Senate Democrats reach healthcare deal on ‘public option’

Reporting from Washington —  Senate Democrats reached what Majority Leader Harry Reid (D-Nev.) called a “broad agreement” Tuesday night that could remove a major obstacle to the massive healthcare bill.

Under the compromise developed by a group of conservative and liberal Democrats, the Senate legislation would no longer include a new government-run insurance program, or “public option,” for Americans who do not get coverage through their employers.

Instead, the government would essentially contract with a nonprofit insurer to provide a nationwide plan that would serve as the public option, according to officials briefed on the discussions. Combined with a vote earlier in the day that rejected efforts to tighten restrictions on public money for abortion, the compromise kept the Senate moving toward Reid’s goal of voting on the healthcare bill before Christmas.

Reid’s office issued a statement saying he was “confident” that he could sell the plan to the Democratic caucus. “This has been a long journey,” he said. “We have confronted many hurdles, and tonight I believe we have overcome yet another one.”

One of the healthcare overhaul’s main goals is to reduce the number of uninsured in the nation, providing coverage to more than 30 million additional Americans.

Low- and moderate-income people who selected the nonprofit plan in a new insurance exchange would qualify for subsidies, just as they would if they selected a commercial plan.

The government would oversee the nonprofit plan, ensuring that it met basic standards for quality and affordability. That provision was designed to satisfy demands from many on the left that the government provide consumers with an alternative to coverage offered by for-profit insurers.

The compromise would also create a mechanism for triggering the creation of a more traditional government-run plan like the one now in the bill, if the nonprofit option does not materialize.

The only Republican to support the bill in committee, Sen. Olympia J. Snowe of Maine, has previously suggested using a trigger, although not necessarily the version in the compromise.

The deal also would open the national Medicare program to uninsured Americans between 55 and 64 as an additional safety net for older workers, many of whom have difficulty buying coverage if they do not get it through work.

Lawmakers involved in the negotiations would not publicly discuss any of the details of their proposed compromise, which they sent to the nonpartisan Congressional Budget Office for analysis.

“It is the true definition of a hybrid,” one advisor to Reid said. “By and large, it’s not a public option, but I think the liberals felt so strongly about getting a bill that allows for comprehensive coverage and meaningful reform, it was worth accepting this. No one believes this is going to be the last word.”

The tentative deal faces an uncertain fate in the full 60-member Democratic caucus, which will have to remain largely united if Democrats are to overcome a GOP-led filibuster and pass a bill before Christmas. Democrats hold 58 seats, and the Senate’s two independents caucus with them. Snowe has said that her favorable vote in committee did not guarantee that she would support the legislation on the floor.

Sens. Russell D. Feingold (D-Wis.) and Bernie Sanders (I-Vt.), both leading liberals, expressed reservations Tuesday evening about any legislation without a government plan. “I do not support proposals that would replace the public option in the bill with a purely private approach,” Feingold said.

And many liberal grass-roots groups and labor unions have been highly critical of the move to strip the government plan from the Senate healthcare bill.

“Using nonprofits to replace a public option won’t work,” a coalition of left-leaning groups said Tuesday in a joint statement coordinated by Health Care for America Now. “In fact, with half of people in private insurance currently enrolled in nonprofit plans, they are part of the problem.”

But lawmakers across the ideological spectrum emerged from the negotiations Tuesday sounding optimistic that a final deal was within reach.

“You’re going to find no one who is happy with everything,” said Sen. John D. Rockefeller IV (D-W.Va.), a leading champion of a new government plan who has been involved in the negotiations.

Sen. Thomas R. Carper (D-Del.), a centrist who has spent weeks trying to help broker a compromise, also said the talks had been fruitful. “I almost wish we had the centrists and the progressives together a bit sooner,” he said after talks broke up.

The possible deal came after the Senate rejected an effort to tighten restrictions against using federal funds for abortion services. That put House and Senate Democrats at odds over how to handle the emotionally charged issue.

The Senate voted, 54 to 45, to kill an amendment offered by Sen. Ben Nelson (D-Neb.) to reinforce a long-standing ban on federal abortion funding. Critics said that the amendment, which was included in the House healthcare bill, would go too far and curb access to abortion coverage even if women bought insurance with their own money.

The vote was a triumph for abortion rights forces and laid bare divisions among Democrats: Seven of them joined most Republicans in backing the antiabortion amendment.

Nelson had indicated in the past that he might not support the healthcare overhaul if his abortion language were rejected. But after the vote he appeared more amenable to compromise. “We’ll see what develops,” he said. “I’ll look at anything.”

The Senate’s abortion vote raised the prospect of a faceoff with the House, where antiabortion Democrats have threatened to kill a final bill if it does not include the tightest funding restrictions. In the Senate, however, antiabortion Democrats generally are not as adamant.

“I believe we can get this divisive issue correct in this bill. We are not there yet,” said Sen. Bob Casey (D-Pa.). He supported Nelson’s amendment but said that its defeat would not turn him against the bill. “I also believe we must pass healthcare legislation through the Senate this month.”

Reid argued passionately that the issue should not derail a major expansion of healthcare access.

“The reason I oppose abortion and the reason I support this historic bill are the same: I respect the sanctity of life,” Reid said. “This is a healthcare bill. It’s not an abortion bill. We can’t afford to miss the big picture.”

When it came to a vote, two Republicans from Maine -- Snowe and Susan Collins -- joined most Democrats and two independents in voting against the abortion amendment. Joining Nelson in supporting the amendment were the other 38 Republicans and six more Democrats: Pennsylvania’s Casey, Evan Bayh of Indiana, Kent Conrad and Byron L. Dorgan of North Dakota, Ted Kaufman of Delaware and Mark Pryor of Arkansas.

janet.hook@latimes.com

noam.levey@latimes.com