Sept. 23 (Bloomberg) -- White House Budget Director Peter Orszag said health-care legislation can be completed in six weeks and may largely be based on a measure being drafted by the U.S. Senate Finance Committee.

“The goal would be, yes, over the next six weeks or so, maybe sooner,” Orszag said in an interview yesterday as the finance panel run by Montana Democrat Max Baucus began meeting to revise the measure. “Prospects for broad-scale health-care reform have probably never been this good.”

Lawmakers have been struggling with legislation that would cover tens of millions of people who lack insurance and tame health-care costs, the top priority of President Barack Obama. Baucus’s committee is still dealing with the issue about two months after four other panels drafted bills because Baucus tried unsuccessfully to court Republican support.

While the White House hasn’t endorsed any one plan, Orszag, 40, repeatedly returned to the $856 billion proposal Baucus released last week when asked about the overhaul effort. He said it “definitely” shows “you can devise a health-reform bill that significantly expands coverage while doing so in a way that is not only deficit-neutral” but “deficit-reducing,” citing a review by the Congressional Budget Office.

Baucus is still attempting to win Republican support as well as defuse criticism in his own party. He revised the proposal yesterday, scaling back a tax on high-end insurance plans, a priority of labor unions, and expanding government subsidies to help Americans fulfill a mandate to buy insurance.

Deductions, Fees

He also proposed further limits on deductions that Americans can take on their taxes, reduced fines for people who failed to get insurance and changed the makeup of annual fees on medical industries. The revised plan calls for eliminating fees on clinical laboratories and increasing by $700 million the amount charged to insurers.

The revision of the so-called Cadillac tax on high-end insurance policies would be “modestly positive” for insurers, while the lower penalty for those who lack insurance was “negative,” said Matt Perry, an analyst at Wells Fargo Securities LLC in New York.

“A lot can change” as the committee continues its planned three days of debate, said Perry, who researches companies including industry leaders UnitedHealth Group Inc. of Minnetonka, Minnesota, and Indianapolis-based WellPoint Inc.

‘Either One’

Baucus’s plan calls for nonprofit cooperatives rather than a government program to compete against private insurers. The government program, or “public option,” is favored by Democrats including Obama as the best way to push down prices.

Orszag signaled the administration doesn’t consider a government-run insurance program essential. He suggested that either the creation of cooperatives or “triggers” to activate a public option if needed to cut costs would be sufficient.

“The goal here is just to introduce more competition where competition is inadequate,” he said. “Either one could work.”

Members of Baucus’s committee, split between 13 Democrats and 10 Republicans, filed 564 amendments for consideration. The changes would add to the cost of the proposal, though it would still be less than $900 billion over 10 years, Baucus said.

Today, the committee decided against a Republican amendment that would have required the full legislation to be posted online for 72 hours before a panel vote. Instead, they adopted a Baucus plan to put “conceptual” language online beforehand.

‘Amazing Leadership’

Arkansas Senator Blanche Lincoln, a Democrat who hasn’t announced a final position on the legislation, said Baucus showed “amazing leadership” in producing the draft. She praised it for cutting the budget deficit and reining in rising health-care costs.

Baucus aims to get a measure that will attract the 60 votes needed to block Republican delaying tactics. Democrats control 59 votes in the Senate, making bipartisan support necessary.

If the Senate finance panel passes its plan, the House and Senate have to combine their various measures, vote on them, then work together on a compromise and vote again. While three House committees passed versions of the legislation, there’s still work to be done to meld them and win support.

“Right now, I don’t think the leadership has the votes” to pass the legislation, said South Dakota Representative Stephanie Herseth Sandlin, a leader of the Blue Dog Coalition of self-described fiscally conservative Democrats.

Blue Dog Push

The Blue Dogs are fighting to retain a provision that requires any public option to negotiate rates with providers, as private insurers do, instead of pegging them to the lower levels paid by Medicare. “There was quite a bit of dismay” at a Blue Dogs meeting yesterday because “there seems to be this push” to set reimbursement rates, Herseth Sandlin said.

House Democratic leaders will produce the combined health- care legislation by next week and circulate it, said Representative John Larson, the Connecticut lawmaker who is chairman of the House Democratic caucus.

“That won’t be the final answer, but it will be something that all the members can now say, ‘OK, is this something we can all coalesce around?’” Larson said.

House Speaker Nancy Pelosi wouldn’t say when legislation would be brought to the floor. She said the Congressional Budget Office will need 10 days to two weeks to estimate the measure’s impact on federal spending once it’s written.

To contact the reporters on this story: Kristin Jensen in Washington at kjensen@bloomberg.net; Laura Litvan in Washington at llitvan@bloomberg.net

Last Updated: September 23, 2009 14:28 EDT