By William Branigin
Washington Post Staff Writer
Tuesday, September 29, 2009 4:50 PM, Washington Post

The Senate Finance Committee on Tuesday rejected two Democratic amendments that would have created a government-run "public option" as part an overhaul of the nation's health-insurance system, with the panel's chairman bowing to staunch Republican opposition that he said would prevent final passage of a bill containing such a provision.

After an amendment offered by Sen. John D. Rockefeller IV (D-W.Va.) was voted down 15 to 8, the committee voted 13 to 10 to reject a second public-option provision introduced by Sen. Charles E. Schumer (D-N.Y.). The committee chairman, Sen. Max Baucus (D-Mont.), voted against both politically volatile amendments, saying he feared that a bill including either one would not get the 60 votes it would need for passage by the full Senate.

Republicans stood solidly against both provisions, arguing that they would lead to complete government control over health care.

But Schumer vowed to keep pressing for a public option on grounds it was the best way to control rising health-care costs.

"The present system is broken," he told the committee. He said he was pushing for a public option not for ideological or symbolic reasons but because "costs are going through the roof." And he expressed confidence that, "with some work and some compromise," proponents of the provision eventually could get 60 votes on the Senate floor.

"We are going to get at this, and at this, and at this, until we succeed, because we believe in it so strongly," Schumer said. The more Americans hear about benefits of a public option, he asserted, "the more they like it."

Rockefeller and Schumer argued repeatedly during the committee's markup that a public option would be the best way to give consumers an affordable choice in health insurance and rein in what they described as voracious, profit-driven private insurance companies.

Republicans charged that both plans would lead to a government "takeover" of the health-care system and ultimately force private insurers out of business. Some Democrats also took issue with aspects of the public option plans, particularly Rockefeller's proposal to tie medical providers' reimbursement rates to Medicare for two years.

In the end, Baucus and four other Democrats -- Sen. Kent Conrad (N.D.), Blanche Lincoln (Ark.), Bill Nelson (Fla.) and Thomas R. Carper (Del.) -- joined all 10 Republicans on the committee in voting against the Rockefeller amendment. On the Schumer amendment, Baucus, Conrad and Lincoln voted with the Republicans to defeat it.

The debate came as the committee worked for a fifth day on an overall health-care reform bill authored by Baucus. His bill, which he says would cost nearly $900 billion over 10 years, contains no public option, favoring instead a system in which nonprofit cooperatives would offer health insurance to people who could not afford private companies' plans.

Democrats who favor a public option argued that polls show 65 percent of Americans support including it in health-insurance reform legislation. House committees have included such an option in their proposals, and President Obama has expressed support for a public option, while also indicating that this is not the most important consideration for him and leaving the way open for cooperatives.

Rockefeller said his proposal would save about $50 billion over 10 years. He denied that it represents "some kind of government takeover," insisting that enrollment in a public plan would be strictly optional.

Charging that private insurance companies have "failed to meet their obligations" to the public, Rockefeller said the firms are "determined to protect their profits and put their customers second." A public option, he said, would act as a "counterweight" to "rapacious" health-insurance companies, helping to reduce excessive growth in the cost of premiums.

The West Virginia Democrat also took aim at what he called "junk insurance" products -- limited-benefit policies that he said make up one of the fastest-growing sectors of the insurance industry but that provide no real coverage when a consumer gets sick because they are so riddled with loopholes and exceptions.

"They're getting away with banditry, and they revel in it," Rockefeller said. The companies encourage employees to find reasons to deny coverage to policyholders and will not change their ways unless forced to do so, he asserted. Nor, he charged, will new rules under the Baucus bill suffice. "Their whole livelihood is made by getting around rules," he said.

Baucus told Rockefeller during the debate, "I agree with the intent of your amendment, which is to hold the insurance industry's feet to the fire." But he said his own bill "is not easy on insurance companies."

Sen. Charles E. Grassley (Iowa), the top Republican on the committee, acknowledged "shortcomings" in the U.S. health-care system and said he was "not arguing for the status quo." But he maintained that "a government-run plan is not the answer."

Such a plan, he said, "will ultimately force private insurers out of business" and lead to "single-payer health care" in which the federal government runs health insurance and the health-care system.

"The government is not a fair competitor," he said. "It's a predator."

Sen. Orrin G. Hatch (R-Utah) said a single-payer program "would be a disaster" and cause Americans to "lose an awful lot of control over their health-care needs."

Under Rockefeller's amendment, for the first two years after the public option took effect in 2013, hospitals and doctors would be reimbursed at the same rates as Medicare for treating patients under the plan and would have to participate in the public option if they also participated in Medicare. After that 2013-14 period, reimbursement rates would be negotiated.

Schumer's amendment called for reimbursement rates for public option participants to be negotiated from the start.

Conrad, a key negotiator on health-care reform and a supporter of cooperatives, told the committee that he "can't possibly support" Rockefeller's proposal because his state has the second-lowest level of Medicare reimbursement in the nation. He said every major hospital in North Dakota would "go broke" if they had to accept public option reimbursements at Medicare rates.

Rockefeller said he thought that was "nonsense" and noted that providers could opt out after two years under his plan.