Health Care Update: Public Option Dead?

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By David Espo, AP Special Correspondent

WASHINGTON (AP) — In a long-anticipated showdown, liberal Democrats twice failed on Tuesday to inject a government-run insurance option into sweeping health care legislation taking shape in the Senate, despite bipartisan agreement that private insurers must change their ways.

The two votes marked a victory for Montana Democrat Max Baucus, the Senate Finance Committee chairman, who is hoping to push his middle-of-the-road measure through the panel by week's end. It also kept alive the possibility that at least one Republican may yet swing behind the overhaul, a key goal of both Baucus and the White House.

The developments occurred as Democrats in the House sought savings to reduce their companion legislation to roughly $900 billion over a decade, the price tag President Barack Obama has suggested.

One option under consideration would reduce the number of individuals and families eligible for federal health coverage subsidies to those earning less than 400% of poverty, or about $43,000 for a single person and $88,000 for a family of four, officials said, commenting only on condition of anonymity. The subsidies are designed to make insurance more affordable, and account for a significant percentage of spending in the bill.

Without disclosing any of the details of a marathon closed-door leadership meeting, Majority Leader Steny Hoyer, D-Md., told reporters, "It's hard work, but we're determined to get it (the bill's cost) down."

If anything, the health care debate was growing more intense. According to one independent organization, television advertising around the issue has been running at a level of more than $1.1 million a day for the past week and now stands more than $100 million since the beginning of the year.

Inside the Senate Finance Committee, Jay Rockefeller, D-W.Va., said his proposal to allow the government to sell insurance in competition with private industry was far from the federal takeover that critics portray. "It's not. It's optional," he said, adding it was designed to offer competition and a lower-priced, reliable choice for consumers shopping for coverage.

"Washington is not the answer," countered Sen. Orrin Hatch, R-Utah.

The key votes were cast by Baucus and four other Democrats, who sided with Republicans who were united against the proposed change in the bill. "The public option would help to hold insurance companies' feet to the fire, I don't think there's much doubt about that, but my first job is to get this bill across the finish line," said the chairman.

"No one shows me how to get to 60 votes with a public option," he said, employing the term used to describe a new government role in health care. It would take 60 votes in the 100-member Senate to overcome any filibuster Republicans might attempt.

Supporters of a new role for government repeatedly accused private insurers of placing profits over coverage, and said they would try for a federal option again when the full Senate votes.

"With some work and some compromise, we can get the 60 votes on the floor of the Senate that will make our system better by providing for a strong, fair and viable public option," said Sen. Chuck Schumer of New York, who sponsored the second proposal to inject more competition into the insurance market.

For the Finance Committee, the day marked the beginning of a second week of public debate over sweeping legislation that generally adheres to conditions that Obama has called for.

The bill includes numerous new consumer protections, including a ban on companies denying insurance on the basis of pre-existing conditions. At the same time it provides government subsidies to help lower-income Americans afford insurance that is currently beyond their means. It also includes steps that supporters say will begin to slow the growth in health care costs nationwide.

After weeks of delay, both the House and Senate now appear on track to vote on different versions of health care legislation this fall. Passage in both houses would set the stage for a compromise to be voted on by year's end.

Rockefeller, whose measure was rejected, 15-8, assailed the insurance industry in withering terms. "I hate to use the word 'rapacious,'" he said — but quickly added it was warranted. He said omission of a government option from the measure was a virtual invitation to insurance companies to continue placing profits over people, and he predicted they would raise their premiums substantially once the legislation went into effect.

Republicans countered that the proposals would lead to the demise of the private insurance industry and result in a system that is completely run by the government.

Sen. Charles Grassley, R-Iowa, cited private studies — one by the conservative Heritage Foundation, the other by the Lewin Group, owned by United HealthCare — saying millions would be pushed out of private insurance as the government held fees to doctors at artificially low levels. He said the result would be a violation of Obama's pledge that consumers would be able to keep their current insurance if they wanted once the legislation went into effect.

While Baucus voted against the proposal, he was at pains to counter Rockefeller's charge that the legislation increased subsidies that would go to insurance companies without dictating changes in past practices.

He said the legislation would raise taxes on insurers, ban denial of coverage because of pre-existing conditions and limit the extra premiums that could be charged on the basis of age.

There was little appetite on the panel for a full-throated defense of the insurance industry, even among Republicans who voted against an expanded government role.

"The private sector is not doing exactly what it should do with medical services. but it can,' said Sen. Jim Bunning, R-Ky., one of the committee's most conservative members. He said most Democrats "don't want to help the insurance company" improve, preferring to have the government step in.

Schumer responded promptly.

"If the state insurance commissioners are doing such a good job, then why are costs going through the roof?" he asked.

All 10 Republicans on the committee voted against the Rockefeller proposal to allow the government to compete directly with insurance companies, Sen. Olympia Snowe among them. Democrats are hoping the Maine lawmaker will eventually break ranks with her party and support the legislation.

Also opposed were Baucus and fellow Democrats Kent Conrad of North Dakota, Blanche Lincoln of Arkansas, Bill Nelson of Florida and Tom Carper of Delaware.

Schumer backed an alternative approach that he said would introduce more competition into the insurance market nationwide. His version differed from Rockefeller's chiefly in that it would have allowed for the government to negotiate payments with doctors, hospitals and other health care providers for an initial two-year period rather than pay them at the same rates as under Medicare.

Baucus, Conrad and Lincoln joined all Republicans to defeat the proposal on a vote of 13-10.

According to Evan Tracey, who heads a private data tracking company called the Campaign Media Analysis Group, about $47 million has been spent for ads favoring a health overhaul and $32 million has gone to opposing the effort. The rest has been spent on commercials that generally mention the issues.

Associated Press writer Erica Werner in Washington contributed to this story. Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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