Healthcare Stocks

[MWM]

Snowe Rejects Public Option as Senate Democrats Weigh Measure
By Laura Litvan and Catherine Dodge

Oct. 23 (Bloomberg) -- Senator Olympia Snowe rejected the idea of backing the immediate creation of any government-run insurance program even as top Democrats are leaning toward including such a plan in U.S. health-care legislation.

“A public option at the forefront really does put the government in a disproportionate position with respect to the industry,” Snowe, the only Republican to vote for a health plan so far, said in an interview with Bloomberg Television’s “Political Capital With Al Hunt,” airing this weekend.

Snowe’s stance is crucial because Democrats such as Nebraska Senator Ben Nelson say a bill has to have Republican support to win his vote. She might also bring along more Republicans, such as fellow Maine Senator Susan Collins.

While the establishment of a so-called public option to compete with private insurers is opposed by all Republicans and has divided Democrats, the idea is getting fresh attention from Senate Democratic leaders, lawmakers say. It was the main topic of discussion all day on Capitol Hill and was brought up at a meeting that Majority Leader Harry Reid and other lawmakers had later with President Barack Obama at the White House.

Senator Kent Conrad, a North Dakota Democrat who’s played a leading role in seeking a bipartisan compromise, said Reid and Obama administration officials are tilting in favor of including a version in a Senate bill.

States would be free to opt out of the insurance program and the plan would pay health-care providers at higher rates than does the Medicare insurance system for the elderly, Conrad, a member of the finance committee, told reporters.

“What I’m hearing is this is the direction of the conversation,” he said, adding that no decision had been made.

Reid’s spokesman, Jim Manley, declined to comment.

60 Votes Needed

A Democratic aide familiar with the discussions said while a public option is being considered, it won’t be included in legislation unless Reid can get 60 votes, the number needed to avoid Republican stalling tactics. Another possibility is Snowe’s plan to start a government plan only if there isn’t enough competition for private insurers to keep rates low, said the aide, who requested anonymity.

Meanwhile, House Democratic leaders are trying to gain consensus among the party’s rank and file for a public option that would peg doctor reimbursements to lower Medicare rates, which would present a stronger challenge to private insurers.

In the Senate, Democrats including Charles Schumer of New York and Jay Rockefeller of West Virginia say a public option is vital to bringing costs down. Snowe and some Democrats such as Nelson say they’re worried about undermining the market.

Snowe said yesterday she would vote with other Republicans to keep a bill with a public option from even reaching the Senate floor for consideration.

Biggest Changes

Lawmakers are considering the biggest health-care changes since the creation of Medicare in 1965. The legislation, Obama’s top domestic priority, attempts to curb medical costs while covering tens of millions of uninsured Americans.

Obama has told Congress he wants to sign legislation this year, a goal that may slip, Snowe said.

“Christmas might be too soon,” she said in the Bloomberg interview. “We should give it the time it deserves.”

Reid is combining a measure passed by the Senate health committee in July with an $829 billion proposal approved by the Senate finance panel on Oct. 13 with Snowe’s vote. The Senate has to debate and vote on a plan before it can be merged with a bill from the House, which is going through the same process.

Legislative Timeline

House Speaker Nancy Pelosi said Democrats hope to introduce their combined legislation next week. Senate Finance Committee Chairman Max Baucus said he doesn’t expect a Senate bill to be ready for floor debate in his chamber.

All the measures require that Americans get insurance, creating online purchasing exchanges and tax credits to help. They also restrict insurers’ ability to deny people coverage and encourage greater use of preventive care, electronic records and research on the effectiveness of treatments.

Baucus said he’d be open to a national public option if it can get 60 votes, the number of seats controlled by Senate Democrats. He voted against it in his committee.

Arkansas Senator Blanche Lincoln, who also voted against a public option on the finance panel, said she still has concerns and wouldn’t vote to allow floor debate on something she doesn’t support. “It would be very difficult to move forward,” the Democrat said yesterday.

Nelson, Collins

Nelson said he doesn’t favor a national public option and told Reid he wants a system where states could set up their own programs. “I made it clear -- a state-based public option, the nature of which would be determined by the states,” he said.

Some Republicans, including South Carolina Senator Jim DeMint, have said it might be best to work against the Democrats on health care and enjoy the fallout if they fail.

Snowe said she understands that political calculus, yet disagrees.

“The question is whether or not you’re willing to be sitting at the table or being a bystander,” she said. “I think it’s important for Republicans to be at the table.”

To contact the reporters on this story: Laura Litvan in Washington at [e-mail]; Catherine Dodge in Washington, at [e-mail].