Health-Bill Negotiators May Drop Public Option, Expand Medicare

By Laura Litvan and Kristin Jensen
Bloomberg News
December 8, 2009

Dec. 8 (Bloomberg) -- Senate Democrats, struggling to find compromises in U.S. health-care legislation, are considering dropping plans to create a new government insurance program in favor of alternatives such as expanding the Medicare program.

Senators negotiating behind closed doors said they may reach an agreement as early as this week on how to deal with a so-called public option insurance program that has divided Democrats. That's welcome news to Senate Majority Leader Harry Reid who today will watch his Democrats fight over the issue of abortion funding on the Senate floor.

Lawmakers cautioned that there is a long way to go even if an accord holds. They're considering possibilities such as modeling a program on the federal employee-insurance system that involves private insurers, further expanding the Medicaid program for the poor and lowering the eligibility age for the Medicare plan for the elderly to 55 from 65, with new premiums.

"We're driving for conclusion," said Senator Jay Rockefeller, a West Virginia Democrat.

A majority of Democrats in the House and Senate have long pushed for a new government-run insurance program that would compete with private companies such as Hartford, Connecticut- based Aetna Inc. While it passed the House, the idea lacks the 60 votes needed to pass in the Democratic-controlled Senate.

Reid is pushing the Senate to pass the overall legislation before the end of the month, paving the way for a House-Senate compromise early next year. The 10-year, $848 billion Senate bill is designed to cover 31 million uninsured Americans and curb rising medical expenses.

House Bill

Like the $1 trillion measure passed by the House on Nov. 7, the plan would require Americans to get health coverage or pay a penalty. It would expand Medicaid, set up new online purchasing exchanges to get insurance and provide subsidies for those who need help buying policies.

Republicans say the bill, President Barack Obama's top domestic priority, might crowd out private insurers, raise taxes and explode the federal budget deficit.

Reid needs all 60 votes controlled by his party to pass legislation in the 100-seat chamber unless he can win a convert among Republicans.

Closed Doors

The most critical work is taking place behind closed doors, especially on the public option, which has drawn opposition from Democrats Ben Nelson of Nebraska, Blanche Lincoln of Arkansas and Mary Landrieu of Louisiana, as well as Connecticut Senator Joe Lieberman, an independent who caucuses with the Democrats.

Democrats including Nelson, Landrieu and Rockefeller have been trying to find middle ground. Landrieu said the goal is to take the pure public option out of the bill and said she might support expanding Medicare if it's supported by premiums paid by new enrollees. Under the plan being discussed, newcomers would buy in, and pay slightly higher premiums than other beneficiaries.

"It's one of the 10 things we discussed," Landrieu said.

Even if a deal is reached, the Congressional Budget Office has to examine the potential costs, Rockefeller said. He said the group would take their ideas to all Senate Democrats to gauge support.

Reid's goal is to file a "manager's amendment" that contains all the changes to the Senate bill that can get the needed 60 votes, said Jim Manley, a spokesman. Even if Reid gets to that point, there are a number of ways Republicans could delay any final vote, Manley said.

Abortion Fight

The attention today will also be on a proposal Nelson and Pennsylvania Democrat Robert Casey put forward with Senate Republicans to place further restrictions on abortion. The amendment is similar to a House provision that drew fire from abortion-rights groups, who say it goes beyond limiting the use of federal funds and pushes insurers not to cover the practice.

"Most Americans would prefer that the health-care reform we're working on remain neutral on abortion," Nelson said yesterday as he introduced his amendment on the Senate floor. He said his amendment would simply extend current rules.

California Democrat Barbara Boxer took issue with that description, saying a "firewall" for funding already exists in the bill. The amendment "strikes at the heart" of the precedent on abortion funding, she said.

The issue is likely to persist even after a vote on the amendment, as Nelson and senators on both sides expect the measure to fall short of the 60 votes needed for passage. Reid may have to find a compromise to win Nelson's vote for the broader legislation.

Resolving Differences

"I still think we can work through our several differences," Casey told reporters. "I just wish there were only two."

Nelson and Casey's amendment would ban the public option from covering abortion except in cases of rape or incest or when the mother's life is at risk. It would require insurers in new purchasing exchanges who offer abortion coverage to sell an identical plan that doesn't cover the procedure.

The current Senate bill permits the public option to provide coverage for abortions, while banning the use of federal funds for that purpose.

The Senate measure also says the exchanges in various state markets would have to provide at least one insurance product that offers abortion coverage only in cases where a woman's life is at risk or in cases of rape or incest, and one that allows for abortions in other instances.

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