RACHEL MADDOW: This news breaking right now, not at all yet clear, but joining us now to help shed some light on what‘s really happening is independent Senator Bernie Sanders of Vermont. Senator Sanders is a member of the Senate Health, Education, Labor and Pensions Committee.

Senator Sanders, thanks for joining us tonight on such short notice.

SEN. BERNIE SANDERS (I), VERMONT: Good to be with you, Rachel.

MADDOW: Help me understand what Senator Reid was trying to communicate tonight. Is the public option is still alive?

SANDERS: I wish I could. I think, the truth, CBO was analyzing the numbers on this. I don‘t think anyone is very clear as to really what is in this package.

But let me-let me be very clear-what I have said repeatedly is we are starting with a bill that is not a particularly strong bill, it does a lot of good things, but at the end of the day, if we are serious about comprehensive universal health care, the only approach is a Medicare for all, single-payer bill. This is certainly not that.

I have also said that it is not my intention to be voting for legislation which doesn‘t have some strong containment components and a public option is one way that you keep the private insurance companies honest.

Now, what‘s going on right now is 10 senators, five more progressive members and five more conservative members have been kind of locked in a room, working on some agreement.

What I think I can say, one of the ideas that is being looked at as you have just indicated, which is not insignificant, is saying to people who are over 55 years of age-and many of those people have financial problems, and the older you get, the more illness you have-what this plan may be saying to those folks is you can opt-in to Medicare on a premium-based way. You‘re going to have to pay a premium, but you will be eligible for subsidies, depending on your income. That is not insignificant.

Furthermore, I think that they are looking at various state options, giving states more flexibility as to how they can provide cost effective health care to all of their people.

So, what you‘re looking at, Rachel, it is not fair, I think-I think it‘s not fair to simply say they are abandoning the public option. What you‘re looking at is tradeoffs which, in fact, at the end of the day, may be stronger than the very weak public options that both the House and Senate have already passed.

MADDOW: Let me ask you just clarifying question though about these tradeoffs. I absolutely hear you in terms of the progressive nature of expanding Medicare to be available to a larger group of people. Medicare after all is a single-payer system. And it is the sort of thing that progressives and people very concerned about cost containment have talked about doing for health reform.

I understand why something like that may be a boon to progressives who would be asked to be trading away something like the public option, at least ideologically makes a lot of sense. I don‘t understand how a government-managed, essentially, menu of private insurance options is a progressive choice. Why that would be something that progressives would be satisfied with and might even give up the public option in return for?

SANDERS: Well, you‘re right.

(LAUGHTER)

SANDERS: The problem is, what we are looking at is a very conservative institution, the Republicans have decided that despite the disintegration of our health care system, they‘re more interested in representing the private insurance companies than the American people. They‘re out of the picture. So, you‘re down to 60 people, including some pretty conservative people.

So, I think what‘s going on in that room is trying to do the best that they can do within that context. The other part of the tradeoff, by the way, may also be an expansion of Medicaid. And if you add to Medicaid the development of many new community health centers, you will be providing a lot more health care access to lower income people. If you do an opt-in for people 55 years of age through Medicare, you‘re also providing a significant benefit.

So, the details, it‘s difficult for me to give you an explanation because nobody really has the final word on what‘s going on. But what you‘re looking at again is a tradeoff, expanding Medicaid, opening up Medicare to millions of more people, and weakening the so-called public option.

MADDOW: Independent senator, Bernie Sanders of Vermont, thank you for

helping us trying to figure this out tonight as this is breaking right now

· really appreciate it, sir.

SANDERS: You‘re welcome. Take care.

MADDOW: Joining us now is the Democratic governor of Pennsylvania, Ed Rendell.

Governor Rendell, thank you very much for coming back on the show.

It‘s good to have you here.

GOV. ED RENDELL (D), PENNSYLVANIA: My pleasure.

MADDOW: We are just getting this breaking news and it‘s not at all clear what exactly has been sent to the Congressional Budget Office for scoring. Some conflicting reports tonight that the public option may be being dropped by Senate Democrats in favor of some other more or less progressive options. Is the public option a make or break, do or die, game-breaker for you?

RENDELL: Well, not necessarily.

First, I want to say that Senator Sanders is absolutely right that we can expand Medicare down to 55-year-olds with a premium pay-in. Pennsylvania‘s done that with the CHIP program, Rachel. We go above the federal subsidy of 100 percent and allow people to buy in, and we basically covered all of our children. If we could do that for 55 and above, those are the people most likely in this economy to be unemployed and most likely not be able to find new jobs. So, that would be a Godsend.

Moving Medicaid up to 133 percent or 150 percent of poverty would add a lot of Americans, usually those single moms with kids who are having trouble staying above water. That would be a Godsend.

We‘d get more people in to what is, as you said essentially, a single payer. But the problem is, for all of the rest of us, eliminating the public option, eliminating competition, and means there‘s very little cost-containment, and that was going to hurt small business, it‘s going to hurt individuals, it‘s going to hurt all the rest of us.

The only way this federally-managed or federally-supervised plan of private insurance companies makes sense, if they give it teeth. If the federal agency that oversees has some teeth to adjust rates or to roll back rates if rates get out of hand. Absent that, it‘s a paper tiger.

MADDOW: It‘s-yes, it seems to me-and again, we are just trying to figure out what‘s going on here because we don‘t have a clear statement of what the policy agreement is-but it seems to me it makes a lot of sense to talk about expanding the existing government-run programs that we know work, Medicaid, Medicare, SCHIP, community health centers, these other programs that we talked about.

RENDELL: Yes, it makes sense.

MADDOW: But to talk about making some sort of-I guess it would be like a nonprofit government-owned store that sells expensive private for-profit products doesn‘t actually seem like a big progressive move forward.

RENDELL: Unless the federal agency has the oversight to regulate prices.

Let me give you a quick snapshot. In Pennsylvania, the insurance commissioner regulates car insurance. As a result, in the last seven years, car insurance has gone up less than inflation. We don‘t regulate health insurance. Health insurance has gone up seven times faster than inflation.

So, it makes no sense. Unless the federal agency that oversees this new plan has some teeth to regulate a roll back or slow down rate increases, then it‘s truly a piper tiger and worthless.

But remember what Senator Sanders said, the way we were talking about public options, I never had much faith in the trigger plan at all, Rachel, because the triggers can be manipulated, the insurance companies can, you know, do one year of reform to avoid the trigger, and then go back to business as usual. So, I never had much faith in the trigger.

I liked the opt-out, I like the opt-in less, but I like the opt-out, states are in unless they opt-out, that would be a good plan. But I never had much confidence. And it looked like the trigger was the only plan, public option plan that had any viability, and I never had much confidence in that. And you heard Senator Sanders say, and he‘s as progressive as they get, that these were not great public option plans that we‘re talking about.

MADDOW: And again, what we‘re faced with is sort of a distance between the policy and the politics as I see it, and I think in a way, you really just well described, the policy had been whittled down to the point where it may not have done much at all. CBO estimating it would be less than 1 percent of people who would be in the public option, in terms of policy. But in terms of politics, progressives had drawn a real line in the sand and said, "Ideologically, we want there to be a public option here."

And I do think and I‘m curious to know whether or not you agree that progressives are going to need to hear something in return, if that public option gets taken away, that there needs to be some big public commitment.

RENDELL: Absolutely. And you‘re right, but remember, you have you one of the most progressive senators in the entire body, Bernie Sanders, on. And he said that the tradeoffs of expanding Medicare to people 55 and above with the premium pay-in, and expanding Medicaid may have been an important plus, particularly the senators who believe that single-payer may be the way to go, because those are, in essence, single-payer plans.

But what worries me about that, and I‘m with Senator Sanders, I think rather than a watered-down public option, if those two things are in the bill, that‘s a pretty decent tradeoff. But I‘m worried about the rest of us, the small businesses and the rest of us whose rates are going to keep escalating because there‘s no competition and no control.

In some states-in my state, Rachel, in virtually every single media market in my state, one health care company has 70 percent, 75 percent of the market, and they‘re a monopoly, essentially a monopoly. There‘s no competition. They set rates or still, they set low levels of reimbursement to doctors and hospitals.

MADDOW: Competition, cost control, competition, cost control, competition, cost control. That‘s all anybody‘s been staying.

RENDELL: Absolutely.

(CROSSTALK)

RENDELL: Right. Unless we can have real regulation, a regulatory scheme. If my insurance commissioner could regulate health care costs in Pennsylvania, we would control costs. We would whip that curve down dramatically, but nobody‘s proposing that far as I can tell.

MADDOW: You just did here on THE RACHEL MADDOW SHOW. Democratic Governor Ed Rendell.

RENDELL: There you go.

MADDOW: . of Pennsylvania, thank you very much for your time tonight, sir. We really appreciate it.

RENDELL: Thanks, Rachel.