Fate of Obama healthcare up to Democrats

WASHINGTON (Reuters) - The fate of President Barack Obama's U.S. healthcare overhaul was in the hands of his own Democrats on Thursday after a summit in which Republicans demanded his plan be tossed out in favor of a smaller one.

Democrats and Republicans appeared to battle to a draw at a marathon seven-hour talkathon hosted by the White House.

Both sides defined several areas where they agree.

But neither was willing to forgo their overarching goals: Democrats want a sweeping bill that requires all Americans to buy insurance, and Republicans want a much smaller and more narrowly defined plan.

The stalemate leaves Democrats with a difficult decision to make.

They have a live option before them -- use a parliamentary tactic known as reconciliation to jam their plan through the U.S. Congress with a simple majority vote.

Obama did nothing to quell talk that this is the route Democrats will pursue, saying most Americans "think that a majority vote makes sense."

Using a muscle tactic on such a large piece of legislation carries political risks, however, as Democrats and Republicans position themselves for November congressional elections.

A Gallup poll found that Americans by 52 to 39 percent opposed Democrats using the procedure.

Both parties are keeping a wary eye on the elections, with Democrats eager for a victory to shore up their liberal base and Republicans reluctant to help them.

"If the bill is passed through reconciliation and it remains as unpopular with the public as it appears to be polling now, that's another huge talking point for the Republicans going into the fall elections," said Merle Black, a political science professor at Emory University in Atlanta.

Obama, who was judged the winner of a public debate with Republicans when he appeared at their retreat in Baltimore last month, may have been hoping for a similar victory to get Americans to take a fresh look at his proposals.

"I really don't think the summit will change the minds of any of the attendees, but its real effect will be if it changes public opinion in any real way," said Rick Weissenstein, an analyst at Concept Capital's Washington Research Group.

"So I think watching the polls after the summit will be important."

The Blair House healthcare summit, probably missed by many Americans since it took place during working hours, was a remarkable session with Obama showing a deep knowledge of the subject and a willingness to listen to the other side that was largely absent last year.

But an exchange with his Republican opponent from the 2008 campaign, Senator John McCain, showed a dismissive attitude.

McCain complained about some of the closed-door deals that had been contained in the Democratic legislation and expressed concern about the Obama administration's opposition to gaining U.S. access to cheaper generic prescription drugs from Canada.

"Let me just make this point, John, because we're not campaigning anymore," Obama told him. "The election's over."

"Well, I, I'm reminded of that every day," McCain said.

Kathleen Hall Jamieson, director of the Annenberg Public Policy Center at the University of Pennsylvania, said the exchange could come back to haunt Obama.

"It could be problematic for the president," she said. "The McCain point is a point that people are sympathetic to, which is about re-importation of drugs, which doesn't seem to be asking anything unreasonable."

In the end, Obama gave the compromise effort a month to six weeks to play itself out to see if a deal can be reached.

He seemed willing to bet that Americans would not penalize Democrats at the ballot box in November by as much as Republicans hope.

"We have honest disagreements about the vision of the country and we'll go ahead and test those out over the next several months 'til November," he said.

(Additional reporting by Susan Heavey; Editing by Simon Denyer)