Retreat: Democrats begin discussing smaller health bill, as liberals refuse to back Senate bill

President Barack Obama and his Democratic allies are conceding for the first time that they may have to accept a less ambitious health overhaul bill than the massive one they've struggled for a year to assemble.

Shorn by Massachusetts voters of their pivotal 60th Senate vote and much of their political momentum, the White House and congressional leaders are considering a more modest version of Obama's top legislative priority. It could focus on curbing insurance company practices like denying coverage to sick people and on helping low-earning people and small businesses afford coverage, officials said.

Also, Greg Sargent of The Washington Post's Plum Line revealed late Wednesday that House liberals will not support passing the Senate's healthcare bill, "period."

In a private meeting in the Capitol just now, a dozen or more House liberals bluntly told Nancy Pelosi that there was no chance that they would vote to pass the Senate bill in its current form — making it all but certain that House Dems won’t opt for this approach, a top House liberal tells me.

“We cannot support the Senate bill — period,” is the message that liberals delivered to the Speaker, Dem Rep Raul Grijalva told me in an interview just now.

Tellingly, House liberals also urged Pelosi to consider passing individual pieces of reform through the House as individual bills, and sending them to the Senate to challenge the upper chamber to reject them, Grijalva tells me. Liberals said this approach would be preferable to passing the Senate bill.

“If the Senate chooses not to close the donut hole, that’s their damn problem,” Grijalva said. “They’ve had it too easy. One vote controls everything. Collectively, we’re tired of that.”

Also fueling the Democratic search for a fresh health care strategy is a conviction by many in the party that it's time for an election-year focus on jobs and the economy, which polls show are easily the public's top concerns.

"I don't think we have to wait for health care to be resolved one way or the other before we move to jobs," said Sen. Robert Casey, D-Pa. "We need to put a jobs bill on the table very soon, certainly in the next few weeks."

According to White House officials, lawmakers and lobbyists, the administration's preference was for the House to send Obama the far-reaching health care bill the Senate approved on Christmas Eve. That could be followed by separate legislation making changes sought by House members, union leaders and others, such as easing an excise tax the Senate would impose on higher-cost insurance plans.

House Speaker Nancy Pelosi, D-Calif., and other House Democratic leaders were trying to talk their rank-and-file members into following that path. They were encountering strong resistance from liberals and others who say the Senate legislation does too little to make health care affordable and contains politically untenable provisions like extra Medicaid aid for Nebraska, put in the bill to lure support from the state's Democratic senator, Ben Nelson.

"The Senate product is toxic," said Rep. Jackie Speier, D-Calif.