December 10, 2009 / 1:42 AM / 10 years ago

Obama praises Senate healthcare deal

WASHINGTON (Reuters) - President Barack Obama on Wednesday praised a Senate compromise on a public insurance option, and Senate Democrats said the proposals moved them one step closer to passage of a sweeping healthcare overhaul.

U.S. Senator John Cornyn (R-TX) (L-R), SenatorLamar Alexander (R-TN) and Senate Minority Leader Mitch McConnell (R-KY) talk to reporters about healthcare legislation outside of the senate Republicans' weekly policy lunch at the U.S. Capitol in Washington, December 8, 2009. REUTERS/Jonathan Ernst

Democratic senators said they still had plenty of questions about the tentative agreement, reached late on Tuesday, and many withheld support until they could evaluate cost estimates of the plans and learn the full details.

After four days of private talks, Senate negotiators agreed to replace a government-run public insurance option with a non-profit approach run by private insurers, potentially resolving the bill’s biggest stumbling block.

“The Senate made critical progress last night with a creative new framework that I believe will help pave the way for final passage and an historic achievement,” Obama said at an event attended by congressional leaders. The healthcare overhaul is his top domestic priority.

“I support this effort, especially since it’s aimed at increasing choice and competition and lowering cost.”

The deal could make it easier for the Senate’s Democratic leaders to meet their self-imposed end-of-the-year deadline to pass a bill, which would then have to be reconciled with a version approved by the House of Representatives on November 7.

The House bill includes a large government-run public insurance option, creating a potentially difficult negotiation when the two chambers try to merge their bills.

Shares of health insurers rose initially on expectations the Senate would jettison a government-run insurance plan seen as damaging to the industry, but later lost those gains as the market focused on proposed new insurance rules that could crimp profits.

Under the tentative Senate deal, the federal Office of Personnel Management would negotiate with private insurers to offer national non-profit health plans similar to those offered to federal employees.

Liberals praised a provision to allow people aged 55 to 64 to “buy in” to the Medicare health plan for the elderly, which now begins at age 65. Other senators questioned the impact on the program’s already shaky fiscal future.

‘SERIOUS QUESTIONS’

“We’ve got to know what all the effects are before we reach a conclusion,” Democratic Senator Kent Conrad said. Dick Durbin, the Senate’s No. 2 Democrat, said there were “legitimate and serious questions being raised.”

The deal includes a provision that would require insurers to spend 90 percent of revenue from premiums on medical services, which could limit their profits.

All of the provisions have been sent to the non-partisan Congressional Budget Office for cost estimates, which are expected within the next five days. Senate Democratic leader Harry Reid will decide which parts to move ahead with.

The Senate is on its 10th day of debate on the bill, which would extend coverage to 30 million uninsured Americans and halt industry practices like refusing coverage to people with pre-existing medical conditions.

“I think at the end of the day we’ll have our 60 votes,” Democratic Senator Bill Nelson told reporters. That is the number of votes Senate Democrats control — and the number needed to overcome Republican opposition.

Opposition to the government-run plan among some Democratic Senate moderates has been one of the biggest hurdles for the healthcare overhaul.

Obama backed the public option as a way to expand choices for consumers and competition for insurers, but he had signaled for months it was not an essential part of a final overhaul.

Liberal Howard Dean, a former presidential candidate and a supporter of a government-run insurance plan, said the compromise was “a positive step forward.”

“This is what should have been done in the first place,” he told the “Early Show” on CBS.

But the liberal activist group “Move On” sent an e-mail to members saying senators had “bargained away the heart of healthcare reform.”

Senator Joe Lieberman, an independent who promised to oppose any bill with a government-run plan, was “encouraged” by the deal. He said he wanted to see the costs, particularly on the Medicare provisions, before deciding on his support.

He reiterated his opposition to any plan that includes a “trigger” element. A trigger to activate a public option in areas where private insurance is considered unaffordable is still being considered in the plan.

The S&P Managed Healthcare index of larger U.S. health insurers rose initially by as much as 2.5 percent before losing those gains to trade slightly lower. Market analysts cited concerns over the regulations on insurers and the details of the Medicare expansion.

Bruce Josten, executive vice president of the U.S. Chamber of Commerce, told business executives the deal had not changed the chamber’s opposition to the healthcare package.

“We oppose a government-run public plan in all of its forms, no matter how it is tweaked, no matter how it is contorted,” Josten said.

Additional reporting by Donna Smith, Thomas Ferraro and Patricia Zengerle; Editing by Peter Cooney

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