Key new health bill faces an uphill battle

WASHINGTON — Senate Finance Committee Chairman Max Baucus' $856 billion plan to overhaul the nation's health-care system — a package that lacks the public option that President Obama favors — was greeted Wednesday largely with skepticism and sometimes disdain, even among fellow Democrats.

The package, which would create health-care co-ops and increase taxes on insurers but would not require companies to offer coverage, is the latest, perhaps last-ditch, effort to find bipartisan agreement on Obama's top domestic priority.

Baucus understands the difficulty better than anyone. For months, the Montana senator and five other committee members, three from each party, struggled to craft bipartisan legislation. They gave up, and Baucus went his own way.

Among Republicans, only Maine Sen. Olympia Snowe, seemed hopeful.

"The bill is a work in progress," she said.

More typical was the view of Wyoming Sen. Michael Enzi, the top Senate health committee Republican and one of Baucus' gang of six.

"The proposal released today still spends too much, and it does too little to cut health-care costs for those with health insurance," Enzi said.

Four other committees — three in the House and one in the Senate — have written health-care bills. All were authored almost entirely by Democrats, and all back a "public option," a government-run plan that would offer an alternative to private insurance.

Baucus believes such a plan has no chance in the Senate.

The biggest change from the other bills is the co-op idea, which veers away from Obama's plea to a joint session of Congress last week that lawmakers seriously consider a public option.

Instead, Baucus proposed co-ops that would operate at the state, regional or national level as nonprofit, member-run health plans. He proposed spending $6 billion in federal money to get them started.

Supporters of co-ops maintain that negotiating rates with hospitals, doctors and other providers would reduce health-care costs, "without putting the government in charge of health care," as Sen. Kent Conrad, D-N.D., another one of the group of six, put it. He estimated Baucus' plan would cover about 94 percent of Americans.

Many other Democrats and their supporters weren't pleased, however, and some were downright angry. AFL-CIO President John Sweeney said the Baucus plan "absolutely fails to meet the most basic health-care needs of working families, and it fails to meet the expectations we have set for our nation."

West Virginia Sen. Jay Rockefeller, the second-ranking Democrat on the Finance Committee, said co-ops are "untested and unsubstantiated, and should not be considered as a national model for health insurance."

House Speaker Nancy Pelosi, D-Calif., issued a terse statement.

"The House bill clearly does more to make coverage affordable for more Americans and provides more competition to drive insurance companies to charge lower premiums and improve coverage," she said, adding she looked forward to "modifications."

Pelosi made it clear what she wants: "I believe the public option is the best way to achieve that goal."

Others were more circumspect. White House spokesman Robert Gibbs called the Baucus plan "an important building block," while Senate Majority Leader Harry Reid of Nevada said, "Everyone should understand it's a beginning, a good beginning."

The Senate Finance Committee, which has 13 Democrats and 10 Republicans, is expected to finish writing its bill by the end of the month. It then would be combined with the Senate health committee measure and be considered by the full Senate.

The House is expected to vote on a bill consolidated from the three committee drafts. Then comes the hardest part: finding common ground between the House and Senate bills and producing one piece of legislation.

Baucus' proposal received one important boost Wednesday from the nonpartisan Congressional Budget Office and the bipartisan Joint Committee on Taxation.

Their preliminary analysis found that Baucus' plan would mean a net reduction in the deficit of $49 billion over 10 years, as new spending is offset by a combination of cuts in federal health programs, notably Medicare, as well as new taxes and fees.

Baucus proposes a nondeductible excise tax, starting in 2013, of 35 percent on insurance companies and plan administrators for any insurance plan that charges more than $8,000 for individuals and $21,000 for families. The Joint Taxation Committee estimates that it would raise about $214.9 billion over 10 years.

The plan faces two instant hurdles: House Democratic leaders prefer an income-tax surcharge on wealthy taxpayers, which would raise an estimated $544 billion over 10 years, and the House legislation has considerably less in Medicare savings.

In addition, Republicans will oppose almost any tax increase. Senate Republican leader Mitch McConnell of Kentucky quickly set the tone, saying the Baucus bill would "put massive new tax burdens on families and individuals."

Despite the concerns, independent analysts said Baucus' proposal has potential.

"What you're seeing is people offering substantive changes," said Elizabeth Carpenter, associate policy director at the liberal New America Foundation's Health Policy Program.

The White House and other senators have been saying for months that they generally agree on 80 percent of what must be done.

For instance, insurers would have to issue coverage to nearly everyone, regardless of health status. There would be "limited variation in premium rates" for tobacco use, age and family composition.

Most consumers would have to buy coverage or face penalties. If someone's income were 100 to 300 percent of the poverty level, he or she would be fined $750 per person, up to a maximum of $1,500 per family. Wealthier people would face penalties of $950 each, up to $3,800 per family.

Baucus aims to make coverage easier to obtain and less expensive by creating insurance exchanges via Web portals that would show consumers all the available coverage in their ZIP codes.

People wouldn't have to give up the insurance they have now, and plans would be able to continue offering the coverage they now provide.

The insurance market would see four categories for benefits: bronze, silver, gold and platinum. All would have to provide a wide variety of basic services, and no lifetime limits could be set.

But the other 20 percent — including such matters as how much a plan would cost and how it would be funded — has stalled the process.

It remained unclear Wednesday whether Baucus had begun to break the ice.

Obama tried to provide fresh momentum with his speech last week to a joint session of Congress, and Sen. Evan Bayh, D-Ind., maintained that "at least the left and right aren't yelling at each other. The atmosphere has improved."

McClatchy Newspapers reporter Margaret Talev contributed to this report.