Democrats reconsider healthcare possibilities

President Obama and congressional Democrats are rethinking their healthcare strategy in the wake of a Republican victory in the Massachusetts Senate race, giving serious consideration to abandoning the comprehensive approach in favor of incremental steps that might salvage key elements of the package.

Now without a filibuster-proof Senate majority, which was lost in the GOP victory, some Democrats believe they could win Republican support for limited changes to the healthcare system, including restrictions on insurance companies and new initiatives to restrain costs.

Obama appeared to endorse such an approach Wednesday. “I would advise that we try to move quickly to coalesce around those elements of the package that people agree on,” the president said in an interview with ABC News.

“We know that we need insurance reform, that the health insurance companies are taking advantage of people,” Obama said. “We know that we have to have some form of cost containment because if we don’t, then our budgets are going to blow up. And we know that small businesses are going to need help so that they can provide health insurance to their families. Those are the core -- some of the core -- elements of, to this bill.”

While nearly all Republicans fought the Democratic healthcare legislation last year as too intrusive and too costly, some have indicated support for parts of the package, including ending the practice by some insurance companies of terminating consumers’ policies when they get sick.

“I believe that if the president reached out to a group of Republicans, including our leaders . . . the president would find that Republicans are willing to sit down with him and talk about how to achieve a bipartisan bill,” said Maine Sen. Susan Collins, a moderate Republican who supported the president’s economic recovery bill last year but voted against the healthcare overhaul.

The U.S. Chamber of Commerce, which has spent millions of dollars fighting the Democratic healthcare legislation, also urged a scaled-back approach Wednesday.

House Speaker Nancy Pelosi (D-San Francisco) and Senate Majority Leader Harry Reid (D-Nev.) spent the day Wednesday discussing their options with rank-and-file lawmakers, many of whom saw the Massachusetts result as a repudiation of the healthcare effort.

“We’re concerned about everything going on in the country, and we’re not going to rush to judgment,” Reid told reporters.

“People are very unsettled,” said Sen. Dianne Feinstein (D-Calif.), who was among the lawmakers urging a slower approach. “They are very worried. There is anger. There is angst. . . . People do not understand [the healthcare bill]. It is so big, it’s beyond their comprehension.”

Sen. Mary L. Landrieu (D-La.) said that Massachusetts voters seemed to be sending the same message she heard from her own constituents: “They think parts of the healthcare debate are overreaching.”

Rep. James E. Clyburn (D-S.C.), the No. 3 Democrat in the House, said that he was open to a more incremental approach to healthcare, noting that Congress rarely enacts major policy changes in a single sweeping bill.

“Medicare was not done in one fell swoop,” he said of the federal healthcare program for the elderly created in 1965. “You lay a foundation. You get things done.”

But moving incrementally has its own dangers, since so many parts of the healthcare system are interrelated. Requiring insurance companies to cover more people, for example, would probably push up premiums unless more healthy people are required to buy insurance. Such a mandate could create problems unless the government provides subsidies to help people buy insurance. And that, in turn, requires new taxes or cuts to Medicare or other popular federal programs, which are always controversial.

Democratic leaders are still exploring whether the House could pass the healthcare bill that the Senate approved just before Christmas, obviating the need for another vote on major healthcare legislation in the Senate, where Democrats would no longer be able overcome a Republican filibuster.

The two chambers could then take up a separate package of changes to the Senate bill through a process known as budget reconciliation, which requires only a simple majority in the Senate.

Advocates of this approach believe that the package could scale back the new tax on high-end “Cadillac” health plans, boost insurance subsidies for low- and moderate-income Americans and make other changes to satisfy House Democrats’ complaints about the Senate legislation.

The strategy got an important endorsement from Service Employees International Union President Andy Stern, a key proponent of a healthcare overhaul who is very influential with many liberal Democrats.

“The Senate bill can serve as the foundation for reform and include at minimum the improvements the administration, House and Senate have negotiated,” Stern said in a posting on the liberal website Huffington Post. “We cannot squander the opportunity to make real progress.”

noam.levey@latimes.com

janet.hook@latimes.com

Times staff writer Richard Simon in Washington contributed to this report.