Two Democrats Spearheading Health Bill Are Split

A significant split has developed between the two Democratic senators leading efforts to remake the nation's health care system. They disagree over the contours of a public health insurance plan, the most explosive issue in the debate.

One of the senators, Edward M. Kennedy of Massachusetts, reasserting himself after months of treatment for brain cancer, made clear this week that he favored a robust public health care plan -- a government-sponsored entity that would compete with private insurers.

As a starting point for his bill, Senator Kennedy favors a public plan that looks like Medicare, the government-run program for older Americans created in 1965, when he was a young senator.

By contrast, Senator Max Baucus, the Montana Democrat who is chairman of the Finance Committee, has been working for months with the panel's senior Republican, Charles E. Grassley of Iowa, in the hope of forging a bipartisan bill, which would probably play down the option of a public plan.

Grassley opposes creation of a new government insurance program and says "we cannot afford the public health plan we have already," referring to Medicare.

President Obama has championed a public plan, saying it would help "keep the private sector honest," though he has indicated he will be flexible on the details.

House Democratic leaders, including three committee chairmen drafting the House bill, are close to Senator Kennedy's position.

Democrats on the Finance Committee said Senator Baucus was exploring a possible compromise. Under this proposal, the public plan would be created only if private insurance companies had not made meaningful, affordable coverage available to all Americans within several years.

Senate Democrats said they believed that Mr. Baucus might settle for this "fallback plan," which could win some support on both sides of his committee, from people like Senator Ron Wyden of Oregon, a Democrat, and Senator Olympia J. Snowe of Maine, a Republican.

Passage of comprehensive health legislation this year is a top priority for Senators Baucus and Kennedy, the chairman of the Committee on Health, Education, Labor and Pensions. So they may be able to resolve their differences, aides said.

The split reflects not only political differences between the two men but also differences between their committees, racing to write the most ambitious health care legislation in the nation's history.

Over all, Democrats on the Finance Committee tend to be more moderate than those on the health committee, which includes more Democrats who identify themselves as liberals or progressives. The two Senate panels are drafting separate bills that are to be merged before going to the Senate floor.

Describing his plan this week, Mr. Kennedy said: "Americans want the choice of enrolling in a health insurance program backed by the government for the public good, not private profit. So that option will be available." Consumers, he said, will be able to enroll in "a publicly sponsored and guaranteed plan."

Senator Charles E. Schumer of New York, the third-ranking member of the Senate Democratic leadership, said Friday, "It's pretty certain that Senator Kennedy could not support the Baucus plan, and Senator Baucus could not support the Kennedy plan." But Senator Schumer said "it's possible" that both could support a version he is developing.

UnderSchumer's proposal, any new public plan would have to comply with all the rules and standards that apply to private insurance. A public plan would also have to be self-sustaining, would have to rely on premiums and would not have a pipeline into the federal Treasury.

Senator Baucus said last month that while a government-run insurance plan was still on the table, "it might be a bit on the side of the table."

Erin Shields, a spokeswoman for Senator Baucus, said Friday, "The Finance Committee has not decided or settled on what a public plan option would look like, if one were to be included in the bill."

Public opinion polls suggest that many consumers would like to have the choice of a public plan. But insurance companies and Republican lawmakers say a public plan could drive private insurers out of business and lead eventually to a single-payer system run by the government.

Supporters of a public plan have been putting pressure on Senator Baucus. Kennedy and 28 other senators signed up last week as co-sponsors of a resolution supporting creation of a public insurance option.

"Health care reform must include insurance reform, and health insurance reform must include the option of a federally backed health insurance plan," said Senator Sherrod Brown, Democrat of Ohio, the chief sponsor of the resolution.

Many doctors and hospital executives fear that a public plan would pay them at Medicare rates, which are often lower than those paid by commercial insurers. Under Senator Kennedy's proposal, the government-sponsored plan might pay more than Medicare, perhaps 10 percent more, but less than private insurance.

Under the House bill, the public plan would use Medicare fee schedules in setting payments to health care providers. Republicans denounce such rate-setting techniques as price controls or "administered prices."