May 21 (Bloomberg) -- U.S. Senate Finance Committee Chairman Max Baucus said the Senate probably will approve an overhaul of health care that falls short of President Barack Obama's plan to insure everyone.

The prospects for a bipartisan compromise are “very, very high,” the Montana Democrat told reporters today. “You never attain perfection. I think 94 percent to 96 percent is pretty good.”

Baucus said legislation his panel will draft in mid-June will include new regulations for insurers, cuts in reimbursements to Medicare providers and a “health exchange” giving some of the 46 million uninsured Americans the purchasing power to find affordable coverage. He said the measure will include some form of a “public option” -- the “hot button” issue in the debate -- that would compete with private insurers.

“I do suspect a version will be in there,” Baucus said in remarks at the nonpartisan Kaiser Family Foundation in Washington.

The House and Senate are slated to consider health-care legislation in the next few months. Obama has made revamping health care a priority of the first year of his presidency, and his budget request for 2010 sets aside $634 billion over 10 years to pay for it.

Falling Short

Baucus said it won't be possible to ensure every American has health coverage, noting there are always some who “slip through the cracks.” He said his legislation won't attempt to extend coverage to undocumented workers because that could doom the bill's prospects.

“That's very politically charged,” he said.

Baucus said he and the Finance Committee's top Republican, Senator Charles Grassley of Iowa, haven't determined whether the legislation will include a mandate that all employers provide coverage to workers.

He said they are still weighing ways to offset the costs, including a proposal to tax employee health benefits. Some economists say the current tax exclusion for the benefits helps the wealthy more than the poor and encourages unnecessary care for those in “Cadillac health plans” with the best benefits, Baucus said.

Putting a cap on benefits not subjected to taxes would “bend the growth curve” of rising medical costs, he said.

The employer tax exclusion for health benefits is considered the largest subsidy in the U.S. tax code. Congress's Joint Committee on Taxation estimates the exclusion reduced federal tax collections by $226 billion in 2008.

In the House, ending that tax break is running into some resistance. Representative Chris Van Hollen, a Democrat from Maryland who is an adviser to House Speaker Nancy Pelosi, told reporters yesterday that, while that tax increase is under consideration, it's “certainly not at the top of the list.”

To contact the reporter on this story: Laura Litvan in Washington at llitvan@bloomberg.net

Last Updated: May 21, 2009 11:59 EDT