By Shailagh Murray and Lori Montgomery
Washington Post Staff Writers
Wednesday, September 9, 2009

President Obama will seek to rally Congress to pass health-care reform in a prime-time address Wednesday, even as lawmakers continue struggling to reach broad consensus on some of the toughest issues in the debate.

Senate Finance Committee Chairman Max Baucus (D-Mont.) offered the president a glimmer of hope for compromise, circulating a detailed draft of the only Democratic reform proposal that has been assembled with significant Republican input. But in a meeting Tuesday, Baucus was unable to persuade his "Gang of Six" bipartisan negotiators to endorse the nearly $900 billion plan, which does not include many provisions that liberal lawmakers are clamoring to see in a final measure.

He gave his two Democratic and three Republican colleagues until 10 a.m. Wednesday to offer suggestions for improving the bill, which would require all U.S. citizens and legal residents to buy health insurance or carry coverage either through an employer, a public program or new insurance "exchanges" as of 2013.

Baucus said he continues to hold out hope that an agreement can be struck before Obama addresses a joint session of Congress at 8 p.m. But the Republican considered most likely to sign onto the plan, Sen. Olympia J. Snowe (Maine), said she will wait to hear what the president has to say.

"I think the speech and our efforts are complementary, not mutually exclusive," Snowe said. "I think I'd rather give it a few more days to work through some of these issues."

Obama discussed his address at length with House Speaker Nancy Pelosi (D-Calif.) and Senate Majority Leader Harry M. Reid (D-Nev.) at the White House on Tuesday. Reid said that the president "did not give us a dress rehearsal," adding that Obama's goal is "to reenergize the way to do health-care reform" while clearing up "ridiculous falsehoods" repeated at hundreds of town hall meetings by opponents of the Democratic-led effort.

Obama worked on the address with senior aides Tuesday morning before heading to Arlington to give a speech to students that was broadcast to classrooms nationwide. Senior adviser Valerie Jarrett said he will not back away from the complexities of the reform effort or the tough politics that lie ahead.

After the "messy" business of legislative wrangling and an intense summer of attacks, Jarrett said, Obama intends to "remind people why we're fighting so hard for this, what it's really all about. He will tell Americans directly what are the risks if we don't do this and what are the rewards if we do it."

One question lawmakers are eager for Obama to address is the fate of the government-run, or public, insurance option, which has become a focal point of the debate. Many Democrats say a government plan would force competition among private insurers and guarantee affordable coverage for people who are not covered by their employers. But opponents say such a program could become a precursor to a government takeover of health care -- and even some supporters concede that the public option might threaten the larger causes of reducing the number of uninsured and lowering costs.

After meeting with Obama, Pelosi said that he indicated support for a public option but that he will convey in his speech that "if you have a better idea, put it on the table." The president told the two leaders that 95 percent of workable legislation exists in various proposals but that he wants Baucus to complete a bill "to get the process going," Reid said.

Meanwhile, two prominent House Democrats backed away from a public option Tuesday, providing at least some leeway for Obama. Rep. Mike Ross (Ark.), a leader of the 52-member Blue Dog coalition, said he could no longer support a government-run plan, a shift from his position a few months ago that suggests the divide between liberal and conservative Democrats may have widened in the wake of raucous town hall meetings last month.

House Majority Leader Steny H. Hoyer (D-Md.) said he still supports a public option but could back legislation without it -- a remark that ran counter to Pelosi's insistence Tuesday that a government plan "is essential to our passing a bill."

Some other leading liberals, including House Judiciary Committee Chairman John Conyers Jr. (D-Mich.), pledged to vote against the final bill if the public option is dropped. Other Democrats said they expect Obama to frame the public option as an important objective but not worth the price of failure.

Senate Minority Leader Mitch McConnell (R-Ky.) signaled Tuesday that his party may retreat from the "just say no" approach that was effective this summer. Doing nothing, he said, is not an option. "At this point, there really should be no doubt where the American people stand. The status quo is not acceptable, but neither are any of the proposals we've seen from the White House or Democrats in Congress," he said. What people want, McConnell said, is a less costly effort with a less ambitious scope. "They want reforms, but they want the right reforms," he said.

Baucus is still seeking a Senate Finance Committee measure that would offer an attainable middle ground because it would include provisions that were reached by consensus and could prove to be long lasting. "It is very much my hope, and I still believe we can find a bipartisan agreement," Baucus told reporters after a 2 1/2 -hour meeting with his Gang of Six colleagues.

Instead of requiring all employers to offer insurance, as several other proposals do, Baucus suggests targeting only those with more than 50 full-time workers, and only if their employees receive federal subsidies to buy insurance. His plan calls for employers in those circumstances to reimburse the government.

The idea appeals to champions of small business but worries liberals, who note that it would give some companies a huge incentive not to hire people who earn between 133 percent and 300 percent of the federal poverty level, the group that would be eligible for subsidies. The plan "would discourage the hiring of lower-income people," particularly minorities and women, according to an analysis released Tuesday by the liberal Center on Budget and Policy Priorities.

The proposal also includes the first alternative to a public option: a system of 51 cooperatives that would function as nonprofit, member-run insurance programs. Federal funding would underwrite start-up costs, but the co-ops would eventually be independent entities, although they would be "permitted to enter into collective purchasing arrangements for services and items that increase administrative and other cost efficiencies," according to a copy of the proposal.

The co-ops could not be government-run, but they also may not be affiliated with insurance providers. Additionally, the draft states, co-op "governing documents must incorporate ethics and conflict of interest standards protecting against insurance industry involvement and interference."

While Baucus said the plan could be about "to break" toward winning support "from many more people," he had yet to find favor Tuesday among his own negotiators. Snowe said she worries about the burden that expanding Medicaid eligibility would impose on state governments. Aides to Sen. Mike Enzi (R-Wyo.) said he does not care for a plan that would tax insurance companies that sell costly policies, or for a proposal that would impose a $6 billion annual fee on insurance companies based on their share of the market.

Even the normally voluble Sen. Kent Conrad (D-N.D.) tersely summed up the discussions late Tuesday as "very professional." As he left the Capitol, he added: "We're not finished."

Staff writers Paul Kane, Scott Wilson and Ceci Connolly contributed to this report.