Trying to cut cost of overhaul

WASHINGTON - Jolted by cost estimates as high as $1.6 trillion, Senate Democrats agreed yesterday to scale back planned subsidies for the uninsured and sought concessions totaling hundreds of billions of dollars from industry to defray the cost of sweeping health-care legislation.

At the same time, key Democrats disagreed openly among themselves over a proposed tax on health-insurance benefits to pay for expanding coverage to the uninsured.

And a compromise with Republicans over a role for government in the insurance marketplace remained elusive.

Despite numerous uncertainties, Sen. Christopher Dodd (D., Conn.) said the Senate Health, Education, Labor and Pensions Committee would begin formal work today on legislation to provide "successful, affordable, quality health care."

The meeting would mark the first public drafting session in either chamber on legislation to control the costs of health care while expanding coverage to the tens of millions who lack it - a goal that President Obama has placed atop his domestic agenda.

Separately, the Senate Finance Committee is expected to begin work next week on a companion measure. Several officials said the Congressional Budget Office had issued a cost estimate of $1.6 trillion, with only about $560 billion paid for. They spoke on condition of anonymity, saying the matter was confidential.

Finance Committee Chairman Max Baucus (D., Mont.) dismissed the estimates as outdated, and officials predicted the final bill would come in under $1 trillion.

Sen. Kent Conrad (D., N.D.) said, "It is clear there have got to be changes made to make the whole package affordable."

In a brief interview, Baucus also disclosed he was "very close" to agreement with a handful of industry groups for them to accept hundreds of billions of dollars less in Medicare and Medicaid fees than they are now projected to receive. He did not provide a specific savings figure.

Numerous officials said cost constraints were forcing Democrats to refine their plans of offering federal subsidies to help the uninsured buy health coverage.

To pay for the legislation, Baucus has signaled he intends to propose a tax on insurance benefits for individuals with the costliest insurance coverage, possibly plans with premiums totaling more than $15,000 between employer and employee combined. Obama campaigned aggressively against the idea when his Republican rival, Sen. John McCain, proposed it during their presidential campaign.

While Obama has recently signaled flexibility on the issue, Dodd criticized it for potentially penalizing individuals and families at a time they are under financial pressure.

"I'm not attracted to that idea," he said.

Also yesterday, Health and Human Services Secretary Kathleen Sebelius stressed that Obama was open to compromise on a public insurance plan. She spoke positively of a proposal for consumer-owned cooperatives, which she said could receive seed money from the Treasury but then be free of control.

She predicted that in the end, the insurance industry would blink first in a showdown over the issue.

"I think they understand there's a lot of momentum both in the House and in the Senate for something to pass," she said, "and they'd much rather be inside the room, having those discussions, and helping to shape it as much to their liking as they possibly can."