Democrats meet at White House for healthcare talks

Speaker of the House Nancy Pelosi talks to reporters about healthcare after a meeting with U.S. President Barack Obama and House committee chairs at the White House in Washington, January 6, 2010.

WASHINGTON (Reuters) - With President Barack Obama urging them on, congressional Democratic leaders spent most of Wednesday at the White House in search of an elusive final compromise on a sweeping healthcare overhaul.

In their first face-to-face talks on merging healthcare bills in the Senate and House of Representatives, Democratic leaders hunted for agreement on how to pay for the overhaul and structure new insurance exchanges.

Negotiators remained quiet on their progress, but aides and members of Congress said it was a good sign the talks went on for hours.

"I think it's very encouraging," Democratic Representative Robert Andrews said as the talks stretched past five hours. "The fact they are still talking is a good sign."

Obama popped in and out of the meeting in the White House Cabinet room with House Speaker Nancy Pelosi and Senate Democratic leader Harry Reid, an administration official said.

About a half-dozen other Democratic leaders attended, along with officials including Chief of Staff Rahm Emanuel and Health and Human Services Secretary Kathleen Sebelius.

"The progress here is that discussions are ongoing," a senior Democratic aide said.

The House and Senate versions of the overhaul, Obama's top legislative priority, must be melded into one bill and passed again by each chamber before Obama can sign it.

Both bills would extend insurance coverage to more than 30 million uninsured Americans, create exchanges where individuals can shop for insurance plans and halt practices such as refusing insurance to people with pre-existing conditions.

But the two chambers have clashed on how to pay for the changes, with House Democrats and labor unions in sharp opposition to a Senate tax on high-cost insurance plans that Obama has endorsed.

Critics say the tax will hit middle-class families and union members who gave up higher wages for better health benefits. House-Senate negotiators are considering raising the threshold for the tax and exempting certain industries.

One way negotiators are considering to replace the lost revenue in part would be to extend the payroll tax on Medicare, the health program for the elderly, to income from investments by the wealthiest Americans.

REPUBLICANS STILL HOPE TO KILL IT

With public opinion polls showing majorities of Americans opposed to the healthcare overhaul, Republicans said on Wednesday they were confident they could still block final passage.

"This healthcare bill can be defeated," Eric Cantor, the No. 2 Republican in the House, told reporters.

He said Republicans would target 37 Democrats who backed the bill in November but could face political consequences for their stance and try to get them to switch positions.

"The choice for them is: Are they going to be with the people, or are they going to be with Pelosi?" Cantor said.

A shift of three votes in the House could doom the bill, which passed by a 220 to 215 vote in November. The Senate has even less room for error; he bill passed on Christmas Eve with exactly the 60 votes it needed to overcome unified Republican opposition.

Because of the narrow margin in the Senate, the version produced by that chamber has served as the framework for negotiations.

But the House has pushed for a more generous level of federal subsidies to help expand coverage to the uninsured and to adopt a single national insurance exchange. The Senate bill calls for state-based exchanges.

The House's version of a government-run insurance plan was not included in the Senate bill and is almost certainly dead.

Democratic Representative John Larson cautioned against reading too much into the problems merging the bills.

"How many times throughout the course of the year have we heard that this bill is dead? How many times have we heard that there are problems," Larson said.

Democrats hope to finish the bill before Obama's State of the Union speech in early February.

(Additional reporting by Ross Colvin and Andy Sullivan; editing by Cynthia Osterman)