Health plan may back co-op over a public option

Obama sees some goals bypassed as lawmakers from several panels work feverishly to hash out compromises.

After weeks of secretive talks, a bipartisan group in the Senate edged closer yesterday to a health-care compromise that omits two key Democratic priorities but incorporates provisions to slow the explosive rise in medical costs, officials said.

These officials said participants were on track to exclude a requirement many congressional Democrats seek for businesses to offer coverage to their workers. Nor would there be a provision for a government insurance option, despite President Obama's support for such a plan.

The three Democrats and three Republicans from the Senate Finance Committee were considering a tax of as much as 35 percent on very high-cost insurance policies, part of an attempt to rein in rapid escalation of costs. Also likely to be included in any deal would be the creation of a commission charged with slowing the growth of Medicare through recommendations that would take effect automatically unless overturned by Congress.

"We're going to get agreement here," said Sen. Max Baucus (D., Mont.), the Finance Committee chairman.

Obama outlined two broad goals for legislation he is struggling to win from Congress: expansion of health-insurance coverage to millions who lack it, and reining in increases in costs.

Like bills drafted by Democrats, the proposal under discussion by the Finance Committee would bar insurance companies from denying coverage to any applicant. Nor could insurers charge higher premiums for preexisting medical conditions. But it jettisons other core Democratic provisions in a reach for bipartisanship on an issue that has so far produced little.

The effort received a boost yesterday from the U.S. Chamber of Commerce, normally a close ally of Republicans. In a letter to committee leaders, the business group called for the panel to "act promptly, preferably before" the Senate's scheduled vacation at the end of next week. In doing so, the business organization dealt a blow to GOP leaders who have called for Democrats to slow down.

Obama's top domestic priority has suffered numerous setbacks in recent weeks, and Republicans have stepped up their criticism. A Senate vote has been postponed until September. Administration and Democratic leaders hope to show significant progress before lawmakers begin their monthlong recess.

In the House, the leadership sought to allay concerns among the rank and file. Speaker Nancy Pelosi said that "we're on schedule to do it now or do it whenever," when asked whether the House would complete its bill before lawmakers leave at the end of the week for their summer break.

In the Senate, officials stressed that no agreement had been reached on a bipartisan measure, and said there was no guarantee of one. They also warned that numerous issues remained to be settled.

Any measure that emerges is expected to provide for a nonprofit cooperative to sell insurance in competition with private industry, rather than giving the U.S. government a role in the marketplace.

Sen. Olympia J. Snowe (R., Maine) confirmed that co-ops were the preferred approach. "It's safe to say that'll probably remain in the final document," she said.

Officials also said a bipartisan compromise would not subject companies to a penalty if they declined to offer coverage to their workers. Instead, the businesses would be required to reimburse the government for part or all of any federal subsidies designed to help lower-income employees obtain insurance on their own. "We don't want to undermine [employer coverage] or create a perverse incentive where employers potentially drop coverage because employees can get subsidies," Snowe said.

Democratic-drafted legislation in the House includes both a penalty and a requirement for companies to share costs of covering employees.

Much of the cost of the proposal would come from curbing the growth in fees to insurance companies and other providers under Medicare. But congressional aides said a proposal limiting Flexible Savings Accounts to $2,000 annually was also a strong possibility. FSAs permit the use of pretax income to pay for items such as health care and child care. Negotiators also are considering fees on manufacturers of medical devices and makers of drugs coming onto the market.

Officials said the legislation under discussion would likely cost under $1 trillion, include an expansion of Medicaid, and provide federal subsidies for individuals and families up to 300 percent of poverty to spread health care more broadly. Individuals would have a mandate to buy affordable insurance

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