GOVERNMENT HEALTH INSURANCE OPTION APPEARS DOOMED

January 11, 2010

Associated Press -

Washington - Senior House Democrats have largely abandoned hopes of including a government-run insurance option in the final compromise health care bill taking shape, according to several officials, and are pushing for other measures to rein in private insurers.

House Speaker Nancy Pelosi and other senior Democrats told President Barack Obama in recent meetings they want the legislation to strip the insurance industry of a long-standing exemption from federal antitrust laws, officials said. That provision is in the House-passed measure, but was omitted from the bill that the Senate passed on Christmas Eve.

They also want the final measure to include a House-passed proposal for a nationwide insurance exchange, to be regulated by the federal government, where consumers could shop for private coverage. The Senate bill calls for a state-based system of exchanges.

Additionally, House Democrats want to require insurers to spend a minimum amount of premium income on benefits, thereby limiting what is available for salaries, bonuses, advertising and other items. The House bill sets the floor at 85 percent; the Senate-passed measure lowers it to 80 percent for policies sold to small groups and individuals.

The officials spoke on condition of anonymity because the negotiations are private. The maneuvering comes as the White House and majority Democrats intensify efforts to agree on a final measure, possibly before Obama delivers his State of the Union address late this month or early in February.

Among them, Obama said are provisions that would enable people with pre-existing illnesses or conditions to buy affordable health insurance; bar insurance companies from denying coverage to children with such conditions, and provide tax credits to help small-business owners provide health care coverage to their employees.

Government intervention into the insurance market is one of the most contentious issues to be settled. Others include the fate of a Senate-passed tax on high-cost insurance plans, bitterly opposed by some labor unions; the extent to which abortions could be covered by insurance to be sold in the new exchanges; and the amount of money available to help lower-income families purchase coverage.

Liberals long have pressed to include a government-run insurance option in the legislation, arguing it would create competition for private companies and place a brake on costs.

House Democrats included it in their legislation. In the Senate, it drew opposition from Democratic moderates whose votes are essential to the bill's fate.

Given the opposition in the Senate, Pelosi signaled late last year she did not view a public option as a requirement for a final compromise. Asked in an interview Dec. 16 whether she could support legislation without it, she said, "It depends what else is in the bill."

While Obama favors a government option, he has said repeatedly it is only a small part of his overall effort to remake the health care system, and is not essential.

Pelosi and Senate Majority Leader Harry Reid have expressed optimism about chances for a swift agreement, but there appears to be relatively little maneuvering room. That is particularly true in the Senate, where 60 votes will be needed to overcome a Republican filibuster, a legislative maneuver to block a final vote, and any change carries the risk of alienating a Democrat whose vote is crucial.

The bill's future is further complicated by a scheduled Jan. 19 election in Massachusetts. Some polls show Democrat Martha Coakley in a closer-than-expected race against Republican Scott Brown and an independent contender.

The winner will replace Sen. Paul Kirk, who became the 60th member of the Democratic caucus when he was named to his seat as successor to the late Sen. Edward M. Kennedy. A Republican upset would deprive Democrats of their 60th vote.

Some House Democrats say the proposed government insurance option remains alive, although they speak publicly of its possible demise as long as insurance companies aren't let off the hook.

California Rep. Xavier Becerra, who's on the leadership team, said House members would only be willing to abandon the public plan if they were certain the final bill achieves the goals they want, as Pelosi described.

"We're willing to give up what's good for America as long as we get something good back," he said. But officials said little if any time has been spent in White House meetings on the issue, and there was scant discussion of it during a conference call for members of the Democratic rank and file earlier this week.

The United States is the only wealthy industrialized nation that does not have universal health coverage. Health insurance in the United States is provided primarily by employers. The government picks up coverage for retirees and the disabled through Medicare, for the poor through Medicaid, and for military veterans and members of Indian tribes. That still leaves many people without coverage, estimated at 40 to 50 million.

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