Democrats push for "public" healthcare option

Senate Finance Committee Chairman Max Baucus leaves the Senate's ''Gang of Six'' meeting on health care reform on Capitol Hill, September 14, 2009.

WASHINGTON (Reuters) - Key U.S. congressional Democrats demanded on Tuesday that a government-run insurance option be included in healthcare reform legislation, a day before the Senate Finance Committee publishes a long-awaited bill that does not include one.

Democratic Senator John Rockefeller, a Finance panel member and strong backer of the government-run "public" option, said he could not support the committee's healthcare bill unless there are significant changes.

"There is no way in its present form that I will vote for it," he said of the Senate Finance bill, the product of months of negotiations between three Democrats and three Republicans on the panel -- the so-called "Gang of Six."

The bill, which could ultimately be the focus of a congressional compromise on President Barack Obama's top domestic priority, is scheduled to be made public on Wednesday even though no Republicans have yet signed on to support it.

While Obama backs a government-run option, he has signaled it is not essential to help meet his goal of increasing competition, lowering costs and expanding coverage to most of the 46 million Americans who currently lack health insurance.

Instead of a government-run plan, the Senate Finance proposal opts for non-profit cooperatives as a way to increase competition for insurance companies.

The plan from the panel's chairman, Max Baucus, will also tax insurance firms on their most expensive healthcare policies and levy fees on insurers and other healthcare companies.

Democrats in the House of Representatives pushed for a government-run "public" healthcare option during a meeting with White House senior adviser David Axelrod.

"The caucus was saying there will be no healthcare reform out of this caucus without a public option," Democrat Lynn Woolsey told reporters.

She said Axelrod reiterated Obama's preference for a government-run plan, which Republican and some moderate Democratic critics say would hurt insurance companies and give government too broad a role.

FINE LINE FOR OBAMA

"It was nice to hear again that the administration and the president support a public option as a choice," Woolsey said.

Three House committees and one Senate committee have finished work on healthcare bills that include a public option, leaving the Senate Finance panel as the final hurdle before each chamber takes up the issue.

The clashes over the government-run plan illustrate Obama's difficulty as he tries to fashion a coalition to pass a major overhaul of the $2.5 trillion healthcare industry at a cost of $900 billion over 10 years -- without increasing the deficit.

Each time he reaches out to Republicans or conservatives, Obama and his allies in Congress anger liberal Democrats who have the votes to kill any measure in the House.

But in the Senate, support from moderate Democrats and perhaps even some Republicans will be needed to reach the 60 votes necessary to clear procedural hurdles.

Rockefeller, of West Virginia, said he wanted the government-run option in the plan and did not like the tax on high-cost healthcare plans, which he said would hurt coal miners who work in a high-risk environment and have expensive health plans.

He said he also had problems with some of the bill's changes to the children's health insurance program and Medicaid, the healthcare program for the poor.

Democrats hold a 13-10 majority on the Senate Finance Committee. Unless they gain Republican support, Rockefeller's desertion would leave Democrats with a 12-11 majority and give Baucus little room for error to get the bill through.

Baucus says he will move ahead with the bill even without any Republican support. He has negotiated for months with Republican Senators Olympia Snowe, Charles Grassley and Mike Enzi, but none has signed on to the bill yet.

Enzi and Grassley were critical of Obama's plans during the congressional recess in August, dimming hopes they would be included in the compromise.

Baucus said he still hoped for Republican support when the committee begins to vote on the bill's provisions next week.

"What really counts and what I expect is Republican support for the bill when it is reported out of committee," he said. "I think there will be Republican support when the bill is reported out of committee at the very latest."

(Additional reporting by Andy Sullivan and Thomas Ferraro; Editing by John O'Callaghan and Todd Eastham)