Obama, Republicans clash at health summit

WASHINGTON (Reuters) - President Barack Obama and Republicans clashed frequently on Thursday at a summit on his stalled healthcare overhaul, battling over the size and cost of the proposal and moving no closer to a compromise agreement.

Obama told about 40 congressional leaders his comprehensive overhaul was "absolutely critical" to a sustained economic recovery, but Republicans said he should scrap the current plans and start over with a smaller approach.

"There are some fundamental differences between us that we cannot paper over," Jon Kyl, the No. 2 Senate Republican, told Obama, adding his plan gave Washington too much power over the health system and took it away from patients and doctors.

"We do not agree about the fundamental question of who should be in charge," Kyl said.

Obama hoped the day-long summit at Blair House, the presidential guest house across the street from the White House, would revive momentum in Congress for his faltering attempt to make healthcare more affordable and extend coverage to tens of millions of uninsured Americans.

He admitted it might not be possible to bridge the differences with Republicans but said "I thought it was worthwhile for us to make this effort."

Afterward, Republican Senate leader Mitch McConnell said he was "discouraged" by the summit's outcome and thought it was clear Democrats planned to ram through a version of the Senate-passed healthcare plan.

Senate Democratic leader Harry Reid seemed to reinforce that view, telling reporters: "It is time to do something and we are going to do it."

Obama had urged lawmakers to go beyond political theater and partisan finger-pointing during the summit, but the polite tone was interrupted several times by tense exchanges with Republicans, including his 2008 presidential foe John McCain.

'THE ELECTION IS OVER'

When McCain questioned whether Obama had delivered on the political change he promised, Obama curtly reminded him: "We're not campaigning anymore. The election is over." McCain responded with a laugh: "I'm reminded of that every day."

Republican Senator Lamar Alexander and Obama also clashed on whether Democratic plans would raise insurance premiums, with each interrupting the other to make their points.

Health insurer stocks closed slightly higher on Thursday, performing better than the broader U.S. market as investor concerns waned about a sweeping healthcare reform that would hurt profits. Analysts said they expected a much more diluted version of the plan would eventually be adopted.

Shares in WellPoint rose 2.2 percent, Aetnagained 1.4 percent and Humana rose 0.5 percent. The Morgan Stanley Healthcare Payor Index was nearly unchanged.

"I think that investors recognize that all the bad news about how reform might affect insurance companies is already behind us," said Dave Shove, analyst for BMO Capital Markets.

The summit debate broke no new ground in the healthcare debate, with Republicans calling the bills too costly and saying they would mean more taxes, more regulations and higher premiums for consumers.

"This 2,700-page bill will bankrupt our country," said House Republican leader John Boehner. The Congressional Budget Office has said the bills would reduce the budget deficit by about $100 billion over the next 10 years.

Obama dominated the speaking time at the 7-hour summit, rebutting many of the Republican charges and sometimes chiding Republican critics for reverting to "talking points" in their comments.

"He actually consumed more time than all the Republicans combined and Democrats combined," Republican Kyl said. "It wasn't a matter of just inviting us down and listening to our ideas, he wanted to argue with us."

Republicans promoted their own scaled-back approach to boost competition across state lines, create high-risk insurance pools and curtail medical malpractice lawsuits. They stacked the Democratic bill on their table to show its size and said their opposition represented the view of most Americans.

"We have to start by taking the current bill and putting it on the shelf and starting from a clean sheet of paper," Alexander said. "This is a car that can't be recalled and fixed."

Obama and his fellow Democrats made it clear they have no intention of starting over, but Obama hopes to win over wavering Democratic lawmakers and rally support among voters who have lost enthusiasm for the effort to reshape the $2.5 trillion U.S. healthcare industry.

The bills passed by the Democratic-controlled House and Senate late last year were designed to rein in costs, regulate insurers and expand coverage to more than 30 million more Americans.

But efforts to merge them and send a final version to Obama collapsed in January after Democrats lost their crucial 60th Senate vote in a special election in Massachusetts amid broad public dissatisfaction with the healthcare drive.

Democrats are considering trying to ram a bill through Congress using a procedure called reconciliation that would bypass the need for Republican support. Republicans denounced the idea.

"You can say that this process has been used before, and that would be right. But it's never been used for anything like this," Alexander said, quoting Democratic Senator Robert Byrd's description of the process as ramming the bill through like "a freight train."

Reid defended the procedure and noted Republicans had used it before "for major things" like tax cuts and reform of Medicare, the federal health program for the elderly.

The White House also has a scaled-back alternative plan it could push if a more comprehensive approach fails. It would extend coverage to about 15 million Americans rather than the 31 million envisioned by the larger plan.

Asked as he entered the summit if he had a Plan B, Obama replied: "I've always got plans."

(Additional reporting by Caren Bohan, Matt Spetalnick, Ross Colvin, Jeff Mason, Donna Smith, Susan Heavey, Thomas Ferraro, Bill Berkrot and David Morgan; editing by Anthony Boadle)