By Shailagh Murray and Lori Montgomery
Washington Post Staff Writers
Tuesday, September 22, 2009

Seeking to lock down votes before Tuesday's meeting of the Senate Finance Committee, Chairman Max Baucus began reworking his health-care overhaul to ease the financial burden on middle-class Americans who would be required for the first time to have health insurance.

All of his changes, though, would add billions to the cost of a bill whose chief accomplishment was its relative austerity.

Baucus (Mont.) came under fire last week from fellow Democrats and Sen. Olympia J. Snowe (Maine), the only Republican still at the negotiating table, for a mandate that people buy health coverage, at a price they may not be able to afford.

To address that concern, Baucus said Monday that his revised bill would offer more generous subsidies to low- and middle-income people to buy coverage through a network of private insurance exchanges. He also said he may cut the maximum penalty facing middle-class families who do not buy insurance.

Baucus said he is considering substantial changes to one of his primary sources of funding: a proposed tax on high-cost insurance policies. Some Democrats complained that the tax would strike hardest at residents of expensive urban areas and those with risky jobs, such as coal miners, firefighters and other public safety workers.

In a meeting Monday night with Finance Committee Democrats, Baucus cautioned that lawmakers may have to find additional revenue sources or cost savings, depending on how drastically they seek to change the bill. "The main discussion was, 'Okay, how do we make insurance affordable for people? Because we've got to make insurance affordable.' But the next question was, 'How do you pay for it?' " Baucus said.

One option Democrats were discussing was to expand Medicaid as a potentially less expensive way to cover low-income people.

The last-minute maneuvering came as Baucus prepared to open a week-long debate on health care in his committee, the last of five congressional panels to take up President Obama's signature domestic initiative. Lawmakers have proposed 564 amendments to Baucus's measure, and a vote on the $774 billion plan is not expected before Friday at the earliest.

The bill would expand health coverage to millions without adding to federal budget deficits, and despite criticism of the measure from both parties, it has attracted the support of more moderate Democrats than any other proposal.

After a year-long effort to build a bipartisan consensus around the plan, Baucus has so far been unable to persuade any Republicans to sign on, and fellow Democrats have accused him of wasting his time courting conservative Sens. Charles E. Grassley (Iowa) and Mike Enzi (Wyo.).

The chairman said, though, that he would change nothing about the arduous process, and he continued to work Monday night toward incorporating Democratic and Republican amendments into the bill.

"I felt from the get-go that bipartisan was better than not," Baucus said in an interview. "It's more durable. It's more sustainable."

Even if no GOP votes materialize, he has cleared the way for Democrats to claim that Republicans had a fair shot at shaping what could become the biggest government-led expansion of health coverage since Medicare was created in 1965.

"This bill, except for the five to 10 things that weren't resolved, has been put together with some Republican input," Grassley said.

In addition to making health coverage mandatory for most Americans, the Baucus plan -- and other health-care bills pending in the House and another Senate committee -- would dramatically expand Medicaid and create a new insurance market for people who do not have access to affordable insurance through their employers. Unlike the other bills, it would not create a government-run health plan to compete with private insurers, nor would it worsen federal budget deficits. To the contrary, Baucus would more than pay for the expansion of coverage, reducing deficits by $49 billion by 2019, according to the nonpartisan Congressional Budget Office.

Many of the changes under consideration Monday would add to the bill's cost, aides said. To cover the additional spending, Democratic sources said, Baucus would cut the program's surplus to about $21 billion by 2019. He also is contemplating additional spending cuts and tax increases, the sources said.

Baucus is considering whether to lower the maximum amount that middle-income families would pay for insurance, and he is considering changes to his excise tax on high-cost policies, raising the amount that would be exempted from a 35 percent excise tax. Sen. John D. Rockefeller IV (D-W.Va.) said he feared that the tax would be hard on high-risk workers such as coal miners. "These are workers that require more expensive health coverage due to the nature of their job, and they should not have to foot the bill for health care reform," Rockefeller said in a statement.

Baucus is resisting calls to eliminate the tax altogether, however. The tax is viewed as the most critical provision in the package toward reducing future budget deficits. It would place a limit for the first time on the largest loophole in the U.S. tax code, and, by discouraging insurers from offering high-cost policies, economists think it would curtail the overuse of health services.

Snowe wants to make Baucus's plan more affordable not only for uninsured people but also for those who already have employer-sponsored coverage. Baucus proposes to base federal subsidies on how much workers pay toward their employer-sponsored insurance, but Snowe wants to treat people who earn about equal amounts the same under the plan -- regardless of whether they had access to coverage through an employer.

Another Snowe amendment would create a government-run insurance option in states or regions where private insurance companies do not offer widely affordable plans.

So far, Baucus's strongest supporters appear to include moderate Democrats in both chambers, including the 52-member House "Blue Dog" caucus, which has serious reservations about the House bill. Sen. Blanche Lincoln (Ark.), a moderate Democrat on the Finance Committee, called the Baucus measure "a good culmination of all the discussions that we've had." And Baucus said he still holds out hope for Republican backing.

"I've written this the best way I can," he said. "Now it's up to Republicans to decide whether they want to be on it or not. We're going ahead."