HEALTH CARE: Sen. Harry Reid sets markers for historic overhaul

WASHINGTON (AP) - Setting up a historic year-end health care debate, Senate Majority Leader Harry Reid unveiled long-awaited legislation Wednesday night to extend coverage to all but 6 percent of eligible Americans and bar private industry from denying insurance because of pre-existing medical conditions.

The Democrat's $849 billion measure is designed to remake the nation's health care system, relying on cuts in future Medicare spending to cover costs - as well as on higher payroll taxes for the well-to-do and a new levy on patients undergoing elective cosmetic surgery.

Aides said the mammoth, 2,074-page bill would reduce deficits by $127 billion over a decade and by as much as $650 billion in the 10 years that follow, citing as-yet-unreleased estimates by the Congressional Budget Office.

"Tonight begins the last leg of this journey," said Nevada Sen. Reid, less than two weeks after the House approved its version of a sweeping remake of the health care system- and nearly 10 months after President Barack Obama's Inauguration Day summons to action.

Obama welcomed Reid's action, saying, "Today, thanks to the Senate's hard work, we're closer than ever to enacting solutions to these problems. I look forward to working with the Senate and House to get a finished bill to my desk as soon as possible." There was no mention of Obama's longtime goal of signing legislation by year's end.

Republicans vowed a protracted struggle to block the legislation and deny the president a victory that would cap a tumultuous first year in office.

"This bill has been behind closed doors for weeks," said Sen. Mitch McConnell of Kentucky, the Republican leader. "Now, it's America's turn, and this will not be a short debate. Higher premiums, tax increases and Medicare cuts to pay for more government. The American people know that is not reform."

An early showdown on the Senate floor is expected by week's end.

Reid's Senate measure would require most Americans to carry health insurance and would provide hundreds of billions of dollars in subsidies to help those at lower incomes afford it. Medium and large companies would not be required to offer coverage, but they would be forced to pay fees if the government ended up subsidizing their employees' insurance.

Beginning in 2014, the bill would set up new insurance marketplaces - called exchanges - primarily for those who now have a hard time getting or keeping coverage. Consumers would have the choice of purchasing government sold insurance, an attempt to hold down prices charged by private insurers.

After weeks of secretive drafting, Reid outlined the legislation to rank-and-file Democratic senators at a closed-door meeting. "Everyone was positive," said Sen. Amy Klobuchar, D-Minn.

That didn't mean there weren't problems - far from it. At his news conference, Reid pointedly refrained from saying he had the 60 votes necessary to propel the bill over its first hurdle.

Reid met privately earlier in the day with Sens. Ben Nelson of Nebraska, Mary Landrieu of Louisiana and Blanche Lincoln of Arkansas, moderate Democrats who have expressed concerns about the measure.

Nelson later issued a statement strongly suggesting he would vote with fellow Democrats on an initial showdown expected within days. Aides have said privately that Reid decided to retain an existing antitrust exemption for the insurance industry as a way of satisfying the Nebraskan's concerns.

Landrieu said, "I'm not going to be for anything that doesn't drive down costs over time."

Lincoln, the only one of the three who faces re-election next year, told reporters, "We'll wait and see."

With the support of two independents, Democrats have 60 seats, the precise number needed to choke off any delaying tactics by the 40 Republicans who appear united in opposition to the bill in its current form.

In general, Reid proposed an outline that is similar to the House-passed bill, but there were important differences.

He called for an increase of a half percentage point in the Medicare payroll tax for individuals with income over $200,000 a year, $250,000 for couples.

He also included a tax on high-value insurance policies, meant to curb the appetite for expensive care.

The House bill contains neither of those two provisions, relying on an income tax surcharge on the wealthy to finance an expansion of coverage.

Reid's measure also calls for hundreds of billions of dollars in cuts in future Medicare spending, an attempt to satisfy Obama's call to curtail the growth of health care spending that is fiercely opposed by Republicans.

On another controversial issue, Sen. John Kerry, D-Mass., told reporters Reid had decided to require the side-by-side sale of insurance policies that cover abortion services and do not, an attempt to satisfy both sides. That is far less restrictive than a House-passed provision that left liberal Democrats angry.

Ahead lie weeks - if not more - of unpredictable maneuvering on the Senate floor, where Reid and his allies will seek to incorporate changes sought by Democrats and repel attempts by Republicans to defeat the legislation and inflict a significant political defeat on the president.

Reid released his legislation more than a week after the House approved its version of the health care bill on a near party-line vote of 220-215.

According to estimates from the Congressional Budget Office, that House bill, with a price tag of about $1.2 trillion, would result in coverage for tens of millions of uninsured, and provide 96 percent of the eligible population with insurance.

Two Senate committees approved different versions earlier in the year, and while Reid has said he would produce a blend of the two proposals, in fact he had a virtual free hand to come up with a plan that could command the 60 votes needed to pass.

Anticipating a major struggle, the White House deputized Interior Secretary Ken Salazar and former Senate Majority Leader Tom Daschle to join Vice President Joe Biden in trying to clear the way for the bill's approval over the next several weeks.

Salazar, a former Colorado senator, is viewed as a bridge to moderate Democrats who are far outnumbered by liberals inside the Democratic caucus.

Daschle was Obama's first choice for secretary of health and human services, a position from which he was to try and oversee the administration's drive to enact health care legislation. He withdrew his nomination when it was disclosed he had not paid more than $120,000 in federal taxes over several years.

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Associated Press writers Ricardo Alonso-Zaldivar and Erica Werner contributed to this report.