The focus of the health overhaul debate now shifts to whether Senate Majority Leader Harry Reid can persuade a handful of moderate senators to get behind his new proposal for a government-sponsored insurance plan.
That's no sure bet. Even Reid, D-Nev., didn't claim to have the 60 votes needed to pass his proposal when he ended weeks of speculation by announcing that the Senate version of sweeping health care legislation would include a provision for the government to sell health insurance in competition with private insurers.
The issue has been the biggest flash point in the health care debate, and government-sponsored insurance had been seen as unlikely to be included in Senate legislation because of opposition from moderates. The House's health care bill, expected to be released as early as this week, is certain to contain a strong provision for a so-called public insurance option, though details aren't final.
"I think it's the fairest way to go," Reid told reporters Monday.
"We have 60 people in the caucus," he said. "We all hug together and see where we come out."
Individual states would have the choice of opting out of the government plan under Reid's proposal. It still amounted to a victory for liberal lawmakers who have pushed for a public insurance option they contend would create needed competition for private industry and provide affordable choices to consumers.
The reaction from moderate Democrats - they fear a public plan could drive insurers out of business and take over the marketplace - ranged from muted to skeptical. The one Republican who has so far lent her support to Democratic health overhaul proposals, Sen. Olympia Snowe of Maine, said she was "deeply disappointed" by Reid's decision.
Snowe had supported allowing government insurance in individual states only if the private market wasn't providing sufficient choice and competition. But Reid said he wasn't sending that "trigger" option to the Congressional Budget Office for evaluation, as he did Monday with the opt-out proposal.
"We hope that Olympia will come back. She's worked hard. She's a very good legislator. I'm disappointed that the one issue, the public option, has been something that's frightened her," Reid said.
If Snowe doesn't come back, the fate of Reid's public option could rest in the hands of a few key moderate Democrats including Sens. Ben Nelson of Nebraska, Blanche Lincoln of Arkansas and Mary Landrieu of Louisiana.
Landrieu said in a statement that she's still "very skeptical" about a government plan run from Washington but would keep working with Reid to find a "principled compromise."
Nelson "is not committing how we will vote regarding any proposal Sen. Reid is advancing," said spokesman Jake Thompson.
Lincoln, who's up for re-election in 2010, said through a spokesman she intends to study the details and decide how to vote based on the impact on her home state.
The White Housesaying Obama was "pleased that the Senate has decided to include a public option for health coverage, in this case with an allowance for states to opt out."
Obama has long voiced support for such a plan but has also signaled it was not a requirement for a health care bill he would sign. He has also said he would like bipartisan support for the legislation - and Snowe appeared to be his best hope for that.
Changes on the public option - and numerous other provisions in the measure - are possible during a debate expected to last for weeks. If Reid's public option proposal is knocked out during the amendment process, liberals will at least have had their shot, possibly answering pressure from Democratic base voters.
The insurance industry was sharply critical of Reid's announcement.
"A new government-run plan would underpay doctors and hospitals rather than driving real reforms that bring down costs and improve quality," said Karen Ignagni, head of America's Health Insurance Plans.
Both the House and Senate are struggling to complete work by year's end on legislation extending coverage to millions who lack it, banning insurance industry practices such as denying coverage because of pre-existing medical conditions, and slowing the rise in medical costs nationally.
Officials said Reid had prepared several variations of key provisions so he could make adjustments in his bill at the last minute and still make sure he was within Obama's target of a $900 billion price tag over a decade.
Differences in bills passed by the House and Senate would have to be reconciled before any legislation reaches Obama's desk.