politics

WASHINGTON - After an intense debate that captured the essence of the national struggle over health care, a pivotal Senate committee on Tuesday rejected two Democratic proposals to create a government insurance plan to compete with private insurers.

The votes, in the Senate Finance Committee, underscored divisions among Democrats and were a setback for President Obama, who has endorsed the public plan as a way to "keep insurance companies honest."

The first proposal, by Sen. Jay Rockefeller, D-W.Va., was rejected 15 to 8, as five Democrats joined all of the Republicans on the panel in voting no. The second proposal, by Sen. Charles Schumer, D-N.Y., was defeated 13 to 10, with three Democrats voting no.

The votes vindicated the middle-of-the-road approach taken by the committee chairman, Sen. Max Baucus, D-Mont. Baucus voted against both proposals, which were offered as amendments to his bill to expand coverage and rein in health costs.

"There's a lot to like about a public option," Baucus said, but he asserted that the idea could not get the 60 votes needed to overcome a Republican filibuster on the Senate floor.

Proponents of a public plan said that it is needed to compete with private insurers and that consumers would benefit from the competition, getting lower prices and better benefits.

Republican members of the committee unanimously opposed the public option, saying it was -- in the words of Sen. Orrin Hatch, R-Utah -- "a Trojan horse for a single-payer system" in which the government would eventually control most health care.

Obama has said he wants a public plan, but he has not insisted on it, and the administration has sent mixed signals about how important it is. In the debate Tuesday, few senators mentioned the president's preferences, although several noted that many House Democrats, including Speaker Nancy Pelosi, supported the public option.

House Democratic leaders met for several hours on Tuesday to continue the dicey work of melding bills from three committees into a consensus package that could win a House majority.

Schumer said the public option would hold down costs because it would not have to generate profits, answer to shareholders or incur marketing expenses. His plan would have required the public plan to negotiate rates with doctors and hospitals, rather than setting prices based on Medicare reimbursement rates. But arguments on the two proposals were similar.

Rockefeller said the Congressional Budget Office had estimated that a government insurance plan could slice $50 billion from the cost of Baucus' bill, priced at $774 billion over 10 years. The budget office predicted that 8 million people would initially enroll in the public plan -- about one-third of those who would seek coverage through new insurance exchanges.

"The public plan will be optional," Rockefeller insisted. "It will be voluntary. It will be affordable to people who are now helpless before their insurance companies."

But Sen. Charles Grassley of Iowa, the senior Republican on the committee, said a government insurance plan would have inherent advantages over private insurers.

"Government is not a fair competitor," Grassley said. "It's a predator." He predicted that "a government plan will ultimately force private insurers out of business," reducing choices for consumers.

Sen. John Ensign, R-Nev., said he feared that a government plan would prove so popular it could never be uprooted.

Besides Baucus, two Democrats, Sens. Kent Conrad of North Dakota and Blanche Lincoln of Arkansas, voted against both public option proposals. Two other Democrats, Sens. Thomas Carper of Delaware and Bill Nelson of Florida, voted against the first amendment, but supported the second.

The votes set the stage for a compromise under which the public plan could be offered in states where people could not find affordable private coverage, Carper said. He and Sen. Olympia Snowe, R-Maine, have proposed such a compromise.

Democrats hope Snowe will eventually break with her party and support the legislation.

In the House, the Democratic leader, Rep. Steny Hoyer of Maryland, echoed Schumer's argument that the Finance Committee was the least friendly of the forums that would consider a public option.

"The Senate floor may be better, and the conference even better," Hoyer said, looking ahead to negotiations where differences between the two chambers might be resolved.

"We will keep fighting so the bill that lands on the president's desk has a good, strong, robust public option," an undaunted Schumer said.