WRAPUP 5-Senator's plan enters heated U.S. healthcare debate

Wed Sep 16, 2009 6:50pm EDT

(For more coverage of U.S. healthcare reform [nN20512341])

* Baucus says plan would cost $856 billion over 10 years

* Plan does not include government-run insurance option

* No Republican backing for proposal so far

* Government subsidies to help pay for insurance coverage

* Baucus bill joins four others in congressional debate (Adds Snowe comments, details, closing share prices)

By Donna Smith and John Whitesides

WASHINGTON, Sept 16 (Reuters) - U.S. Senator Max Baucus unveiled a long-awaited healthcare overhaul on Wednesday that would dramatically revamp insurance rules but does not include a government-run option backed by liberal Democrats.

After months of negotiations, the Baucus bill -- with an estimated cost of $856 billion over 10 years -- attracted no Republican support and alienated some in his own Democratic Party. [ID:nN08250193] [ID:nN16153524]

But Baucus, chairman of the Senate Finance Committee and a key player in the healthcare debate, said it would eventually win over Republicans and closely followed the framework laid out by President Barack Obama on his top domestic priority.

"This is a good bill. This is a balanced bill. It can pass the Senate," Baucus told reporters. "At the end of the day, there is going to be Republican support for this bill."

Republicans were quick to criticize the measure, the last of five bills pending in the marathon congressional process of overhauling the $2.5 trillion U.S. healthcare industry. Even many Democrats objected to some provisions.

The legislation would require all U.S. citizens and legal residents to obtain health insurance, offer subsidies on a sliding scale to help people buy it, levy fees on healthcare companies and insurers and expand Medicaid, the healthcare system for the poor.

Instead of the controversial government-run public option, the Baucus proposal calls for the creation of non-profit cooperatives to create competition in the insurance market.

The $856 billion price tag is slightly cheaper than the four other bills in the Senate and House of Representatives, which would all cost at least $1 trillion. Baucus said it would not increase the budget deficit.

The nonpartisan Congressional Budget Office said the cost of the Baucus plan would be even lower at $774 billion, shave $49 billion from the deficit over 10 years and cut the number of uninsured people by about 29 million.

Some 46 million people in the United States -- nearly a sixth of the population -- now have no health insurance. [ID:nN15412217]

CRITICISM FROM BOTH SIDES

White House spokesman Robert Gibbs said the plan was "an important building block and gets us closer to comprehensive healthcare reform."

Baucus led months of talks among the "Gang of Six" -- three Democrats and three Republicans -- in hopes of finding a compromise. In the end, he failed to win over the Republican negotiators Olympia Snowe, Mike Enzi and Charles Grassley.

"A number of issues still need to be addressed -- including cost assumptions and ultimate affordability to both consumers and the government," Snowe said.

The Senate Finance Committee will vote on the plan next week and the final product will be merged with a measure passed by the Senate Health panel. Each chamber of Congress will take up a version of the healthcare bill in the coming weeks.

With congressional elections in 2010, Obama has urged Congress to finish work on the issue by the end of this year.

"There are going to be many changes from what he (Baucus) has released," Senate Democratic Leader Harry Reid told Reuters. "There are things in there that I don't like."

House Speaker Nancy Pelosi, also a Democrat, said she preferred the House versions which include a public option.

"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," Pelosi said in a statement.

Opinion polls show Americans are split over Obama's plans for the healthcare industry, which he says are designed to rein in costs, improve care, regulate insurers to protect consumers and expand coverage to the uninsured.

Under the Baucus plan, insurance companies could no longer deny coverage to people with pre-existing conditions and would be barred from offering limited-benefit plans or placing lifetime limits on coverage.

It would also create state-based exchanges where individuals and small businesses could shop for insurance.

The proposal requires health insurance providers to collectively pay an annual fee of $6 billion starting in 2010, with other health companies making smaller collective payments to help fund reforms in the bill.

The Baucus bill sent share prices for some healthcare companies higher because reimbursement cuts for Medicare, the health program for the elderly, were less steep than expected, analysts said.

Home healthcare services provider Amedisys Inc (AMED.O) soared more than 12 percent to close at $43.80 and rival Gentiva Health Services (GTIV.O) rose 9 percent to $25.01. Nursing home operator Skilled Healthcare Group (SKH.N) rose 8 percent to $8.64 and oxygen provider Lincare Holdings LNCR.O jumped more than 14 percent to $30.10.

Healthcare stock indexes were also up. The Morgan Stanley Healthcare Payor index .HMO rose 2.2 percent, while the S&P Healthcare Sector index .GSPA and the Arca Pharmaceutical Index .DRG each gained less than 1 percent.

'NOT A FINISHED PRODUCT'

"We all know that while this is a very good start, it is not a finished product," Democratic Senator Kent Conrad, one of the negotiators on the Baucus plan, said in a statement.

The bill has some proposals designed to ease Republican concerns, specifying that illegal immigrants would not be covered and federal funds would not be used for abortions.

It also encourages states to start pilot projects to bolster medical malpractice reform, a traditional Republican concern. But Republicans were not persuaded.

Republican Senate Leader Mitch McConnell said the Baucus plan "puts massive new tax burdens on families and small businesses, to create yet another thousand-page, trillion-dollar government program."

Some Democrats complained about the concessions made to Republicans, particularly reductions in the scope of the bill and elimination of the public option.

Critics of the option say it would hurt insurance companies and give government too big a role. Despite his support for a government-run insurance option, Obama has signaled it is not an essential element of any ultimate healthcare overhaul.

Senate Finance Committee member John Rockefeller, a Democrat and a strong backer of a public option, said he would not support the panel's healthcare bill without significant changes. He is the only Democrat to oppose the plan so far. (Additional reporting by Thomas Ferraro; Editing by John O'Callaghan and Todd Eastham)