Support for public option grows in House and Senate

By Lori Montgomery and Shailagh Murray
Washington Post Staff Writer
Friday, October 23, 2009

House Democrats are coalescing around an $871 billion health-care package that would create a government-run insurance plan to help millions of Americans afford coverage, raise taxes on the nation's richest families and impose an array of new regulations on private insurers, in part by stripping the industry of its long-standing exemption from federal antitrust laws.

Senate Democratic leaders, meanwhile, huddled with President Obama on Thursday, and lawmakers said Majority Leader Harry M. Reid (Nev.) was increasingly leaning toward the idea of including a version of a public insurance option, albeit one that would allow states to opt out of such a system, in the chamber's bill.

House Speaker Nancy Pelosi (D-Calif.) and her top lieutenants said Thursday that they are close to corralling the 218 votes they need to move forward with comprehensive legislation that would include a version of the public option prized by liberals as a fundamental pillar of reform. House leaders were still trying to defuse a number of lingering disputes, including a battle over abortion. But senior lawmakers said that major sections of the measure have been locked in and that a final bill could be made public as soon as Monday in preparation for debate before the full House early next month.

"We feel very confident we have the votes to move forward," said Rep. John B. Larson (Conn.), the third-ranking House Democrat, as he emerged from the latest of dozens of meetings aimed at uniting the Democratic rank and file. "We want to make sure that when we do our 'Kumbaya' moment, that we're all there."

Across the Capitol, Senate leaders also hope to open floor debate next month, but the public plan has emerged as a major sticking point. Liberals, led by Sen. Charles E. Schumer (D-N.Y.), are seeking support for an "opt-out" provision that would create a government plan but allow states not to participate. Others worry that if Reid adds a public plan to the package he is crafting from two competing Senate bills, moderate Democrats will join Republicans in voting to block the bill from reaching the Senate floor.

Sen. Olympia J. Snowe (Maine), the only Republican to support any of the Democrat-sponsored health-care legislation, opposes the Schumer alternative and told reporters Thursday that she would vote against a measure that includes it. Sen. Ben Nelson (D-Neb.) also criticized the opt-out approach and urged Reid to leave the public plan out of the bill. "I applaud his effort," Nelson said of Reid's attempt to find common ground. "But it's too risky."

The discussion continued at the White House late Thursday, where Obama was noncommittal on the opt-out idea, according to senior Democratic aides who were briefed on the session. Many Democrats said Reid was leaning toward adding the Schumer language, even at the risk of failure on the Senate floor, to establish a baseline of support in the chamber for a public option.

The sailing was considerably smoother in the House, where work was nearly complete on a package that would cover 35 million more Americans by expanding Medicaid, the government health plan for the poor, and creating exchanges where low- and moderate-income people could shop for insurance and apply for federal subsidies. The exchanges would offer policies from private firms, as well as a public plan that would keep premiums low by paying providers at rates linked to Medicare.

The expansion would be financed through penalties on people who do not obtain insurance, an 8 percent payroll tax on employers who do not offer coverage to their workers and about $500 billion in cuts to Medicare over the next decade. The House plan also proposes a 5.4 percent surcharge on income over $500,000 for individuals and $1 million for families, a levy that would affect 0.3 percent of taxpayers but raise an estimated $460 billion over 10 years, Democrats said.

Some Democrats from rural districts, where Medicare pays well below the national average, have opposed linking a public plan to Medicare, arguing that it would impose a huge financial burden on their doctors and hospitals. But prospects for a "robust" public plan were boosted in recent days as House leaders worked to address that concern and to convince lawmakers that only a plan connected to Medicare would save enough money to push the overall cost below $900 billion over the next decade -- the target Obama set in early September.

As part of that campaign, Pelosi said she requested two estimates from the Congressional Budget Office, one featuring a plan tied to Medicare and the other with a public plan permitted to negotiate rates directly with providers, as some moderates prefer. The CBO found that negotiating rates is likely to significantly increase the cost of a public plan, requiring other adjustments to drive costs back down. Among them: shifting 3 million more people onto Medicaid, which pays doctors and hospitals even lower rates than Medicare. That option was "not palatable to members," Pelosi said at her weekly news conference.

For some lawmakers, the strategy worked. Rep. Gerald E. Connolly (D-Va.), a moderate freshman who had favored negotiated rates, now says he "could live with" a plan pegged to Medicare. "If we're looking for savings, I can't ignore evidence in front of my face," he said.

Others were unmoved, and a senior Democrat said their concerns could force Pelosi to backtrack. Rep. Earl Pomeroy (D-N.D.) said that Medicare rates are worse than Medicaid rates in his state, and that he has made that clear to House leaders.

"They've made the decision," he said. "Now the question is whether they have the votes."

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