Senator eyes insurer fee for health reform plan

WASHINGTON (Reuters) - A leading U.S. senator seeking to forge agreement on healthcare reform will put forward a plan that includes sweeping insurance market changes and a fee on companies that will help pay to cover the uninsured, a source familiar with the proposal said on Monday.

Senate Finance Committee Chairman Max Baucus, a Democrat who leads a group of six senators trying to craft compromise legislation on President Barack Obama’s top domestic priority, plans to discuss the proposal when the group meets on Tuesday.

The source said the Baucus plan, reflecting negotiations by the group and circulated among them over the weekend, would cost less than $900 billion over 10 years.

It calls for non-profit cooperatives to compete with insurance companies but does not contain a new government-run health insurance plan -- the “public option” -- sought by many liberal Democrats and backed by Obama, the source said.

Fiscal, political and philosophical battles are raging over the reforms as critics question the cost during an economic crisis, insurance companies lobby hard against parts of the plan, Republicans stand fast against the Democratic president and conservative commentators warn of a socialist takeover of healthcare.

Saying “it’s time to act,” Obama sought to shore up support for his overhaul of the $2.5 trillion U.S. healthcare system in economically hard-hit Ohio on Monday before a major address to Congress on Wednesday.

“It’s time to do what’s right for America’s working families and put aside partisanship, stop saying things that aren’t true, come together as a nation, pass health insurance reform now -- this year,” he told a cheering crowd at a Labor Day picnic held by the AFL-CIO union coalition in Cincinnati.

With 46 million Americans without health coverage, Obama said, “A public option within that basket of insurance choices would help improve quality and bring down costs.”

“I want a health insurance system that works as well for the American people as it does for the insurance industry. They should be free to make a profit. But they also have to be fair,” he said.


With his poll numbers down from once-lofty heights, Obama’s effort to reclaim control of the debate is seen as a key test of his leadership that could define his young presidency.

U.S. Senate Majority leader Harry Reid (D-NV) (Right) looks over at Senator Max Baucus (D-MT) as he speaks about their meeting with President Barack Obama about the "cash-for-clunkers" program and healthcare legislation at the White House in Washington, August 4, 2009. REUTERS/Jim Young

After a summer of sometimes bitter words, White House spokesman Robert Gibbs said on Sunday that Obama will “draw some lines in the sand” in his speech on Wednesday.

It was unclear whether the Baucus proposal will be enough to secure agreement on the Senate panel after the three Democrats and three Republicans, known as the “Gang of Six,” struggled for months to forge a bipartisan agreement.

In recent weeks, Republican panel members Charles Grassley and Michael Enzi have voiced concerns about Obama’s plans and legislation pending in the House of Representatives.

The third Republican negotiator, Olympia Snowe, has been much more supportive of the effort and the White House has reached out to her for possible compromise.

A spokesman for House Republican leader John Boehner said the Baucus plan, based on media reports, “would still include increased health insurance costs for the American people, cuts to Medicare without improvements in care, and some sort of government takeover of healthcare.”

“We don’t need a new backroom deal,” said the spokesman, Michael Steel. “We need real, bipartisan reforms that lower costs and increase access.”

Baucus said on Friday he was prepared to move forward on legislation quickly in the Democratic-controlled Congress -- with or without Republican support.

“I am committed to getting healthcare reform done -- done soon and done right,” he said in a statement.

The source said a new tax on insurance companies proposed by Baucus would raise about $6 billion a year and help pay for the reform plan.

The Senate panel had been looking at taxing some employer-provided health plans. But unions and Obama opposed that, prompting negotiators to look at the insurers fee.

Liberal Democrats have criticized the idea of non-profit cooperatives, saying they will not have enough clout to compete with big insurance companies, but the proposal could appeal to more moderate members of the party who represent rural states.


The source said the Baucus plan aimed to inject more competition into the insurance market and included transparency provisions that would make it difficult for companies to pass on the new fee to consumers.

It also seeks to improve the quality of care and increase coverage of prevention and wellness programs, the source said.

The Senate Finance package, like bills passed by other panels in the Senate and House, would stop insurers from excluding people for pre-existing conditions or charging more because of health history.

It also would limit out-of-pocket expenses for patients, bar insurers from placing caps on benefits and expand the Medicaid program for the poor.

Without bipartisan agreement, Baucus will likely move a bill through his committee with just Democrats and possibly the support of Snowe, a moderate Republican from Maine, a state that backed Obama in last November’s presidential election.

That also means Obama will have to unify his Democrats in the Senate, where 60 votes are needed from among the 100 members to pass controversial legislation.

Snowe’s support might also help shore up backing from centrist Democrats who are wary about creating a new government healthcare program.

Snowe supports a compromise plan that would not initially include a public option but would “trigger” the creation of a government program if insurance companies failed to meet cost and quality benchmarks.

Additional reporting by Matt Spetalnick in Cincinnati; Editing by John O’Callaghan