SCENARIO: -U.S. healthcare reform reaches new stage

By John Whitesides

WASHINGTON (Reuters) - Democratic leaders in the U.S. Senate and House of Representatives are negotiating ways to merge five healthcare bills into a single measure in each chamber that will rein in costs, regulate insurers and expand coverage.

Eventually, the House and Senate must reconcile their separate bills on healthcare reform into a proposal that can be signed by President Barack Obama. His goal is to sign a bill by the end of the year.

Here is a look at how the issue might play out as it moves through Congress over the next two months:

SENATE BILLS MERGED

Senate Democratic leader Harry Reid is leading talks on merging separate bills passed by the Finance and Health panels. The biggest sticking point will be a government-run public insurance option included in the Health bill but not Finance.

Reid must balance the demands of party liberals who want a strong public option with the concerns of moderates who oppose it or back compromise versions. Reid has little margin for error -- Democrats control exactly 60 votes, the number needed to overcome procedural hurdles and pass a bill.

Some of the compromises include state-based public insurance plans and a proposal for a "trigger" that would activate a public plan if there was not enough competition in the insurance market.

A proposal for non-profit cooperatives included in the Finance bill has not gained much support outside the panel.

Differences over whether to require employers to provide health insurance, the amount of subsidies offered to help lower- and middle-income people buy insurance and the taxes imposed to pay for the plan must also be overcome.

FULL SENATE DEBATE

Republicans have demanded that the bill that emerges from negotiations be submitted to congressional budget analysts for a cost estimate before the Senate takes it up. A floor debate that could last several weeks is now expected to begin in early November -- although deadlines have slipped repeatedly.

Democrats say they will be able to cobble together 60 votes to break Republican attempts to block the bill.

"There are some issues that have to be worked out, but frankly the desire to pass healthcare reform legislation is so strong ... that we're going to resolve those differences and pass it this year," Finance Committee Chairman Max Baucus said on Thursday.

HOUSE BILLS MERGED

House Democratic leaders are working to merge three separate bills into one for floor debate, and all three include a version of the public insurance option.