Senate panel backs healthcare reform

By John Whitesides and Donna Smith

WASHINGTON (Reuters) - A key U.S. Senate committee endorsed a sweeping healthcare overhaul on Tuesday, gaining the support of an influential Republican and delivering President Barack Obama a victory on his top domestic priority.

The Democratic-controlled Senate Finance Committee approved the measure by 14-9, with Senator Olympia Snowe becoming the first Republican in Congress to back a healthcare reform bill.

"Today we reached a critical milestone in our effort to reform our healthcare system," said Obama, who warned there were still big challenges ahead for healthcare reform.

The bill, the last of five pending health measures to clear a committee in Congress, will be merged with the Senate health panel's version for a floor vote.

Snowe, who had been courted by Obama and his fellow Democrats, said she backed the plan with reservations and could not guarantee her continued support as the overhaul advances.

"My vote today is my vote today. It doesn't forecast what my vote will be tomorrow," Snowe said.

Health insurer companies stocks fell on fears the reform was gaining steam and would hurt profits if it passed. The S&P Managed Health Care index of large health insurers was down 1.9 percent.

"Support for Democratic healthcare legislation by Senator Snowe is a critical development, which definitively shifts the political balance in Democrats' favor," said healthcare equities analyst Avik Roy.

The vote gave another shot of momentum to the healthcare drive and was good news for Obama, who has been criticized for taking too much on board from wars in Iraq and Afghanistan to climate change and gay rights.

The proposal drafted by Democratic Chairman Max Baucus was designed to reduce costs, regulate insurers and expand coverage. [nN13186448]

"Pretty much everything has been said and now it's time to get the job done," Baucus said. "Americans are looking for common-sense solutions."

Republicans condemned the plan as a costly and heavy-handed government intrusion into the private healthcare sector and said the measure would get even worse as it moves forward.

'SLIPPERY SLOPE'

"We can now see clearly that the bill continues its march leftward," said Senator Charles Grassley, the senior Republican on the panel. "This bill is already moving on a slippery slope to more government control of healthcare."

Snowe's support could give Democrats a crucial swing vote as they try to hold the 60 Senate votes needed to overcome procedural roadblocks. Democrats control exactly 60 seats in the 100-member Senate.