Senate Finance Committee Votes Against Government-Run Health Insurance Plan

In a decisive vote that could forecast the demise of a proposed government health insurance plan, the Senate Finance Committee voted twice Tuesday against creating a "public option" that would compete with private companies.

The two votes marked a victory for Montana Democrat Max Baucus, the Senate Finance Committee chairman, who is hoping to push his middle-of-the-road measure through the panel by week's end. It also kept alive the possibility that at least one Republican may yet swing behind the overhaul, a key goal of both Baucus and the White House.

"My job is to put together a bill that gets to 60 votes" in the full Senate, Baucus said shortly before he joined a majority on the committee in defeating efforts to rewrite a key portion of his draft legislation. "No one shows me how to get to 60 votes with a public option," he said, using the term used to describe a new government role in health care. It would take 60 votes in the 100-member Senate to overcome any filibuster Republicans might attempt.

The first proposal failed in a 15-to-8 vote, which followed several hours of debate. The second proposal failed 13-10. Taken together, the votes were a defeat for liberal Democrats who view government-sponsored insurance for the middle class as a key component of President Obama's health care overhaul.

Sen. Jay Rockefeller of West Virginia proposed the first measure that was defeated by five Democrats, including Baucus, and all 10 committee Republicans.

Sen. Chuck Schumer of New York backed an alternative approach that he said would introduce more competition into the insurance market nationwide. His version differed from Rockefeller's chiefly in that it would have allowed for the government to negotiate payments with doctors, hospitals and other health care providers for an initial two-year period rather than pay them at the same rates as under Medicare.

The votes followed warnings by the Finance Committee's top Republicans that creating a government-run health insurance program would crush private companies.

Sen. John Ensign, R-Nev., and Sen. Chuck Grassley, R-Iowa, sparred with Democrats on the Senate floor over the necessity of a public plan -- with Grassley saying lawmakers shouldn't take advantage of the shortcomings in the health care system to "denigrate" American health care.

Rockefeller proposed a plan modeled on Medicare, the federal health care program for senior citizens, in which the government would set what it pays doctors, hospitals and other medical providers. Schumer proposed a government plan that looks more like a private insurance company and negotiates payment rates with providers.

Republicans and moderate Democrats, meanwhile, stood their ground in opposition to a government plan that would compete for subscribers with private carriers.

Ensign was quick to pounce on Rockefeller's amendment, arguing that his idea for a public option would deny doctors participation in Medicare for two years if they choose not to participate in a new government program.

Rockefeller, saying 70 percent of doctors support a public option, defended his proposal. He said it will protect American families, and he dismissed assertions that it will lead to a government takeover of health insurance. "It will be optional. No one has to do this," he said.

Grassley reiterated his opposition to a government-run plan and challenged Rockefeller's 70-percent statistic, saying another poll showed that not even a majority of doctors would support a public option that weakened the private insurance industry.

The United States is the only developed nation that does not have a comprehensive national health care plan, leaving about 50 million people without health insurance. The government provides coverage for the poor and elderly, but most Americans rely on private insurance, usually received through their employers. Others buy their own insurance or pay steep medical bills out of pocket.

Sen. Kent Conrad, D-ND, who has crafted an alternative plan that would set up a series of non-profit health care cooperatives, blasted Rockefeller's plan, saying, "The devil is in the details."  Conrad said if the amendment is implemented, "every major hospital goes broke."

"I can't possibly support any amendment that does that," he said.

Sen. Jeff Bingaman, D-NM, said he could support a public option, but he disagrees with Rockefeller's approach. "I think there is a problem with providing Medicare reimbursement rates," Bingaman said, echoing the concerns of Conrad.

As senators continue to spar over the public option, two liberal groups are launching a hard-hitting television and Internet ad featuring a young father from Montana. Bing Perrine, 26, who needs a heart operation and is uninsured and deeply in debt, looks straight into the camera and asks Baucus: "Whose side are you on?"

The ad is sponsored by Democracy for America and the Progressive Change Campaign Committee, which say Baucus is too cozy with insurance and health care interests that have contributed to his campaigns and oppose a government plan.

Baucus aide Tyler Matsdorf said the ad falsely implies that the senator doesn't care about the plight of people with pre-existing health problems. It's just that Baucus would address such problems differently than the liberals, Matsdorf said. For example, his plan calls for nonprofit co-ops to compete with the insurance industry independently of the government. Insurers also oppose co-ops.

"Win or lose, it's clear that the strong public interest and support for a public option will be well represented by the supportive senators," said Gerald Shea, a top health care policy expert for the AFL-CIO labor federation. "My sense is that our message about how vital the public plan is to the critically important issue of cost control is beginning to break through the bubble that has surrounded Finance for months."

The wild card in Tuesday's debate is Maine Sen. Olympia Snowe, a moderate Republican. Aides say she's considering offering a compromise that would use the public option as a threat, to be deployed only if private insurers fail to keep premiums in check after a reasonable period of time.

If there's a final bill this year, it's possible that Snowe's idea will be the one to carry the day.

FOX News' Trish Turner and the Associated Press contributed to this report.