Democrats cite CBO report to bolster healthcare case

* Democrats cite CBO report to bolster public option

* Senators meet to find bipartisan solution

By Donna Smith

WASHINGTON, July 27 (Reuters) - Democrats in the U.S. House of Representatives pounced on a congressional budget report to promote their plan for a government-run health insurance option on Monday, as party leaders said they were closer to agreement on healthcare reform.

The analysis by the nonpartisan Congressional Budget Office said a government-run health insurance plan proposed by Democrats would not drive private insurers out of business, and most people would still choose to get their medical coverage through their employers.

The public option proposed by House Democrats has come under heavy fire from Republicans who say it will devastate the private insurance industry.

"We're moving closer to a point where we can hold insurance companies accountable," House Speaker Nancy Pelosi told reporters, repeating her frequent prediction that once a bill hits the floor "it will win."

She declined to predict, however, whether the full House would be able to take a vote on the legislation before it leaves for a monthlong August recess, saying "we're good to do it now or to do it whenever."

President Barack Obama's drive for healthcare reform has slowed in the Senate and House, both controlled by his fellow Democrats, amid criticism from all sides about the cost, scope and funding of the more than $1 trillion measure.

Democrats in the House have argued over reining in the proposal's costs, while Republicans in both chambers have slammed the measures as an expensive first step toward a government takeover of healthcare.

A bipartisan group of senators on the Finance Committee resumed their deliberations on Monday night, searching for an agreement to move the reform plan forward in that chamber.

The legislation is designed to control costs, improve care and expand health insurance coverage to most of the 46 million uninsured Americans.

The House plan includes the government healthcare option.

NEW DIRECTION

The CBO report estimated only about 10 million to 11 million people would sign up for the public option by 2019, far fewer than the 83 million cited in another analysis by the Lewin Group. The Lewin Group is part of Ingenix, a wholly-owned subsidiary of UnitedHealth Group (UNH.N).

The CBO report also estimated that about 12 million people who otherwise would not be enrolled in employer-based plans would fall under the Democratic proposal because the mandate for individuals to be insured would increase workers' demands for employer-based insurance.