SCENARIOS: What are the next steps for healthcare overhaul?

WASHINGTON (Reuters) - The Democratic-led Congress picked up speed this week in its effort to overhaul the $2.5 trillion healthcare industry. A plan to set up a government-run insurance option, mandate medical insurance and make changes in the insurance industry emerged from three of the five committees working on it.

The following outlines next steps for the legislation, which President Barack Obama wants passed this year in a major political test for his young administration.

HOUSE NEGOTIATIONS PROGRESS

The week of July 20, the third and last House of Representatives Committee, Energy and Commerce, will consider amendments on its part of the massive 1,000-page healthcare overhaul legislation. Assuming the measure passes the Democratic-controlled panel, technically the legislation will next head to a vote in the full House by the end of July.

However, Democratic leaders acknowledged on Friday they may need to make changes that would save more money on government healthcare programs to pay for the cost of expanding care to many of the uninsured.

Democratic leaders will also need to work with two groups of fiscally conservative Democrats - 20 first-term members and the 50-member Blue Dog Coalition - that have objected to tax increases in the bill which would raise $587 billion over 10 years.

Negotiations on changes to the bill will continue. House Democratic leaders will decide which amendments will be considered by the full House and will likely come up with their own "manager's amendment" to incorporate changes the party agrees to make.

"We are on our schedule to bring up the legislation before the break, and we continue to be on that schedule," Speaker Nancy Pelosi said at a news conference on Friday.

SENATE NEGOTIATIONS PROGRESS

Leaders of the Senate Finance Committee, which writes tax policy and has jurisdiction over the Medicare program for the elderly and Medicaid for the poor, are to resume closed door negotiations. This committee represents the best chance of achieving a bipartisan bill that the business community could support.

Chairman Max Baucus said on Thursday they were making progress and would return the following week.

A major undecided plan is to figure out how to pay for the at least $1 trillion health insurance reform.

One tax under discussion would raise $75 billion to $100 billion from private insurers. "It makes sense that private health insurers, who are going to gain 40 million customers in a reformed system, should pay their fair share," a member of the panel, Senator Charles Schumer, said on Thursday.

Others have suggested that Americans could start to pay taxes on some of the currently tax-free healthcare benefits provided by employers. Since most Americans receive some employer-paid health insurance, this could potentially raise hundreds of billions of dollars.

BACK TO THE DRAWING BOARD

Obama and Democratic-leaders in Congress have pledged that healthcare reform, currently estimated at $1 trillion, will not add to the federal deficit.

However, congressional budget analysts have not yet fully assessed the bill as amended by the House committees.

A delay could occur if provisions in the House bill do not fully pay for their plan, or if senators are unable to reach agreement on ways to raise money for their version.

The plans include about $500 billion in savings from government-run Medicare and Medicaid programs, and other ways will need to be found to make up the difference.

But Congress is taking a nearly monthlong recess in August, and Obama is counting on keeping up the momentum to get a bill on his desk by the end of the year.

(Reporting by Jackie Frank, Donna Smith and Kim Dixon; Editing by Anthony Boadle)