It's all very clear-cut, really.
Since it seems that we are to be eternally cursed with health insurance companies, polls show that most Americans like the idea of a public option--a non-profit health insurer administered by the government--to act as real competition to keep their prices in line.
After all, since insurance companies are exempt from antitrust laws, and some have a virtual monopoly on their business in many states, they shouldn't have it both ways, should they?
Critics complain that the public option is a Trojan horse that will eventually usher in the dreaded single-payer government health plan, and be the death of private insurers. I'm not sure where the threat lies here: it's like saying that introducing penicillin will mean the death of venereal disease.
Anyway, it should please states-rights conservatives that the Democratic leadership is offering a state opt-out as a sweetener. This way, blue states can have their public option, and red states can--on principle--reject its subversive, godless, socialistic philosophical underpinnings if they want to.
Of course, if the red-staters begin to notice that the blue-staters' premiums are falling precipitously, there may be a reapportionment of legislators in the next statewide elections. Money always talks, and...well, you know the rest of the expression.