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Prospects for Public Option Dim in Senate
Key Committee Rejects Proposals For Government Health Insurance

By Shailagh Murray and Lori Montgomery
Washington Post Staff Writers
Wednesday, September 30, 2009

A key Senate panel twice beat back efforts Tuesday to create a government-run insurance plan, dealing a crippling blow to the hopes of liberals seeking to expand the federal role in health coverage as a cornerstone of reform.

In a signal moment in the increasingly fractious debate over reforming the nation's sprawling health-care system, Senate Finance Committee members rejected two amendments to create a public option on votes of 15 to 8 and 13 to 10.

Committee Chairman Max Baucus (Mont.) was one of three Democrats who voted no on both proposals. Baucus, who has emerged as the central player in shaping the bill, which is likely to be the main vehicle for debate on the Senate floor, said he supports the principle of a public option as an alternative to private insurance. But he warned that including it could doom the bill to a Republican filibuster.

"No one has been able to show me how we can count up to 60 votes with a public option," Baucus said. "I want a bill that can become law."

The votes are likely to deepen fissures in the Democratic Party over the shape of the legislation, and they proved what critics have long argued: Moderate Democrats are reluctant to expand the federal health-care role beyond the current boundaries of the Medicare, Medicaid and Department of Veterans Affairs programs. Even President Obama, who has repeatedly supported a government-run plan in public statements, has indicated that the idea is not worth the price of failing to enact his biggest domestic policy goal.

Despite the setback for advocates of a public option, debate over such a plan is certain to continue. Sens. John D. Rockefeller IV (D-W.Va.) and Charles E. Schumer (D-N.Y.), who offered the amendments that were voted down Tuesday, have vowed to keep the issue at the forefront as the debate unfolds. And Senate Majority Leader Harry M. Reid (D-Nev.) could include a government plan when he combines the Finance Committee's bill with Senate health committee legislation, approved in July, that includes a public option.

Aides said Tuesday that Reid has not decided how to proceed. If he doesn't include a public option, backers of a government plan will seek to amend the bill when it advances to the Senate floor, or during final negotiations with the House, where Speaker Nancy Pelosi (D-Calif.) remains a staunch advocate.

Supporters vowed to press on, expressing confidence that backing will grow as lawmakers consider the implications of relying on private insurers to bring about the far-reaching reform that many in Congress envision. Controlling the costs of health care is one of the primary goals of the push for change, and many Democrats believe that only the government has the clout to drive down premiums while ridding the system of costly inefficiencies.

"The public option is on the march," Rockefeller said, moments before his amendment was roundly defeated. Schumer pledged, "We are going to keep at this and at this and at this until we succeed, because we believe in it so strongly."

Finance Committee Republicans were united in their opposition. Sen. Charles E. Grassley (Iowa) called the public option a "slow walk toward government-controlled, single-payer health care."

House leaders hope to bring their reform proposal to the floor in October but are still debating how their public option would function. Under one version, rates paid to health-care providers would mirror Medicare payment rates, which are lower than those paid by private insurers for the same services. That would yield significant savings for beneficiaries through lower premiums, but it could wreak havoc on hospitals, doctors and other providers in rural communities, where the Medicare reimbursement rates are far below the national average.

Rockefeller's proposal also pegged public-plan rates to Medicare rates, drawing strong protests from committee Democrats who represent sparsely populated states. "Every hospital in my state goes broke" under the Rockefeller approach, said Sen. Kent Conrad, of North Dakota. "I can't possibly support an amendment that does that."

Support for a public option is much broader among House Democrats. "I think a very significant majority of Democrats in the House of Representatives are okay with a public option," said Majority Leader Steny H. Hoyer (Md.), who is closely allied with House moderates.

How to structure a public option is just one of five or six major sticking points in the House, where lawmakers are struggling to rewrite an expansion of insurance coverage to meet Obama's requirement that any bill be deficit-neutral and cost $900 billion or less over the next decade.

Options for reducing the price of the more than $1 trillion House package include trimming the generosity of insurance plans that would be subsidized through new state-run exchanges, designed to allow people without access to affordable employer coverage to buy policies at discounted group rates. Another proposal would shift a larger part of the burden for expanding Medicaid eligibility to the states, House aides said.

House leaders met Tuesday to discuss ways to correct regional disparities in Medicare reimbursement rates, and they are haggling over how to handle funding for abortions, to the extent that private plans offered on exchanges will be permitted to cover the service. Also unresolved is whether undocumented immigrants would have access to the exchanges.

Nor have House Democrats settled on a package of tax increases and spending cuts to pay for an insurance expansion. In July, the House Ways and Means Committee approved a surtax on income over $350,000 as a primary source of funding, but Pelosi has since suggested that she would rather see the surtax applied only to millionaires. She has also said she is considering a Senate plan to impose a 35 percent excise tax on generous "Cadillac" insurance policies, but other top House Democrats say that is not their preference.

Without it, however, the House would be left with a revenue package that would not keep up with the cost of expanding coverage, throwing the plan into deficit sometime after 2019.

Senators also voted Tuesday to restore federal funding for abstinence-only education, which Obama had proposed to eliminate. Conrad and Sen. Blanche Lincoln (Ark.) joined all 10 Republicans on the Finance Committee in adding the $50 million-a-year program to the health care bill.

The measure would still have to pass the full House and Senate.

Obama had proposed in his 2010 budget to direct money spent on abstinence-only education to broader teen pregnancy-reduction programs.

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