The Obama administration signaled Sunday that it was on the verge of abandoning plans to create a government-run insurance option as part of its program to reform the nation’s healthcare system. The move away from a pubic option is seen as a major victory for the health insurance industry. In an interview on CNN, Health and Human Services Secretary Kathleen Sebelius said that a public option is “not the essential element” of healthcare overhaul.

Kathleen Sebelius: “I think the President is just continuing to say, let’s not have this be the only focus of the conversation. Coverage for all Americans, lowering the crushing cost for everyone, making sure that we have new rules for insurance companies, that they can’t dump people out of the marketplace if you get sick, that they can’t drop your coverage based on a preexisting condition, that you can’t be priced out because you’re a woman instead of a man, and gender discrimination won’t be allowed to continue anymore — those are really essential parts of the program, along with choice and competition, which I think we’ll have at the end of the day.”

Kathleen Sebelius’s comment came one day after President Obama told a healthcare forum in Colorado that “the public option, whether we have it or don’t have it, is not the entirety of healthcare reform.” Instead of a public insurance option, the Obama administration suggested it will back the formation of private-sector options such as insurance exchanges or cooperatives. Analysts say it is unlikely that the co-ops would bring healthcare prices down as significantly as the government could.