Senate Majority Leader Harry Reid talks to the media after the Senate Democratic caucus that Obama attended on Capitol Hill in Washington on Sunday. Associated Press


Liberals dropped the public insurance plan that was a central plank of the Democrats' health bill in favor of a more limited alternative, following intense pressure from a small group of Democrats who had insisted for months that it was a deal-breaker. While disputes over abortion coverage and other issues remain, Democrats appeared a whisker away from having enough votes to overcome Republican opposition and pass a sweeping health overhaul in the Senate.

The Senate bill -- including the lack of a public plan -- is likely to form the core of any final legislation, though it will have to be reconciled with a health bill passed by the House last month.

On the Table

Compare the plans, point-by-point

Health-Care Overhaul Attempts

As costs have risen, attempts at change

The agreement capped several days of high-stakes negotiations by a group of 10 Democratic senators -- five moderates and five liberals. Senate Majority Leader Harry Reid (D., Nev.) had advanced a bill that would have had the government directly operate a health-insurance plan, while giving states the right to opt out.

In place of that, the senators embraced a more limited proposal that would empower the government's Office of Personnel Management to put in place a new low-cost national health plan, congressional aides said. The office already administers plans offered to federal employees and members of Congress. The new national plan would be run by nonprofit entities set up by the private sector, and would be available to the public on the new insurance exchanges that would be created under the bill.

If no private insurers sign up with the Office of Personnel Management to offer a national plan, the office would be authorized to implement a direct government-run plan, an unlikely prospect, aides said.

The plan must still be analyzed by the nonpartisan Congressional Budget Office and vetted by the full Democratic caucus. But the proposal is aimed at reconciling divisions among Democrats and ensuring that Mr. Reid has 60 votes needed for final passage.

"I believe this moves us way down the road," Mr. Reid said in announcing what he called a "broad agreement."

The arrangement is attractive to Democratic centrists who worry about the government's growing footprint in the private market.

In a nod to Democratic liberals still intent on expanding coverage, the group agreed to a proposal that would open Medicare, the health-insurance program for the elderly, to Americans ages 55 to 64. The proposal would benefit an estimated two million to three million Americans who have difficulty obtaining coverage elsewhere, including those who have lost their jobs. People in the 55-to-64 group who already get health insurance through their employers would continue to do so under the proposal.

Those eligible under the expanded Medicare program would be allowed to buy into it at subsidized rates, but would likely pay more than retirees age 65 and over.

Democrats are now talking about dropping their first idea of a public option. Instead, they are exploring allowing the same agency that oversees health care for federal workers to expand to cover millions of Americans. Fox's Doug Luzader reports. Video courtesy of Fox News.


Republicans criticized the Democratic negotiations. "What's becoming abundantly clear is that the majority will make any deal, agree to any terms, sign any dotted line that brings them closer to final passage of this terrible bill," said Senate Minority Leader Mitch McConnell (R., Ky.).

Sen. John Barrasso (R., Wyo.) said expanding Medicare "is putting more people in a boat that's already sinking."

The American Medical Association said it opposes expanding Medicare because doctors face steep pay cuts under the program and many Medicare patients are struggling to find a doctor. Hospitals also said expanding Medicare and Medicaid is a bad idea. (Read more on opposition to the Medicare move in the Health Blog.)

"We want coverage -- in the worst way -- expanded, but both of these means are problematic for hospitals and physicians," said Chip Kahn, president of the Federation of American Hospitals, which lobbies on behalf of for-profit hospitals. "It's going to make it difficult to make it work."

After more than a week of debate on the Senate floor, Mr. Reid was working hard to unify his 60-member caucus, which includes 58 Democrats and two independents. A handful of moderate Democrats as well as Sen. Joseph Lieberman, the Connecticut independent, signaled concerns with the government-run plan, threatening to derail the broader bill.

Mr. Reid's decision to tap 10 Democrats from both wings of the party to negotiate a deal on the issue was a gambit that the group could bridge the differences.

Mr. Lieberman sent aides to join the senators' talks. He was among the most vocal in opposing the public option, and on Tuesday he praised the proposal to empower the Office of Personnel Management to work with private insurers to implement a new national plan. "That's an interesting idea," he said. The senator also said he was willing to consider supporting the Medicare expansion, saying the proposal is designed to help those who "have a tough time getting affordable insurance."

Sens. Blanche Lincoln and Ron Wyden on Capitol Hill Tuesday, when the Senate weighed scenarios to alter the health bill. Reuters

He added, "These are trade-offs, not compromises."

The legislation is designed to extend insurance coverage to tens of millions of Americans. It would create new tax subsidies to help low- and middle-income people comply with a mandate to purchase coverage.

It would also bar insurers from engaging in a range of practices, such as denying coverage because of pre-existing conditions, and Senate Democrats were considering adding to those restrictions.

Under discussion among Senate Democrats was a proposal that would require insurance companies to spend no less than 90% of the insurance premiums they take in on health services, effectively limiting how much they can reap in profit. The health bill the House passed last month contains a similar provision, though it sets the minimum at 85%.

Also, a proposal to expand eligibility for Medicaid beyond the increase already in the bill was dropped Tuesday, said people familiar with the negotiations. Instead, the Democratic negotiators agreed to a proposal that would extend the Children's Health Insurance Program, a popular federal-state initiative that provides insurance to more than seven million children in low-income families. The current program is funded through 2013 and would be extended to 2015, these people said.

Aides cautioned that the accord reached Tuesday could be reopened if the CBO identifies major problems. Moreover, other issues, such as proposals to control the rapid growth of health costs, may still need to be negotiated over the next few days.


The deal was announced a few hours after the Senate, voting 54-45, rejected a proposal to tighten abortion limits in its health-overhaul legislation.

Supporters said the amendment, offered by Sen. Ben Nelson (D., Neb.), was needed to ensure no federal funds would be used to help women get abortions. Seven Democrats voted for the amendment, while two Republicans voted against it. Mr. Reid, arguing that expanding health care was "also a question of morality," urged that the issue not be brought into the bill. "This is a health-care bill, not an abortion bill," said Mr. Reid, himself an abortion opponent. "We can't afford to miss the big picture."

Democratic leaders have suggested the issue could still be revisited by tightening the limits, though not as far as Mr. Nelson wanted. Mr. Nelson proposed to bar any woman receiving a government tax credit from buying insurance that covers abortion.

With the need for Democratic unity at a premium, Mr. Nelson suggested he's open to further discussion on the issue. "I don't want to be stubborn or closed-minded," he said.

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