U.S. healthcare overhaul on fast track

By Donna Smith

WASHINGTON (Reuters) - President Barack Obama has said he wants the U.S. Congress to deliver to him a sweeping overhaul of the $2.5 trillion U.S. health care system by October, arguing it would help put the struggling U.S. economy on a solid growth path for the future.

It is a very tight timetable for very complex legislation that involves a number of committees in the House of Representatives and Senate. But leaders in both chambers believe they are on track to meet that goal.

STATE OF PLAY IN THE SENATE:

* Senate Finance Committee Chairman Max Baucus is pushing for strong bipartisan support, which he says will help ensure final passage of legislation that can maintain public support as changes are implemented throughout the health system.

* The Senate Health, Education, Labor and Pensions Committee is also drafting legislation. Senator Christopher Dodd has been taking a lead role in managing the bill in that committee in the absence of the chairman, Edward Kennedy, who is battling brain cancer. Dodd and Kennedy have both expressed a desire for a bipartisan bill.

* There is broad agreement on the need to promote prevention and reward hospitals and doctors for providing better quality of care instead of the quantity of services. Those changes would be driven through the Medicare program for the elderly.

* There is also broad agreement for maintaining employer-provided health care. For those without employer- provided insurance, the proposed legislation would set up an insurance exchange -- a clearinghouse -- where individuals and small businesses could shop for medical plans and compare benefits and prices.

A major sticking point is whether a new government insurance plan should compete with private insurers in the exchange. Republicans say they cannot support legislation that includes a new public plan, arguing it would drive private insurers out of business and lead to a government-run health care system. Many Democrats insist on a public plan, arguing it can be set up to compete fairly with private insurers and that it is the only way to keep premiums low.

* Obama also wants a public plan option and both Baucus and Dodd say their bills will include one. The issue is how to design it to keep enough Republicans on board to give the Democratic majority bipartisan political cover. Lawmakers are considering a fallback position -- a kind of trigger that would put a public plan in place should competition and lower costs fail to materialize.

STATE OF PLAY IN THE HOUSE:

* Three House committees are working on legislation -- the taxwriting Ways and Means Committee, the Committee on Energy and Commerce and the Committee on Education and Labor. They hope to lay down legislation in the next few weeks and hold committee votes after lawmakers return from the weeklong Fourth of July holiday break.

* The bills will be melded together into one piece of legislation that will go to the floor before the August recess if lawmakers stay on schedule.

* The House bill is unlikely to win backing from Republicans and it is expected to include a public plan option that is more to the liking of liberal Democrats. But a sizable group of conservative Democrats - the so-called Blue Dogs -- are cool to the idea and have thrown their weight behind the "trigger" that would go into place should the private sector fail to meet price and competition targets.

THE PLAYERS:

* The stakes are high and groups representing insurers, doctors, consumer groups and businesses have refrained from broad attacks against reform. Most agree the current system of rapidly rising costs and millions of uninsured cannot be sustained.