Can Public Option Survive? Negotiations Resume in Senate

ABC News' Z. Byron Wolf reports: Bipartisan health care negotiations resumed this morning among members of the Senate Finance Committee.

Three Republicans on that committee, ranking member Charles Grasley of Iowa, Olympia Snowe of Maine and Orrin Hatch of Utah have been working hard to find a common ground with Democrats on the committee.

All three, currently in the Senate office of Finance Committee Chairman Max Baucus, D-Mont., agree that progress is being made, but it is unclear when they could emerge with a bipartisan bill.

Grassley said this morning that a bipartisan bill could be presented this week if the non-partisan Congressional Budget Office (CBO) returns an acceptable cost estimate and Grassley, Snowe and Hatch all sign off on the policy proposals.

Senators are scheduled to leave Friday for 4th of July recess and Grassley was unsure whether senators on the committee would stay in town to continue negotiations if a deal is not struck by then.

Finance Committee negotiators have trimmed $300 billion from the bill, which initial had an estimated price tag of $1.6 trillion.

But, as Grassley said upon heading into this morning's meeting, "that still leaves us with a $200 or $300 billion problem" if they want to get the price tag to $1 trillion over 10 years, as promised.

Other outstanding issues include a mandate that employers provide health insurance to employees or pay into a government system.

Known as "pay or play," Grassley said a strict mandate for all employers is off the table in bipartisan negotiations, but said the Finance Committee may still require this of companies with more than 100 employees.

Unlike the HELP Committee, which has been holding very partisan public markups of its own incomplete proposal for the past week, the Finance Committee, in its closed door but bipartisan negotiations, seems to be abandoning a public health insurance option.

Snowe has said she would support a public option if the private market failed to provide affordable and quality insurance to all Americans. That could be provided as a back-up, triggered by a failure in the market. Snowe is said to be working on such a back-up public option with Sen. Chuck Schumer, D-N.Y.

But it is unclear whether Snowe would support a public option like the one that is expected to be proposed by the HELP Committee. Grassley said he doubted any Republican would support a financing mechanism proposed by the Finance Committee to pay for the policy proposal from the HELP Committee, with its potential "pay or play" for employers and a possibly private insurance market-strangling public option.

As for paying for health care reform, Grassley said proposals on the table include capping the tax-free status of benefits provided by employers, at the cost associated with federal benefits like those lawmakers get plus 10 percent, or about $17,000 per year worth of benefits. The cost of any benefits above those levels would be taxed under that proposal, which according to Grassley, is still on the table.

Democrats, for the most part but with some exceptions, clearly prefer the HELP committee policy proposal.

Democratic leaders in the Senate met last night with White House Chief of Staff Rahm Emanuel, who came to Capitol Hill to strategize about how to reach a bipartisan bill and still find something palatable to the Democratic rank and file.

Grassley said this morning that he expected an update from Baucus on what Democrats could accept in the way of a bipartisan proposal.

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