Democrats are weighing big expansions of Medicare and Medicaid to break an impasse over the public option. | AP photo composite by POLITICO Public option deal takes shape

A potential deal took shape Monday that could eliminate the public option from the Senate health reform bill, as Democrats weighed big expansions of both Medicare and Medicaid in a bid to break an impasse over the government insurance plan.

But negotiators were still struggling to craft a compromise that could satisfy moderates worried about the too-heavy hand of government — and liberals who would be giving up on their cherished goal of a federal health insurance safety net.


After five days of intensive talks among five moderates and five liberals, the outlines of a compromise aimed at appeasing both ends of the Democratic political spectrum were emerging: a plan designed to expand insurance coverage without creating a new government-run program.

Under the compromise, the public option would be removed from the bill and replaced with a new government-administered national insurance plan similar to the Federal Employee Health Benefits Plan, which serves members of Congress and federal workers.

To sweeten the deal for liberals, people 55 and older would be able to “buy-in” to Medicare and purchase coverage in the popular government program for the elderly. Liberal Democrats such as Sen. Sherrod Brown of Ohio and Sen. John Rockefeller of West Virginia have been pushing the idea for years.

Senate Majority Leader Harry Reid (D-Nev.) told the group they needed to reach a deal by Tuesday night, according to an official briefed on the meeting.

Howard Dean, the former Democratic National Committee chairman, injected the buy-in concept back into the negotiations two weeks ago, according to a Senate aide.

The turning point in the debate occurred over the past few weeks, as some progressives began to question whether the public option had been watered down too much for it to even be effective. Dean called Reid and Sen. Chuck Schumer (D-N.Y.) to suggest that they revisit the Medicare buy-in proposal, which he pushed during his 2004 campaign, the aide said.

Senate Finance Committee Chairman Max Baucus (D-Mont.) said the Medicare buy-in “is the closest proposal thus far that can get the support of 60 senators.”

“Nothing’s final. Nothing’s close to final,” Baucus said, but added: “This just kind of feels like it’s getting legs.”

The negotiating group is also looking to expand Medicaid to cover people with incomes 150 percent above the poverty line, up from 133 percent under the Senate bill, and to impose stronger regulations on private insurers.

The potential compromise was the latest, but perhaps most important, attempt at defusing the highly charged debate over the public option. The emerging deal signals that progressives within that negotiating group have, at least on some level, conceded that the public option will not win 60 votes. Reid needs to resolve the issue in the next few days if he expects to pass the health care bill by Christmas.

“There is push and pull, and we have to find the right balance that satisfies the party as to how much government involvement there should be and how much private-sector involvement there should be,” Schumer said. “That has been the nub of the issue here.”

Among Senate Democrats, the most stalwart liberals and conservative moderates suggested they were at least open to the compromise but needed to see official cost estimates from the Congressional Budget Office as well as the legislative language.

“It’s got some movement,” said Rockefeller, who has been among the most vocal public option proponents. Rockefeller said the negotiators are working to get the group’s signoff by Tuesday to send a package to the CBO.

“But having said that, I just feel like I’ve jinxed it,” he said.

Sen. Mark Pryor (D-Ark.), a moderate who has emerged as a key negotiator in the talks, said, “There are no insurmountable obstacles. We continue to resolve outstanding issues. There are some, but they are resolvable.”

Sen. Ben Nelson (D-Neb.), an undecided moderate, said, “The discussions are going in the right direction, in moving away from a government-run plan. To the extent that they continue to go in that direction is obviously very positive.”

Still, neither side is sold.

Progressive senators reacted more positively to the developments than did activists. Their reaction to the swap of a public option for a national nonprofit insurance plan might have been best captured by a spokeswoman for one of the major groups pushing for a public plan, who wrote on her personal blog: “The latest noncompromise compromise is absolute crap and totally unacceptable.”

The new proposals raised a number of political uncertainties. Would stronger insurance regulations alienate Nelson and Sen. Joe Lieberman (I-Conn.)? Would governors balk at the expansion of Medicaid, which they say severely burdens states?

And how would an expansion of Medicare exacerbate a program that is already headed toward insolvency by 2017? Doctors and hospitals have resisted broadening Medicare and Medicaid because the government reimbursement rates for both programs are lower than private insurance.

“It’s got many of the same problems I have with previous versions of the public option,” said Sen. Kent Conrad (D-N.D.), who contends that hospitals in his state would go bankrupt. “That then ties you to Medicare levels of reimbursements for a whole new population.”

Conrad’s comments drew a sharp rebuke from Rockefeller. “I am really very tired of hearing about that from him,” he said. “It is always about North Dakota. It is never about any other parts of the country. That is what we are trying to do, the best thing for the country.”

Sen. Tom Harkin (D-Iowa) said the group was on the verge of a compromise, possibly by Tuesday afternoon.

“Will it be something that I like? No. But it’s not going to be something that the moderates or the conservatives like either ... It’s going to be one of those things in the middle that doesn’t make everyone happy.”

The ability of the negotiating to reach a compromise would break the deadlock over the public option, but any agreement would still need sign off from Reid and the White House.

For his part, Brown said the public option is not dead.

“It’s not,” Brown said as he left the negotiation session Monday night. “There’s no agreement on anything.”

Chris Frates, Patrick O’Connor and Meredith Shiner contributed to this story.