The Finance Committee hearings are starting to display the Democrats’ intra-party rift over the creation of a government-run plan.

Sen. Kent Conrad argued that an amendment proposed by Jay Rockefeller that would create a government-run plan that would set reimbursement rates at Medicare levels would bankrupt every hospital in his home state of North Dakota. Instead, Conrad favors creating tax exempt non-profit insurers, or co-ops.

Rockefeller called Conrad’s claim about the threat to hospitals “nonsense.”

The Rockefeller amendment would force any doctor who accepts Medicare to also accept the new government plan for the first two years, after which point the doctors and hospitals could opt out of the government plan, and the Department of Health and Human Services would negotiate rates with doctors and hospitals.

By making it optional after two years, Rockefeller tried to argue that it isn’t coercive. And he also strained to make the argument that even though the plan would be administered by the federal government, that it wouldn’t be government-run.

Judging by the debate so far, it seems that the Rockefeller amendment will be defeated easily. After that, the committee will consider an amendment by Sen. Chuck Schumer that would create a government plan that would not set payment levels at Medicare rates.