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Baucus Leans Toward Insurance Co-op Idea for Health Overhaul

By Alex Wayne, CQ Staff

June 11, 2009 -- The Senate Finance Committee's version of health care legislation, to be revealed next week, will include some form of a public plan and is likely to call for a system of government-organized insurance "co-operatives" across the country, Chairman Max Baucus said Thursday.

"I am inclined, and I think the committee is inclined, toward it," Baucus said. "It's got to be written in a way that accomplishes the objective of the public option, even though it itself is not public."

In the panel's hour and a half discussion on the concept, which would be modeled after a proposal by Senate Finance Chairman Kent Conrad, D-N.D., most committee Republicans held fast in their opposition to any public plan in health care overhaul legislation. Conrad proposes setting up a system of publicly owned "co-ops" to offer health insurance, rather than a centrally controlled federal plan.

"I think it all smacks of a government-run plan that really won't work," said Orrin G. Hatch, R-Utah.

The Democrats' proposed "public plan option" is the most controversial issue in the health care debate. Democrats say a public plan will force private insurers to reduce their costs and treat their customers better. But most Republicans, insurers and business groups oppose the idea, including Conrad's plan.

Maine's Olympia J. Snowe is one committee Republican, however, who supports Conrad's idea of co-operatives, noting that some states already have insurance co-ops. She said she also would like to see a stronger, government-run plan as a "fallback" option if many Americans continue to lack access to affordable coverage.

Baucus faces difficulties on his left, as well. Charles E. Schumer, D-N.Y., said that the co-op alternative must meet certain conditions, including that "it has to be national." Hatch said that Schumer told committee members he wanted the national co-op to be founded and backed by the government.

"It has to have a significant infusion of federal dollars right from the start, so it has the clout to compete against the insurance companies," Schumer said.

Baucus said the committee still awaits cost estimates on its legislation from the Congressional Budget Office; some of CBO's "scores" are due on Monday. A draft version of his bill will be released Wednesday, Baucus said, and the committee will begin debating it on June 23. Baucus said he expects the markup to extend all week.

Republicans expressed unease about that schedule. Snowe said she had urged Baucus to be "flexible" about the timing of a markup, and Hatch said "they're pushing it unmercifully fast." But Hatch said that he understood Baucus felt pressure from Democratic leaders to complete the bill.

"I think we've finally realized as a group, a committee, that the time table I've laid out is about the only option we have," Baucus said.

His chief of staff, Russell Sullivan, told reporters that the draft legislation probably will not be complete because committee members continue to wrestle with issues such as the public plan and, crucially, how to pay for the cost of the bill.

The legislation is expected to include some modification of the tax treatment of employer-sponsored benefits. Currently, employee health plans are excluded from income taxes. Capping or otherwise limiting the exclusion could raise hundreds of billions of dollars to pay for an overhaul.

Richard Rubin contributed to this story.

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