U.S. healthcare debate: it's only the beginning

Senator Jim Bunning (R) and Senate Finance Committee chairman Max Baucus discuss amendments to healthcare reform legislation during an executive session on Capitol Hill in Washington October 1, 2009.

WASHINGTON (Reuters) - U.S. President Barack Obama's push for a sweeping healthcare overhaul edged closer on Thursday to a major victory in the Senate Finance Committee, but the fight in Congress is only beginning.

Obama's Democratic Party remains divided on key issues, including a government-run insurance option, and party leaders in the Senate and House of Representatives will face a gauntlet of competing demands from liberal and conservative Democrats.

Republican critics of the overhaul, meanwhile, plan new attacks on provisions on taxes, mandates and Medicare, the healthcare plan for seniors, that could resonate with a wary public as the battle snakes its way through Congress.

The Senate committee, the last of five panels in Congress to move on healthcare, neared a final vote on Chairman Max Baucus's plan in the next few days. The panel has rejected any significant changes during seven days of debate.

Obama has made an overhaul of the $2.5 trillion healthcare system his top domestic priority, pushing for a plan to reduce costs, regulate insurers and expand coverage to the uninsured.

The Finance bill will be melded by Senate Democratic Leader Harry Reid with one passed earlier this year by the Senate Health panel, and the combined product is expected to hit the Senate floor by mid-October.

"We feel that where we are is a good place to be," Reid told reporters. "We feel that where we are going to be a few weeks from now is going to be even better."

The public insurance option promises to be one of the biggest battles, with Obama and liberal Democrats backing it as a way to increase competition and critics charging it will undermine the private insurance industry and lead to a government takeover.

"We will keep fighting," Democratic Senator Charles Schumer said after the Finance Committee rejected two attempts to adopt a government-run public insurance option on Tuesday. "This is not over."

INSURANCE WORRIED

The insurance industry has lobbied hard against the public option. Rick Weissenstein, a health care analyst for Washington Research Group, said the industry was worried as the bill moved ahead.

"Everybody's concerned about the next step ... a lot of things can change as they try to seek the formula that gives them 60 votes," he said.

Three Democrats, including Baucus, voted against the public option in committee. Democrats control 60 seats in the 100-member Senate, the exact number needed to clear Republican procedural hurdles, meaning any defections could doom it to failure.

Schumer said proponents of the public option would try again on the Senate floor and were looking at new approaches to attract wavering Democrats like Blanche Lincoln of Arkansas, who voted against it in committee.

Democrats have discussed a possible compromise that would allow states without enough insurance competition to offer a menu of choices that would include a state government-run plan aided by federal seed money.

Other alternatives include nonprofit cooperatives, included in the Senate Finance bill, and a "trigger" that would activate government plans in states without enough competition.

"Because we believe in Democratic unity, there is no line in the sand," Schumer said. "Liberals haven't put a line in the sand ... the more moderate members haven't put a line in the sand."

The issue ultimately could be decided in a conference committee to work out differences with the House, where all three pending bills include a public option. House Democratic leaders have been working to merge the three bills passed by separate House committees into one version.

"We don't intend to go to the floor without a public option in our bill," House Speaker Nancy Pelosi told reporters.

They are looking to trim the final price tag of the House bill to about $900 billion -- down from about $1.1 trillion -- and ensure it does not add to the budget deficit.

Republicans have attacked the costs and say the overhaul will ultimately mean higher taxes and bigger budget deficits -- an argument polls show has left much of the public nervous about what the changes might mean.

"It's going to expand the government's role in the healthcare of every single American, whether they like it or not," Republican Senate leader Mitch McConnell told reporters.

(Editing by Philip Barbara)