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Senate Passes Measure to Overhaul Health-Care System


By Nicole Gaouette, Catherine Dodge and Ryan J. Donmoyer

(Bloomberg)—The Senate approved legislation that would make the broadest changes to the U.S. health-care system in decades, advancing President Barack Obama's top domestic priority after months of partisan wrangling.

The Senate voted 60-39, with all Democrats and two independents backing an $871 billion measure that would extend coverage to tens of millions of uninsured Americans. Republicans opposed the legislation, saying it would raise taxes, widen the federal deficit and hurt private companies such as Hartford, Connecticut-based Aetna Inc.

The legislation "brings us toward the end of a nearly century-long struggle to reform America's health-care system," Obama said at the White House before leaving for a Christmas vacation in Hawaii. "We can't doom another generation of Americans to soaring costs and eroding coverage and exploding deficits."

Senate Majority Leader Harry Reid, a Nevada Democrat, called the early-morning vote "a victory for the American people."

His counterpart, Republican Leader Mitch McConnell, of Kentucky, pledged to continue fighting a measure he said doesn't solve the problem of skyrocketing health-care costs.

"My colleagues and I will work to stop this bill from becoming law," he said.

Seeking Compromise

The Senate and House must now work together on a compromise between their two versions, a process that Democrats want to finish before the president's State of the Union address in late January or early February. Negotiations will center on the different tax proposals in each measure, provisions on abortion and a new government-run insurance program that's included in the House bill and not the Senate's.

The Obama administration is aiming at completing a compromise around the time of the speech and before next year's budget is presented to Congress in early February, said an administration official speaking on condition of anonymity.

Reid and House Speaker Nancy Pelosi of California plan to talk next week, and aides from both chambers will likely start working on the legislation during the first week of January, said Reid's spokesman Jim Manley.

Expanded Coverage

Both bills represent the biggest expansion of health coverage since Congress created the Medicare program for the elderly in 1965 and would restructure a system that represents about 18 percent of the world's largest economy. Obama has linked the effort to curb rising medical costs to the long-term health of the U.S. economy.

The Senate's passage follows a debate that dominated Capitol Hill for the year and was marked by partisan rancor. Reid was forced to mend rifts within his own party that threatened to derail the measure.

Republicans rejected attempts by Democrats to hold the vote on final passage earlier in the week. It was the first time the Senate held a vote on Christmas Eve since 1895, according to the Senate Press Gallery.

Democrats paid tribute to the late Senator Ted Kennedy, the Massachusetts Democrat who made health care a top priority during almost five decades in Congress. His widow, Victoria Kennedy, was in the Senate gallery for the vote and was hugging people, laughing and crying.

"As we stand at the finish line here in the Senate, we are not alone," said Senator Max Baucus, a Montana Democrat. "We stand with those who have blazed the trail ahead of us, tireless champions of reform, such as our good friend Ted Kennedy."

'Stride Forward'

Representative John Dingell, a Michigan Democrat who is the longest-serving House member in history and who presided over House debate on Medicare, also watched from the gallery. "It is a major incremental step," Dingell said of the vote. "It's a stride forward to meet a large unmet need."

Like a $1 trillion House bill passed on Nov. 7, the 10-year Senate plan requires that Americans get insurance or pay a penalty, while at the same time requiring insurers to accept all comers, regardless of preexisting conditions. It offers expanded government aid for the poor and sets up new online purchasing exchanges so the uninsured can shop for policies.

Minnetonka, Minnesota-based UnitedHealth Group Inc. and other health insurers would get millions of new customers, also a benefit for companies such as medical-device maker Medtronic Inc. of Minneapolis and drugmaker Pfizer Inc. of New York. At the same time, their industries would face billions of dollars in new fees.

Health Stocks

Health-insurer stocks rallied earlier this week after the Senate bill cleared its first procedural hurdle. Changes from an earlier version, including a one-year delay in the planned fees and the lack of a competing new government insurance program, or public option, boosted the shares.

The 13-member S&P Supercomposite Managed Health Care Index jumped 2.9 percent on Dec. 21. The index today fell 0.3 percent. The S&P 500 Pharmaceuticals Index of 11 drugmakers was little changed, after rising more than 15 percent this year.

Republican Senator Olympia Snowe of Maine said the party- line vote reflected the intensely partisan and politicized atmosphere in Washington.

'Unforgiving Environment'

"It's a sad commentary that we can't create the kind of environment to create consensus," Snowe said in an interview. "It's an unforgiving environment to craft consensus."

Obama and the Democratic leadership worked hard to court Snowe, who in October voted for the measure in the Finance Committee. There were days when she spoke to the president twice, she said. She had wanted more time to review the legislation before the final vote.

Senator Joseph Lieberman, a Connecticut independent, said that as the House and Senate bills are merged, there likely would be further attempts to make the measure more appealing to lawmakers with reservations.

Republicans expressed hope that they could stop the bill.

"We did everything we could to illuminate the flaws and problems with the rush to judgment," Senator Johnny Isakson, a Georgia Republican, said in an interview. "All of us want to improve access to health care and affordability, but we don't want to break the bank."

To contact the reporters on this story: Nicole Gaouette in Washington at ngaouette@bloomberg.net; Catherine Dodge in Washington at cdodge1@bloomberg.net; Ryan J. Donmoyer in Washington at rdonmoyer@bloomberg.net.

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