Sen. John McCain says he hopes legislation to overhaul the health care system is dead following the Democrats' loss Tuesday of a crucial Senate seat.
The Arizona Republican says the bill "obviously has been rejected by voters."
Appearing Thursday on CBS' "Early Show," McCain called Democratic efforts to pass the bill without any Republican support "a major miscalculation."
He says Republicans would be "happy to sit down and start over" on health care, but would not simply accept a scaled-back version of the legislation.
McCain says Democrats have neglected the issues that concern most Americans: jobs and the economy.
Tuesday's Massachusetts special election win by Republican Scott Brown cost Democrats the 60th Senate vote they need to kill Republican delaying tactics.
THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.
WASHINGTON (AP) — 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 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.
By all accounts, Democrats have made no final decision on their options, which included breaking the health legislation into several smaller bills. But without the 60th Senate vote they need to kill Republican delaying tactics — thanks to Tuesday's stunning Massachusetts special election win by Republican Scott Brown — Obama and others were talking about legislation that would attract broad support.
"I would advise that we try to move quickly to coalesce around those elements of the package that people agree on," Obama said in an interview with ABC News.
"We know that we need insurance reform, that the health insurance companies are taking advantage of people. 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," he said.
In a bid for GOP support, participants suggested other elements that could be added. These included allowing insurance companies to sell policies across state lines, according to Rep. Timothy Walz, D-Minn.
Echoing Obama was House Majority Leader Steny Hoyer, D-Md., who said a slimmer bill would be a "reasonable alternative" that could appeal to the public even with continued Republican opposition.
"I think that we ought to focus on that which ... the public can support and will be positive in terms of making health care more affordable and obtainable," he said.
Nearly as shaken by the Massachusetts vote were health care provider groups that have supported the Democratic effort, such as drug makers, hospitals and doctors.
While few were making public statements, industry groups that stood to gain millions of newly insured customers were worried that such potential gains were in jeopardy, according to lobbyists speaking on condition of anonymity to describe confidential conversations.
Industry groups also were worried that without a health care bill, some of the savings several of them had agreed to contribute — such as lower Medicare reimbursements — might be used for separate congressional efforts this year to reduce the soaring deficit.
Underscoring their sense that the Massachusetts vote put them atop a political wave, Republicans were e-mailing fundraising solicitations on Wednesday to supporters.
"Democrats nationwide should be on notice: Voters are looking for checks-and-balances, and they are prepared to hold the party in power responsible for their reckless spending and out-of-touch agenda in Washington," wrote Sen. John Cornyn, R-Texas, who heads the Senate GOP's campaign arm.
Associated Press writers Ricardo Alonso-Zaldivar, Erica Werner and Ann Sanner contributed to this report.
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