Finance panel rejects public option

The Senate Finance Committee rejected two attempts by Democrats to attach a government-run health insurance plan to the panel’s healthcare bill, delivering a blow to liberals who say it is essential to reform.

The votes underscored the deep divide among Democrats over the most controversial aspect of healthcare reform, President Barack Obama’s signature domestic policy initiative.

After more than four hours of debate, Democratic Sens. Max Baucus (Mont.), Kent Conrad (N.D.) and Blanche Lincoln (Ark.) joined with all 10 of the committee’s Republicans to defeat separate amendments sponsored by Sens. Jay Rockefeller (D-W.Va.) and Charles Schumer (D-N.Y.).

Schumer’s fell on a 10-13 vote. Rockefeller’s was rejected, 8-15, with two other Democrats also voting no.

But the two votes hardly end the debate on the provision. Liberals are expected to push for more votes on the Senate floor, Speaker Nancy Pelosi (D-Calif.) is insisting the House bill include a public option and GOP centrist Sen. Olympia Snowe (Maine) is floating the idea of “triggering” a public option if the insurance industry fails to meet certain requirements.

Baucus, the panel’s chairman, said his “no” votes were born of a pragmatic view that a bill with a public option could not pass the Senate. Despite Democrats controlling 60 seats, several centrists have expressed opposition to, or at least skepticism over, the public option.

“My job is to get a bill that can get 60 votes,” Baucus said. “If this provision is in the bill coming out of the committee, it will jeopardize real, meaningful healthcare reform. I want a bill that can become law.”

The markup, which began on Sept. 22, is expected to finish this week, with a debate on the Senate floor to follow.

Obama supports the public option, but the White House has sent numerous signals that leaving it out would not be a deal-breaker for the president.

Sens. Baucus, Conrad and Jeff Bingaman (D-N.M.) spent months in “Gang of Six” negotiations with Finance Committee Republican Sens. Chuck Grassley (Iowa), Mike Enzi (Wyo.) and Snowe. A public option was not included in the bill that came out of those talks.

In spite of the losing votes Tuesday, Rockefeller, Schumer and other liberals said the Finance Committee’s actions were just one step on a journey.

The public option will gain support among Democrats, Schumer said, though he acknowledged he still had work to do. “We don’t have the 60 votes on the floor for the public option,” Schumer said. “I will be the first to admit that.”

Baucus indicated that he has no objection to the proposal itself. “I see a lot to like in the public option,” he said. “The public option would help to keep the insurance companies’ feet to the fire. There’s no doubt about that.”

But Baucus defended his bill, pointing to new insurance market reforms requiring companies to sign up anyone regardless of pre-existing conditions and limiting insurers’ ability to charge higher premiums to older and sicker people. The bill also would assess $67 billion in fees on insurers over 10 years. “Some of your questions sort of leave the indication that the mark is easy on the insurance industry, and it’s not,” Baucus said to Rockefeller.

Schumer said that the committee’s liberals do not hold a grudge against Baucus. “We understand that his job is to pass a bill. I think we can show him that we can,” he said.

The Senate Health, Education, Labor and Pensions (HELP) Committee has already approved a bill with a public option. Pelosi is adamant that any measure that passes the lower chamber include a public option, though she faces resistance from a centrist Democratic voting bloc.

Schumer’s amendment would have established a so-called level-playing field public option that would negotiate payment rates for medical providers.

Sens. Tom Carper (D-Del.) and Bill Nelson (D-Fla.) joined the three other Democrats in opposing Rockefeller’s amendment, which would have pegged pay rates to Medicare’s levels for two years. Such a policy would underpay providers and would “bankrupt every major hospital in my state,” said Conrad.

Schumer and his allies on the Finance Committee are not alone in their professed optimism.

“I have polled senators, and the vast majority of Democrats — maybe approaching 50 — support a public option,” said HELP Committee Chairman Tom Harkin (D-Iowa), during an appearance on liberal commentator Bill Press’s radio show Tuesday.

Republicans were united in their view that the public option would ultimately eliminate the private health insurance industry.

“A new government plan is nothing more than a Trojan horse for a single-payer healthcare plan in Washington,” Sen. Orrin Hatch (R-Utah) said. “The end result would be a government takeover of our healthcare system.”

Grassley, the panel’s ranking Republican, called the government “a predator” and “not a competitor.”

Rockefeller, however, issued a strong condemnation of the health insurance industry, saying those companies are dedicated to “protecting their profits” and that they “put their customers second.”

“It’s a harsh statement but a true statement,” he said.

Health insurance companies are “rapacious,” Rockefeller said, pointing to industry practices such as rescinding policies or jacking up premiums when people get sick.

“It’s a subject that ought to make us very angry,” he said, but “in the face of all of this, we’re giving them a half a trillion dollars in subsidies. I don’t understand that.”

The Finance Committee may not be finished with the public option debate, however.

Snowe — who did not speak up during the lengthy debate over the public option — could offer an amendment to establish a “trigger” that would institute a public option in states with too few private insurance choices. In addition, Democratic and Republican senators have filed amendments to modify or strip Conrad’s language in the bill to create not-for-profit healthcare cooperatives as an alternative to private insurance.

Regardless of what comes out of the Finance Committee, it will fall to Senate Majority Leader Harry Reid (D-Nev.) to hash out whether the bill that goes to the floor features a public option. Reid said last week that while he supports the public option, he thinks Snowe’s trigger proposal is a “doggone good idea” and preferable to Conrad’s co-ops.

Michael O’Brien contributed to this article.