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* Reid to include government-run plan in healthcare bill
* Public option would allow states to choose to opt out
* Republican Snowe not on board but White House pleased
By John Whitesides and Donna Smith
WASHINGTON, Oct 26 Democratic leader Harry Reid
said on Monday the U.S. Senate's healthcare overhaul will
include a government-run insurance plan that lets states opt
out, handing liberals an early victory on the bill's most
After days of closed-door talks, Reid said he would include
the "public" insurance option in a healthcare reform bill
headed to the Senate floor for debate because it was the best
way to lower costs and create competition.
"I believe there's a strong consensus to move forward in
this direction," he told reporters, declining to say if he had
commitments for the 60 Senate votes needed to pass a healthcare
bill including the public option.
Reid's compromise decision was praised by many fellow
Democrats but condemned by Republicans and the health insurance
industry, whose stock prices fell out of apparent concern about
the prospect of competition from the government-run plan.
The White House said President Barack Obama was "pleased"
that a public option was included in the bill.
The option has become a flashpoint in the raging debate
over Obama's top domestic priority -- a bill that reins in
healthcare costs, expands coverage to millions of uninsured
people and bars insurers from denying coverage for pre-existing
conditions or dropping coverage for the sick.
Reid said he would send the bill to congressional budget
analysts for a cost estimate and begin Senate debate on it as
soon as they report their findings, perhaps next week.
Democratic leaders in the House of Representatives are
nearing the end of a similar process to meld three pending
bills into one. Each House bill includes a public insurance
plan but members are negotiating which version to use.
Obama and liberals support the government-run plan as a way
to boost competition in the insurance market but critics call
it a government takeover that would hurt private companies.
About a dozen moderate Democrats in the Senate -- more than
enough to sink the bill -- have voiced concerns about a public
But several said they are open to letting states "opt out"
of the plan because it would allow local decision-making and
Reid hoped to win them over with the compromise.
'COME BACK, OLYMPIA'
Reid said he talked to Senator Olympia Snowe, the only
Republican to support any of the pending healthcare measures in
a committee vote and a target of heavy Democratic lobbying, but
so far she did not support the public insurance option.
"We hope that Olympia will come back," he told reporters.
"I'm disappointed that the one issue, the public option, has
been something that's frightened her."
Snowe, who has supported a proposal to "trigger" a public
option in areas where insurance competition did not rise to
certain benchmarks, said she was "deeply disappointed" by
"I still believe that a fallback, safety net plan ... could
have been the road toward achieving a broader bipartisan
consensus," she said.
The Senate healthcare bill is the result of more than a
week of negotiations between Reid, other top Senate Democrats
and White House officials, who merged two bills passed by
Senate panels into one piece of legislation.
Reid's decision amounts to a comeback for the public
option, labeled dead by some pundits and senators after the
Senate Finance Committee rejected it earlier this month. But
the idea has gained momentum as some polls show it making
slight gains among the public.
The lobbying group for the insurance industry, America's
Health Insurance Plans, said the public option would not drive
down costs as advertised.
"The American people want healthcare reform that will
reduce costs and this plan doesn't do that," said the group's
president, Karen Ignani. "The divisive debate about a
government-run plan is a roadblock to reform."
Health insurance stocks were weak on Monday, with the S&P
Managed Healthcare index of large insurers closing down 2.5
percent versus a 1.2 percent drop in the S&P 500 index.
The healthcare reform measures have bogged down in
Congress. Republicans criticize the costs at a time of
expanding federal deficits and Democrats have had trouble
winning over party moderates concerned by the price tag and the
cost for lower- and middle-income consumers.
"The core of the proposal is a bill that the American
public clearly does not like and doesn't support," Republican
Senate leader Mitch McConnell said after Reid's announcement.
But a top White House adviser said reforming the health
insurance market could cut the federal budget deficit.
"Done correctly, healthcare reform can genuinely slow the
growth rate of healthcare costs and thus put us on a path to
greatly reduced budget deficits in the long run," said
Christina Romer, chairwoman of the White House Council of
A Thomson Reuters report found the U.S. healthcare system
wastes $505 billion to $850 billion a year and that proposed
reforms could be paid for by fixing some of the most obvious
inefficiencies, preventing mistakes and fighting fraud.
(Editing by John O'Callaghan)