Setback for health-care bill

WASHINGTON — Attempts to draft bipartisan health-care legislation in the Senate have suffered a significant setback, with Democratic leaders objecting to a proposed tax on high-cost health benefits.

Officials say that, in a private meeting Tuesday, many in the Democratic leadership also expressed support for a stronger provision allowing the government to sell insurance in competition with private companies. Ironically, the discontent surfaced as the White House prepared to announce today that the nation's hospitals have agreed to give up $155 billion in anticipated Medicare and Medicaid payments over a decade, money that then could be used to expand health care to millions who lack it.

But one lawmaker deeply involved in bipartisan negotiations in the Senate indicated there were second thoughts about a proposed new tax on the costliest employer-paid insurance benefits.

"It's clearly a very difficult issue. ... You go to the public to ask them what they think and they don't like it," said Sen. Kent Conrad, D-N.D., referring to recent polling. A compilation of four recent polls reviewed at the session showed at least 59 percent of the public opposed to taxing health-care benefits to "pay for reform," and as many as 70 percent.

As a result, Conrad said, "we're looking at other options" to help finance a bill whose price tag is expected to reach $1 trillion or slightly more. He did not identify any.

It was unclear whether these and other difficulties were enough to imperil Obama's objective of signing a health-care bill this fall, or whether they were merely the type of obstacles that emerge any time Congress attempts to pass major legislation.

At its core, the effort as outlined by Obama is designed to achieve twin purposes: expand health insurance to an estimated 50 million who now lack it, and reduce the explosive growth in health care generally.

In the House, government subsidies for private Medicare plans were on the chopping block as Democratic leaders reviewed their options, as was a variety of other proposed trims in Medicare and Medicaid, the federal health-care programs for seniors and the poor.

A long menu of possible tax increases was also in circulation, including one that would fall on the upper-income. Officials said a proposed hike in the Medicare payroll tax had lost favor in recent days. If included in the bill, it would violate Obama's campaign pledge not to raise taxes on the middle class.

Separately, numerous officials said moderate to conservative Democrats were unhappy that the legislation was likely to include an option for the government to sell insurance in direct competition with private companies.

Several of these rebellious lawmakers prefer giving private companies exclusive rights to sell insurance, with the government entering the marketplace only if consumers don't have enough choice in the coverage available to them.

With millions more Americans covered by insurance, the White House and Sen. Max Baucus, the chairman of the Senate Finance Committee, have been negotiating with numerous outside groups in search of at least half of the money needed to finance the expansion in care. A deal with the drug companies marked their first achievement, and a deal with hospitals would give them leverage as they seek similar deals with groups representing doctors and insurance companies.