Senate rejects abortion measure in health bill

WASHINGTON (Reuters) - The Senate rejected on Tuesday an attempt to tighten restrictions on abortion coverage in a healthcare overhaul, threatening a crucial Democrat's support for passage of the final bill.

Democratic Senator Ben Nelson's amendment to tighten the bill's restrictions on the use of federal funds for abortions, identical to a provision approved by the House of Representatives last month, was killed on a 54-45 vote.

Without the abortion language, Nelson had threatened he would not back the final healthcare bill when it came to a vote. If he followed through, Democrats would be one vote short of the 60 they need to pass the measure.

But after his amendment failed, Nelson softened his stance slightly. "It makes it harder to be supportive. We'll see what happens," he told reporters.

Senate Democratic leader Harry Reid said he was willing to keep working with Nelson to add language to the bill that would resolve the concerns on both sides of the divisive issue.

"If in fact he doesn't succeed here, we'll try something else," Reid said of Nelson before the vote. Nelson said he was not looking to negotiate a compromise.

The amendment would have blocked people who receive federal subsidies from buying insurance plans that cover abortions and prohibited a proposed government insurance plan from offering abortion coverage in most circumstances.

The issue of a government-run insurance plan might be moot as Senate negotiators worked on a deal to substitute a non-profit plan operated by private insurers but administered by the Office of Personnel Management, which supervises health coverage for federal workers.

The abortion issue and the government-run insurance plan, which some moderates had opposed, are the two biggest stumbling blocks to passage of a sweeping healthcare overhaul that is President Barack Obama's top domestic priority.

The Senate was on its ninth day of debate on the bill, which would extend coverage to 30 million uninsured people and halt industry practices like refusing coverage to those with pre-existing medical conditions.

Senators are racing the clock to meet a self-imposed end-of-year deadline for the bill's final passage. It would still need to be reconciled with the House version in January.

PUBLIC OPTION TALKS CONTINUE

A group of 10 Democrats -- five liberals and five moderates -- are trying to agree on an alternative to the government-run insurance plan in the Senate bill in time to get new cost estimates and schedule votes before the deadline.

"This is an important day, it's a day when a lot of things have to come together if we hope to finish this in a reasonable time," said the Senate's No. 2 Democrat, Dick Durbin.

The negotiators were exploring the idea of expanding the Medicare federal health program for the elderly, now available to those 65 and older, to those as young as 55 in order to make low-cost insurance more available.

The idea, pushed by liberals in exchange for agreeing to drop a government-run insurance plan, was questioned by some senators who said they needed to see cost estimates from congressional budget analysts.

"I want to make sure that we are not either adding a big additional burden to the Medicare program, which we've got to figure out how to save anyway because it is going bankrupt," said Senator Joe Lieberman, an independent who caucuses with Democrats and opposes a government-run insurance plan.

Nelson's abortion amendment drew sharp opposition from abortion rights supporters angered by the House vote.

"I believe the amendment would be a harsh and unnecessary step back for American women," said Democratic Senator Dianne Feinstein.

Seven Democrats including Nelson voted in favor of the tighter abortion restrictions. Two Republicans -- Olympia Snowe and Susan Collins -- voted to kill the amendment.

Reid, normally an abortion rights opponent, voted against the amendment because he said the broader healthcare overhaul was too important and the bill already prohibited the use of federal funds for abortion coverage.

"This is about access to healthcare, not access to abortion," Reid said.

But Nelson said the federal subsidies given to help with purchases of insurance under the bill could be merged with funds used on plans that offered abortion coverage.

"Taxpayers shouldn't be required to pay for people's abortions," Nelson said. "It's just that simple."

(Additional reporting by Susan Heavey; Editing by Chris Wilson)