Senate Passes Measure to Overhaul Health-Care System

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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.

With assistance from Kristin Jensen, Jonathan D. Salant and James Rowley in Washington. Editors: Bob Drummond, Robin Meszoly