System is sick, but who pays for the cure?

WASHINGTON — Behind the open brawling over how to rebuild the nation's health-care system, the toughest battle may be this: Who should pay the bill?

President Obama and his congressional allies — also struggling to hold down the national debt after years of deficit spending and a rush of new outlays to combat the recession — have pledged to come up with more than $1 trillion over the next decade to offset the costs of what would be the biggest health-care overhaul in generations.

But the prospect of new taxes, new fees for businesses and cutbacks in other government spending has set off a furious, behind-the-scenes struggle.

Faced with a proposal to increase taxes on liquor and soft drinks, for instance, the hard-stuff lobby sent San Francisco brewer Anchor Steam to bend the ear of House Speaker Nancy Pelosi, D-Calif. The brewery found a wholesome ally in milk producers, which object because the cost of chocolate milk would rise.

When congressional Democrats floated the idea of curbing the once-sacrosanct tax break for employer-provided health benefits, the labor movement went on the air to attack one of the idea's leading champions, Oregon Sen. Ron Wyden, among the Senate's most liberal Democrats.

"I suspect what will emerge as the toughest issue for lawmakers is not the ideological debate about the role of government, because there is some consensus there about the need for a centrist approach. Rather, it will be how to pay for the plan," said Drew Altman, president of the nonprofit Kaiser Family Foundation.

Indeed, a potential compromise emerged Wednesday on one of the most vexing issues of the debate: whether to create a government-sponsored plan to compete with private insurers.

The compromise, offered by Sen. Kent Conrad, D-N.D., would create health-care cooperatives owned by groups of residents and small businesses, similar to how electric or other cooperatives operate. They would be nonprofit and without the government involvement that troubles Republicans and business groups.

Senate Finance Committee Chairman Max Baucus of Montana raised the idea Wednesday with Obama, saying later that the president showed interest. Baucus' Republican counterpart, Sen. Chuck Grassley of Iowa, also said the concept had potential.

To date, much of the maneuvering about financing has happened behind closed doors, as interest groups remain reluctant to appear too intransigent and risk getting shut out of negotiations expected to drag through the summer and fall.

But the jockeying is expected to explode into the open in coming weeks, and it's already worrying Democrats on Capitol Hill, where there is little consensus about how to pay for an overhaul.

It is also an ominous indication of how difficult it may be to maintain broad support for the effort once it gets down to specifics.

Obama is stepping up his efforts to build momentum behind the legislative push. He travels to Green Bay, Wis., today for a town-hall meeting focusing on health care.

So far, neither the president nor senior Democrats such as Baucus have provided more than scant details about how they plan to raise the money.

A recent poll by the Kaiser Family Foundation found solid majorities of Americans favor some funding proposals, such as higher taxes for families making more than $250,000 and additional taxes on cigarettes and alcohol.

Other ideas, such as taxing sodas and unhealthy snack foods, are considerably less popular, as is an across-the-board income-tax increase.

Even general talk of specifics has stirred interest groups to action.

Obama sparked a backlash when he laid out plans in his budget to raise nearly $300 billion over the next decade by cutting payments to insurers that contract to provide Medicare to seniors under the so-called Medicare Advantage program.

The insurance industry — which helped derail the Clinton administration's health-care push in the early 1990s — mobilized thousands of senior citizens by organizing "Medicare Advantage Community Meetings" across the country.

AARP, whose more than 40 million members make it among the most powerful interest groups in Washington, D.C., blanketed offices on Capitol Hill with letters warning lawmakers not to do anything that would risk cutting benefits to seniors.

Others rebelled at a second Obama proposal to come up with an additional $300 billion by reducing the deductions that high-income taxpayers could take on charitable contributions, home-mortgage interest and state and local taxes. Charities, which claimed the change would reduce the incentive for people to give to nonprofits during a recession, were so successful getting their message across that homebuilders and real-estate agents did not bother mounting a high-octane lobbying campaign of their own.

Congressional ideas have fared little better, with lobbyists fanning out on Capitol Hill to challenge proposals to levy fees on businesses that don't provide health insurance and to raise taxes on liquor and sugary drinks.

So high are the stakes that many interest groups are competing to convince lawmakers they can't afford to be saddled with a health-care tab.

When senior Democrats this week put forward their proposal for requiring employers to provide health insurance or pay into a public fund to cover the uninsured, business groups led the charge.

"All we have been talking about for months is cost, cost, cost," said R. Bruce Josten, senior lobbyist for the U.S. Chamber of Commerce. "It seems like employers are the one group getting stuck paying the bill."

Gerry Shea, a top official of the AFL-CIO, which has been leading the fight against taxing health benefits, suggested charities, not people with health benefits, should pick up the bill.

"This is about health care. These foundations think their budget is more important than health," Shea said.

The Associated Press contributed to this report.