Reid Threatens 'Nuclear Option' to Pass Health Care Reform as Panel Starts Work

Senate Majority Leader Harry Reid threatened on Tuesday to use a procedural maneuver to steamroll opponents of health care reform, even as a Senate panel began delicate negotiations over a package that could have the best chance at passing.

The Nevada Democrat, who has issued similar threats before, spoke as the Senate Finance Committee began debate over Chairman Max Baucus' reform plan. Reid threatened to use a budgetary tool called reconciliation -- also known as the "nuclear option" -- that would allow Democrats to pass key parts of the legislation with a simple majority, as opposed to the 60 votes needed to avoid a Republican filibuster.

"If we can't work this out to do something within the committee structure, then we'll be forced to do the reconciliation," Reid said, adding that he views that as a "last resort."

"It remains to be seen as to whether we will have to do reconciliation. I am confident and hopeful we won't have to do that, but time will only tell," Reid said.

Republican Sen. Richard Burr, N.C., said reconciliation would be a "grave mistake," and that Reid underestimates the public concerns over the bill.

"I don't think it's a threat. I think that's what Harry Reid intends to do," Burr told FOX News.

But the Senate Finance Committee pushed through tense and intensive talks Tuesday to reach common ground on the Baucus plan. Senators have filed 564 amendments, and on Tuesday afternoon Baucus released a slew of changes.

Among them, Baucus agreed to cut in half the penalty attached to a government-mandated requirement to buy health insurance. Under the changes, families could be charged a maximum of $1,900 for failing to meet the requirement -- as opposed to $3,800.

Baucus also agreed to raise the threshold for insurance plans that would be subject to an excise tax. Under the revisions, plans worth $8,750 for individuals and $23,000 for families would be subject to the tax -- the thresholds were previously $8,000 for individual plans and $21,000 for family plans.

And he agreed to increase the value of tax credits low- and middle-income people would receive toward insurance. Officials said Baucus decided to commit an additional $50 billion over a decade toward making insurance more affordable for working class families.

The Finance Committee is the last of five panels to have a say before the full Senate debates legislation.

Baucus' legislation is designed to make coverage more available and affordable, while restraining the growth in the cost of medical care generally. Its 10-year price tag is below $900 billion, according to the Congressional Budget Office.

Baucus made numerous concessions to Republicans in his unsuccessful stab at bipartisan compromise, jettisoning calls for the government to sell insurance in competition with private industry, as well as a proposed requirement for large companies to offer insurance to their workers.

In his opening remarks, Baucus sought to preempt Republican criticism.

"Despite what some may say, this is no 'government takeover' of health care," Baucus said. "Our plan does not include a public option. We did not include an employer mandate. And we have paid for every cent."

But Sen. Chuck Grassley of Iowa, the panel's ranking Republican, said the White House and Democratic leaders short-circuited the bipartisan talks by imposing a mid-September deadline. "I find it utterly and completely appalling," he said.

Grassley criticized many of the plan's key components, from a requirement that all Americans get insurance, to the taxes that would pay for subsidies to make the coverage affordable. He also said the bill falls short in guaranteeing that illegal immigrants won't get government help to buy insurance, as well as in preventing funding for abortion.

The concerns are bipartisan.

A number of committee Democrats had raised concerns about whether subsidies in Baucus' bill are generous enough to make insurance truly affordable for low-income people. There also are worries about the new tax on high-cost insurance plans, which critics fear would hit some middle-class workers, including many union members in risky occupations such as mining and police work.

Those concerns were shared by Sen. Olympia Snowe, R-Maine, whose support could become even more critical if legislation makes it to the Senate floor.

The Associated Press contributed to this report.