Obama seeks Republican agreement at health summit

After months of heated battles over healthcare reform in Congress, leaders in both parties found few areas of agreement in the early exchanges of a day-long meeting that participants said held little hope for compromise.

Obama said healthcare reform was crucial to bolstering the ailing U.S. economy and urged lawmakers to go beyond political theater and partisan finger-pointing.

What I'm hoping to accomplish today is for everybody to focus not just on where we differ, but focus on where we agree, he told congressional leaders.

And then let's talk about some areas where we disagree and see if we can bridge those gaps. I don't know that those gaps can be bridged, he said.

Republicans said Obama's healthcare overhaul was too costly and would mean more taxes, more regulations and higher premiums for consumers. They said Washington was incapable of imposing workable regulations on one sixth of the economy.

We do not agree about the fundamental question of who should be in charge, Republican Senator Jon Kyl said, painting it as a choice between Washington bureaucrats and patients. There is a big difference in our approaches.

Republicans stacked the 2,700-page bill on their table to show its size and said their opposition represented the will of a majority of Americans.

'START OVER'

We have to start by taking the current bill and putting it on the shelf and starting from a clean sheet of paper, Republican Senator Lamar Alexander said. This is a car that can't be recalled and fixed.

Obama and his fellow Democrats have no intention of starting over, but Obama hopes to influence wavering Democratic lawmakers and rally support among voters who have lost enthusiasm for the effort to reshape the $2.5 trillion U.S. healthcare industry.

The bills passed by the Democratic-controlled House and Senate late last year were designed to rein in costs, regulate insurers and expand coverage to tens of millions of Americans.

But efforts to merge them and send a final version to Obama collapsed in January after Democrats lost their crucial 60th Senate vote in a special election in Massachusetts amid broad public dissatisfaction with the healthcare drive.

Obama offered his own version of the healthcare plan on Monday in an effort to break the legislative gridlock, but Republicans immediately rejected it.

The White House has signaled it would consider backing an effort to ram the bill through Congress using a procedure called reconciliation that would bypass the need for Republican support.

Republicans said they expected the summit could be the first step in launching that process and denounced the idea.

You can say that this process has been used before, and that would be right. But it's never been used for anything like this, Alexander said, quoting Democratic Senator Robert Byrd's description of the process as ramming the bill through like a freight train.

Senate Democratic leader Harry Reid defended the potential use of reconciliation and noted Republicans had used it before for major things like tax cuts and reform of Medicare, the federal health program for the elderly.

Alexander and Obama clashed sharply on whether the Democratic plans would raise the cost of insurance premiums, with each interrupting the other to make their points.

The White House also has a scaled-back alternative plan it could push if a more comprehensive approach fails. It would extend coverage to about 15 million Americans rather than the 31 million envisioned by the larger plan.

Asked as he entered the summit if he had a Plan B, Obama replied: I've always got plans.

The summit did not appear to have much impact on the health insurance industry in morning trading, with shares of the Morgan Stanley Healthcare Payor Index and S&P Managed Healthcare Index slightly down but outperforming the overall market.

It's obviously a big show because the plan that Obama pulled out was essentially a rehash of what had already kind of failed. There wasn't any compromise, said John Lecroy, an analyst at Hapoalim Securities.

My guess is we'll probably end up seeing a second round with a much smaller plan.

About 40 members of Congress, split evenly between Republicans and Democrats, sat around a rectangular table at the summit. The meeting was broken into sections to discuss controlling costs, insurance reforms, deficit reduction and expanding coverage.

Republicans focused on promoting their own scaled-back approach to boost competition across state lines, create high-risk insurance pools and curtail medical malpractice lawsuits.

Republican Representative Dave Camp said lawsuit reform would achieve a bipartisan goal of reducing healthcare costs.

(Additional reporting by Caren Bohan, Matt Spetalnick, Ross Colvin, Jeff Mason, Donna Smith, Susan Heavey, Thomas Ferraro and David Morgan; editing by Anthony Boadle)