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Senate Finance Committee Dropping Dem Health Goals: AP

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WASHINGTON — After weeks of secretive talks, a bipartisan group in the Senate edged closer Monday to a health care compromise that omits two key Democratic priorities but incorporates provisions to slow the explosive rise in medical costs, officials said.

These officials said participants were on track to exclude a requirement many congressional Democrats seek for large businesses to offer coverage to their workers. Nor would there be a provision for a government insurance option, despite President Barack Obama's support for such a plan.

The three Democrats and three Republicans from the Senate Finance Committee were considering a tax of as much as 35 percent on very high-cost insurance policies, part of an attempt to rein in rapid escalation of costs. Also likely to be included in any deal was creation of a commission charged with slowing the growth of Medicare through recommendations that would take effect automatically unless overturned by Congress.

"We're going to get agreement here," Sen. Max Baucus, D-Mont., the Finance Committee chairman, said Monday. "The group of six really wants to get to 'yes.'"

Obama has outlined two broad goals for legislation he is struggling to win from Congress: expansion of health insurance coverage to millions who lack it, and reining in increases in costs.

Like bills drafted by Democrats, the proposal under discussion by the six Finance Committee members would bar insurance companies from denying coverage to any applicant. Nor could insurers charge higher premiums on the basis of pre-existing medical conditions.

But it jettisons other core Democratic provisions in a reach for bipartisanship on an issue that has so far produced little.

The effort received a boost during the day from the U.S. Chamber of Commerce, normally a close ally of Republicans. In a letter to committee leaders, the business group called for the panel to "act promptly, preferably before" the Senate's scheduled vacation at the end of next week. In doing so, the business organization dealt a blow to the Senate Republican Leader Mitch McConnell of Kentucky and other GOP lawmakers who have called repeatedly for Democrats to slow down.

In yet another boost for the drive to enact legislation, PhRMA, which represents drug companies, has purchased more than $500,000 worth of television ads to air during the week in nine states.

Obama's top domestic priority has suffered numerous setbacks in recent weeks, and Republicans have stepped up their criticism. A Senate vote has been postponed until September. Administration and Democratic leaders hope to show significant progress before lawmakers begin their monthlong recess in hopes of regaining momentum.

In the House, the leadership sought to allay concerns among the rank and file. Speaker Nancy Pelosi, D-Calif., said, "We're on schedule to do it now or do it whenever," when asked whether the House would complete its bill before lawmakers leave at the end of the week for their summer break.

A group of seven fiscally conservative House Democrats who've held up action in the key Energy and Commerce Committee by demanding more cost savings and other changes to the House bill met until nearly 11 p.m. with the committee's chairman, Rep. Henry Waxman. Waxman made them an offer intended to address their concerns and they planned to meet Tuesday to decide how to answer, they said, but didn't give details.

In the Senate, officials stressed that no agreement has been reached on a bipartisan measure, and said there is no guarantee of one. They also warned that numerous key issues remain to be settled, including several options to pay for the legislation.

Also unsettled is the question of whether the legislation should address the issue of abortion.

The officials spoke on condition of anonymity, saying they were not authorized to discuss matters under private negotiations.

They said any legislation that emerges from the talks is expected to provide for a nonprofit cooperative to sell insurance in competition with private industry, rather than giving the federal government a role in the marketplace.

Obama and numerous Democrats in Congress have called for a government option to provide competition to private companies and hold down costs. White House spokesman Robert Gibbs said during the day, "I don't believe that the president has come down (on) one versus the other in terms of denoting co-ops equal to or above public option."

One of the senators involved in the talks, Olympia Snowe, R-Maine, confirmed that co-ops are the preferred approach. "It's safe to say that'll probably remain in the final document," she said.

Officials also said a bipartisan compromise would not subject large companies to a penalty if they declined to offer coverage to their workers. Instead, these businesses would be required to reimburse the government for part or all of any federal subsidies designed to help lower-income employees obtain insurance on their own.

"We don't want to undermine (employer coverage) or create a perverse incentive where employers potentially drop coverage because their employees can get subsidies," Snowe said.

Democratic-drafted legislation in the House includes both a penalty and a requirement for large companies to share in the cost of covering employees.

The senators involved in the negotiations are all members of the Senate Finance Committee, and include Baucus and Chuck Grassley, R-Iowa, the senior Republican. Others participating are Democratic Sens. Kent Conrad of North Dakota and Jeff Bingaman of New Mexico, and Republicans Snowe and Mike Enzi of Wyoming.

They have met for hours in recent weeks in Baucus' office, joined by aides and outside advisers such as actuaries summoned to explain arcane details of insurance. Douglas Elmendorf, head of the Congressional Budget Office, has also attended.

Baucus has been under intense pressure from the White House and Senate Democrats in recent weeks to convene the committee to vote out legislation. He has so far declined to do so, opting to give the bipartisan negotiations as much time as needed to succeed.

Several Democratic officials have said he recently pledged to Majority Leader Harry Reid, D-Nev., that the committee would meet next week to vote on legislation, a timetable that implies time is growing short for the bipartisan group to wrap up its work.

Much of the cost of the proposal would come from curbing the growth in fees to insurance companies and other providers under Medicare.

But congressional aides in both parties as well as lobbyists said a proposal limiting Flexible Savings Accounts to $2,000 annually is also a strong possibility. FSAs permit the use of pretax income to pay for items such as health care and child care.

Negotiators also are considering fees on the manufacturers of medical devices and on the makers of both brand name and generic drugs coming onto the market.

To cut down on the cost of the bill, the bipartisan group may include only one year of a long-term plan to adjust reimbursement fees under Medicare.

Officials said the legislation under discussion in a series of private meetings would likely cost under $1 trillion, include an expansion of Medicaid, and provide federal subsidies for individuals and families up to 300 percent of poverty to spread health care more broadly.

Individuals would have a mandate to buy affordable insurance.

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Associated Press writers Ricardo Alonso-Zaldivar and Erica Werner contributed to this report.

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