Senate panel rejects gov't health insurance option

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.

"My job is to put together a bill that gets to 60 votes" in the full Senate, Baucus said shortly before he joined a majority on the committee in defeating efforts to rewrite a key portion of his draft legislation. "No one shows me how to get to 60 votes with a public option," he said, using 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 backed one of the proposals rejected Tuesday.

A combination of Baucus, moderate Democratic allies and all committee Republicans combined to defeat both amendments.

The maneuvering occurred as the committee plunged into a second week of public debate on legislation that generally adheres to conditions that President Barack 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.

Obama has urged lawmakers to hold the cost of legislation to about $900 billion over a decade. That's significantly more than House committees originally envisioned in measures cleared earlier in the year, and the leadership has been working in recent days to find ways to cut costs. "It's hard work but we're determined to get it down," Majority Leader Steny Hoyer, D-Md., said of the price tag after a marathon closed-door meeting.

The health care debate is intensely political, and lawmakers in both parties used Tuesday's debate to seek campaign funds as they near the close of the third quarter of the year.

Senate Majority Leader Harry Reid, D-Nev., issued a recent appeal for funds for his re-election bid, saying, "Delaying reform to protect insurance companies' profits is completely unacceptable to Nevadans, the American people and me."

Similarly, Rep. Joe Wilson, R-S.C., who drew national notice for yelling "You Lie" at Obama during this month's health care speech to Congress, has emerged as a newly featured fundraiser for the National Republican Campaign Committee.

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.

Inside the Senate Finance Committee, the first effort to remake a key portion of the bill came from Sen. Jay Rockefeller, D-W.Va., who said his proposal was far from the government 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.

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.

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

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.