Image: Bingaman and Conrad
Chip Somodevilla  /  Getty Images
Senate Finance Committee member Sen. Jeff Bingaman listens to Sen. Kent Conrad during a session on health care reform on Capitol Hill on Thursday.
updated 9/24/2009 6:23:04 PM ET 2009-09-24T22:23:04

Democrats agonized Thursday over how to soothe worried seniors but decided one idea was too risky because it could antagonize the powerful drug industry whose support is critically needed for President Barack Obama's broader overhaul.

The Senate Finance Committee defeated a Democratic amendment that would have gradually closed the coverage gap in the Medicare drug benefit at the expense of drugmakers. Nonetheless, another proposal to shield seniors in Medicare private insurance plans from benefit cuts remained alive.

Thanks to Medicare, virtually all seniors have reliable insurance coverage — and most are happy with it. But with Democrats planning to finance an overhaul by cutting $500 billion from Medicare and Medicaid, many seniors are worried their benefits will be devalued. Republicans have seized on the issue, forcing Democrats to scramble.

In its third day of deliberations, the committee voted 13-10 to reject an amendment by Sen. Bill Nelson, D-Fla., that required drugmakers to rebate $106 billion over 10 years to the government for medications used by low-income Medicare beneficiaries.

Three Democrats, Bob Menendez of New Jersey, Tom Carper of Delaware and Chairman Max Baucus of Montana, joined Republicans in voting against the proposal. Menendez and Carper warned that the amendment could undermine support for Obama's push to cover the uninsured.

Clout of drug industry
The drug industry signed on early to Obama's goal, pledging $80 billion in savings over 10 years, including a 50 percent discount for seniors who fall into the "doughnut hole" coverage gap. Squeezing the drug companies for even more proved to be too threatening to the fragile political coalition Obama is trying to hold together.

Menendez told senators that Nelson's amendment "may very well undermine the essence of this agreement" and "put us in a position that makes it very difficult to move forward."

Pharmaceutical companies are major employers in the home states of Menendez and Carper. The White House lobbied against the amendment, senators said, underscoring the industry's clout.

Carper said after the vote he had received no direct warning from the drug companies that they would abandon the deal if the amendment passed. "I know I would," he added. "I'd say, 'Take a hike.' "

Image: Baucus and Grassley
Harry Hamburg  /  AP
Senate Finance Committee Chairman Sen. Max Baucus, D-Mont., left, and the committee's ranking Republican Sen. Charles Grassley, R-Iowa.

Meanwhile, another Nelson amendment would preserve extra benefits such as eyeglasses and dental care for many seniors currently enrolled in Medicare private insurance plans. The private plans now get a bonus that Democrats want to cut.

"I don't think it's a good thing to go in and tell senior citizens, 'What you have now, you have to give up,' " said Nelson. "That is a nonstarter."

The Finance Committee is the last of five congressional panels to debate health care legislation that is atop Obama's domestic agenda. While the bill omits several provisions backed by liberals, Baucus hopes to hold support from all Democrats on the panel, and perhaps pick up support from Republican Sen. Olympia Snowe of Maine.

Snowe has yet to disclose her intentions, and while she sometimes sided with fellow Republicans, she also has voted with Democrats at other points.

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Vote next month?
At its core, the bill is designed to expand health insurance coverage to millions of people who lack it, employing a new system of federal subsidies for lower-income individuals and families and establishing an insurance exchange in which coverage would have federally guaranteed benefits. Insurance companies would be prohibited from refusing to sell insurance based on an individual's health history, and limits would be imposed on higher premiums based on age.

At the same time, Baucus — in keeping with Obama's wishes — drafted legislation that would reduce the skyrocketing rate of medical spending overall. The bill's price tag is about $900 billion over a decade.

Legislation already has cleared three committees in the House, and the leadership is slowly piecing together changes that could lead to a vote next month.

House Democratic leaders were groping for consensus Thursday as they worked to merge the legislation into a single bill to bring to the floor. They hope to finish by next week but plenty of issues were still unresolved, from whether to strengthen measures to prevent illegal immigrants from getting government-funded coverage, to the shape of a new public insurance plan that would compete with private companies.

Senate Majority Leader Harry Reid, D-Nev., has said he intends to bring legislation to the Senate floor as soon as possible. Whatever measure emerges from the Finance Committee must be blended with a bill that cleared the Senate Health, Education, Labor and Pensions Committee. Baucus has said he wants to finish this week, but it may take longer.

Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Video: Tempers flare in health debate

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