Pelosi's 'Public Option' Bill Gets Boost From Report Pegging Cost Below Obama's $900B

WASHINGTON -- House Speaker Nancy Pelosi's drive to put the federal government in the business of selling health insurance got a major boost Tuesday with a new report that showed the cost of a health reform bill that included the so-called "public option" could be less expensive than the $900 billion projected by the Obama administration.

But putting a damper on that report is a new government estimate that finds that the nation's health care tab -- already the biggest of any advanced country -- would increase even more under health care overhaul legislation in the House.

That's the conclusion of an analysis by the Health and Human Services department that looks at the impact of the health care bill drafted by House Democratic leaders.

The analysis finds that total national health care spending would increase by about 2 percent from 2010-2019, mostly because newly insured people would seek medical care.

The report by career government economists raises questions about the Obama administration's claim that health care legislation will "bend the cost curve," and slow a spending rate that many economists say is unsustainable.

But House Democrats can still take comfort in an estimate by the Congressional Budget Office (CBO). Congressional budget analysts, reporting back on the cost of two-of-three House scenarios, pegged the cost of a health reform package that included a robust government-run insurance program at $871 billion, less than the initial $1 trillion projected price tag.

The figures were preliminary because no final decision on the design of the government-run plan had been made, said a Democratic aide who requested anonymity in discussing the bill because the deliberations were private.

A senior House leadership aide familiar with the numbers told Fox News that all three plans reduce the deficit over 20 years.

"We're excited by the CBO numbers," said Pelosi, D-Calif., who then shared the figures with Senate Majority Leader Harry Reid, D-Nev., in a sit-down meeting.

The CBO cost analysis could make or break the bill in the House. Many moderate and fiscally-conscious Democrats are concerned the measure could cost too much. And a bill that busts the federal deficit could cost Democratic leaders votes.

"We're in an excellent place with the caucus with what they've put out," Pelosi said of the CBO's analysis. "We have to live by what they (CBO) put out."

But there was no final CBO score on the health care reform plans.

Pelosi said Wednesday that she hoped to have a final CBO score later in the day. She also expressed a desire to have the House pass a health care bill by Thanksgiving.

"We're just about there," Pelosi said.

House Democrats worked on their legislation as senior Senate Democrats signaled they intend to try to strip the insurance industry of its exemption from antitrust laws as part of an upcoming debate over health care.

Sen. Reid and Sen. Patrick Leahy, the Vermont Democrat who chairs the Senate Judiciary Committee, announced plans to hold a news conference on the issue Wednesday along with Sen. Chuck Schumer, D-N.Y.

If approved, the change would bring the insurance industry under stricter federal regulation. While a 60-vote majority is likely to be required for passage, the decision by top Democrats to seek a vote underscores the antagonism that lately has sprouted between advocates of Obama's ambitious health care plan and insurance companies who are dissatisfied with key features of the legislation.

The House bill with the strong government-run health plan would extend coverage to 96 percent of uninsured Americans and significantly reduce budget deficits.

A $871 billion bill in the House would be in line with the leading Senate bill, the $829 billion measure approved last week by the Senate Finance Committee.

Pelosi and other liberal lawmakers have joined Obama in calling for a public insurance program as a way to drive down the costs of insurance. Republicans have opposed government-run insurance and vowed to vote against a bill establishing a public option.

Pelosi assembled Democratic lawmakers Tuesday night to try to sell them on her preferred version of the public plan, which would link payment rates to providers to Medicare rates, plus an additional 5 percent for doctors. Moderates have been concerned that those rates are too low and would hurt hospitals and other providers particularly in rural areas.

Several lawmakers said they were getting close to the 218-vote majority needed for the stronger version.

"That's certainly where a large majority of the caucus is," said Rep. Chris Van Hollen, D-Md.

Leaders in both the House and the Senate were trying to finalize bills in time to begin floor debate in the next several weeks. Whether Senate Majority Leader Harry Reid, D-Nev., would include a public insurance plan in the Senate version was not clear.

In the Senate, legislation giving doctors $247 billion in increased Medicare fees over the next decade veered toward collapse, a victim of bipartisan concern over growing federal deficits.

Key lawmakers worked privately on a far less costly bill that would avert a 21 percent cut scheduled to take effect on Jan. 1 and give physicians an increase of .5 percent in 2010 and 2011.

Sen. Kent Conrad, D-N.D., said he and Sen. Charles Grassley, R-Iowa, were discussing a possible compromise that would cost $25 billion over two years and -- unlike the original measure -- not raise federal deficits.

The nation's debt "doubled during the last administration and if we don't do something, it's going to double again in the next eight years," Conrad said.

Anything less than the 10-year bill would mark a defeat for the American Medical Association, which has made a priority of legislation to create a new program to assure doctors reliable annual fee increases. The organization has aired television commercials in several states at a cost of $1 million or more and dispatched top officials to the Capitol in recent days to lobby lawmakers.

"Congress needs to fix this problem once and for all," AMA President Dr. J. James Rohack said in a statement. "No more Band-Aids."

The developments occurred as Senate leaders and White House aides met for the second straight day in the Capitol in hopes of agreeing on comprehensive health care legislation. Participants in the talks said no decisions had been made about key issues, including proposals for government insurance.

Obama has made an overhaul of the nation's health care system a top priority. Speaking at a Democratic National Committee fundraiser in New York on Tuesday, he said Democrats tend to have their "intramural fights" but that the American people desperately need a good bill to pass.

"I want all the Democrats who are in the House to understand what a profound potential achievement this is and stay focused on the goal line," Obama said. To his Republican critics, he said he welcomed a fierce debate over the final details but added that he would not stand for "folks sitting on the sidelines and rooting for failure."

All the health overhaul bills on Capitol Hill would require, for the first time, that most Americans purchase insurance. Lower-income individuals and families would receive federal subsidies to defray the cost, and small businesses would receive government help to pick up part of the cost of covering their employees.

Legislation would also include consumer protections such as a bar on the insurance industry's current practice of denying coverage on the basis of pre-existing medical conditions. Obama also wants any bill he signs to rein in the nation's spiraling medical costs.

The Associated Press contributed to this report.