The Congressional Budget Office added that the measure would reduce federal deficits by $81 billion over a decade and probably lead to "continued reductions in federal budget deficits" in the years beyond.
The report paves the way for the Senate Finance Committee to vote as early as Friday on the legislation, which is largely in line with President Barack Obama's call for the most sweeping overhaul of the nation's health care system in a half-century.
Sen. Max Baucus, D-Mont., the committee chairman and principal architect of the measure, hailed the budget report.
"This legislation, I believe, is a smart investment on our federal balance sheet. It's an even smarter investment for American families, businesses and our economy," he said on the Senate floor.
The lower price tag does make it easier to pass this bill out of committee, but then the real work begins, reports CBSNews correspondent Nancy Cordes. Senate leaders have to meld it with a more liberal reform bill that contains a public option - two very different bills and all these numbers are likely to change, reports Cordes.
The committee Baucus chairs is the fifth and last of the congressional panels to debate health care. The Senate Finance version has a decided middle-of-the-road flavor, shunning any provision for the government to sell insurance in competition with private industry. Nor does it require businesses to offer coverage to their workers, although large firms that do not would be required to offset the cost of any government subsidies going to those employees.
The measure would require that millions of Americans purchase private insurance for the first time, and would set up a new marketplace where policies would be available.
Federal subsidies would be available to millions of lower-income individuals and families to help defray the cost of coverage that would otherwise be out of their reach.
The measure would be paid for through a variety of tax increases and spending cuts, including savings of hundreds of billions of dollars from Medicare, the federal health care program for seniors.
Democratic leaders in both houses are hoping to hold votes on health care on the floor of the House and Senate within a few weeks.
Health Care Reform Progress Report
CBSNews.com Special Report: Health Care
Health Care Inches Ahead in the House
Anticipating approval by the Finance Committee this week, Majority Leader Harry Reid is already overseeing efforts to merge that bill with an alternative approved by the Senate Committee on Health, Education, Labor and Pensions.
Reid is subject to intense cross-pressures, not only from the members of the two committees, but also from the Obama administration and rank-and-file senators seeking to mold the legislation to their liking.
Reid also must take into account the likely need to amass 60 votes behind any legislation, the majority needed to overcome any Republican filibuster.
Baucus has expressed confidence he has the votes for his measure inside the Finance Committee, and the major lingering question there is whether Sen. Olympia Snowe, R-Maine, will break ranks with fellow Republicans and vote for it. She has been steadily noncommittal in public statements, but is under pressure from her own party to oppose the legislation.
Wednesday's report from CBO's director, Dr. Douglas Elmendorf, stressed that the estimates were preliminary.
It said that by 2019, "the number of nonelderly people who are uninsured would be reduced by about 29 million," either through private insurance or by enrolling in federal programs. That would leave an additional 25 million uninsured, about one-third of them illegal immigrants who are not eligible for coverage under the bill.
"Under the proposal, the share of legal nonelderly residents with insurance coverage would rise from about 83 percent currently to about 94 percent," the letter said.