option. They are likely to be sicker. They‘re likely to be folks who haven‘t had good preventive health care services.

To really put the consumer in the driver‘s seat, to give the consumer clout, to turn the tables on the insurance lobby, you‘ve got to have a really big group. That‘s what I‘m pushing for, and free choice is very compatible with the public option.

MADDOW: So the idea is that anybody should be able to get into the health exchange? It shouldn‘t be that if you already have insurance through your employer, that locks you out of the health exchange? That anybody can be able to join, that creates competition, so that not only do we have a choice for people to get insured who can‘t afford insurance today, but people can also hopefully improve on the insurance they have through competition and that sort of an exchange, is that the overall idea?

WYDEN: It will send a message on day one to the insurance lobby that if you abuse somebody, if you abuse one of your consumers, you rip them off, give them lousy treatment, jack up the rates, they are going to turn the tables on you. They are going to choose another product.

And I think it is so important for folks to understand this is about taking on the insurance lobby with choice rather than tethering somebody to something they don‘t want, something they don‘t like. With choice, you liberate the consumer. You put them in the driver‘s seat rather than an insurance CEO.

MADDOW: The AFL-CIO today sent a letter to finance committee members against your amendment. They‘re saying that it would encourage younger, healthier workers to-to leave, leaving behind in the employer-based health plans older, sicker workers, and that would make those plans too expensive to maintain. What‘s your reaction to their criticism?

WYDEN: They are just flat-out wrong, and, in fact, the Congressional Budget Office put out an analysis today indicating that the AFL-CIO was wrong. They do not really understand what the proposal is. The Congressional Budget Office says that our idea would not destabilize the employer system.

I also think that the typical union member would be pretty shocked to know that their leadership here in Washington, D.C. is lobbying for a public option that would deny more than 200 million Americans the opportunity to get it. That‘s not in line with the public interest.

I want everybody to have real choice. I think our free choice proposal worked very well with the public option. And, by the way, we got some very good news today, Rachel, because the Mayo Clinic says that they would support a public option as long as it gave people choices like members of Congress get, and I‘ve got legislation to do that, too.

MADDOW: In terms of thinking about what‘s ultimately going to happen and how this is going to work for most Americans, when you guys are having these negotiations, particularly among Democrats, is there an awareness that if the end result of this bill is that coverage stays as lousy and expensive as it is today, the Democrats have changed the law so that we‘re all forced to buy that lousy and expensive coverage, that this will be a huge political disaster? Has that-I‘m worried politically that, that‘s going to happen and sink the Democratic Party for generations, but I‘m also worried that‘s going to be what happens to me personally in terms of my health insurance.

WYDEN: Rachel, you‘re being logical, and sometimes, logic doesn‘t break into these political debates. But that‘s the point that I‘m making. I have been saying, folks, choice and competition are magical words in America. They‘re magical words for progressives, but they resonate all across the country.

Here is our chance to link real choice, real consumer choice with the public option and tell people, if you‘re getting hammered today, if you‘re stuck with a product you don‘t like, we‘re going to liberate you. We‘re going to put you in charge. And, you bet, if the Congress passes somehow an anti-consumer, anti-choice, anti-holding insurance companies accountable bill, I think we‘ll pay dearly for it.

MADDOW: And I think the other thing that we‘ve learned tonight is that, right now, there is a rift between some Democratic senators on the Senate Finance Committee and organized labor. And unless that rift closes, it‘s going to be hard to make political progress here. So, I think that‘s going to be one of the major topics in the days ahead.

Senator Ron Wyden of Oregon, good luck with the mark-up this week, and I know it continues tonight. Thanks very much for taking the time.

WYDEN: Thanks for having me.