Nov. 23 (Bloomberg) -- Democrats who united last week to bring a sweeping health-care plan to the U.S. Senate floor still need to settle disagreements in their own ranks to pass President Barack Obama’s top domestic initiative.

Majority Leader Harry Reid won over two holdouts in his party hours before a 60-39 vote Nov. 21, ending questions about whether Democrats could stick together to clear the first hurdle to passage. The $848 billion, 10-year plan would make the biggest changes to the U.S. health-care system since the Medicare insurance program for the elderly was created in 1965.

“Our plan saves lives, saves money and saves Medicare,” Reid told reporters after the vote. While acknowledging challenges in the coming weeks, he said, “we can see the finish line” and predicted the bill will pass the Senate.

Senators Mary Landrieu of Louisiana and Blanche Lincoln of Arkansas, the last two Democrats to agree to allow the start of debate, are among those in the party who say big changes must be made to get their vote for the final bill.

“My vote to move forward on this important debate should in no way be construed by the supporters of this current framework as an indication of how I might vote as this debate comes to an end,” Landrieu said. “Much more work needs to be done.”

No Defections

Republican George Voinovich of Ohio didn’t vote. Every Senate Republican opposes the legislation, so Reid can’t afford any defections from his 60-member caucus when the Senate begins debate after the Thanksgiving recess. Reid aims for a final vote by the end of the year.

White House spokesman Robert Gibbs said in a statement the vote “brings us one step closer to ending insurance company abuses, reining in spiraling health-care costs, providing stability and security to those with health insurance, and extending quality health coverage to those who lack it.”

The legislation is intended to cover 31 million uninsured people and curb costs. Like a bill passed Nov. 7 by the U.S. House, the Senate plan would require all Americans to get health coverage. It would set up insurance-purchasing exchanges and provide subsidies for those who can’t afford coverage.

Republicans predicted the measure will explode the U.S. budget deficit, cause rationing of health care and fail to produce the cost savings that are a chief goal. Republican leaders say the plan’s true cost is about $2.5 trillion over a decade.

‘Spending Binge’

A vote for the bill would support “the spending binge that is leading to a massive and unsustainable long-term debt that will shackle our children to a future they can’t afford,” said Senate Republican leader Mitch McConnell of Kentucky. Still, McConnell sounded doubtful Republicans will offer an alternative. “What we don’t think the American people want is another 2,000-page bill,” he said on CNN yesterday.

“Senator Reid’s claim that the cost is $848 billion is the ultimate Washington gimmick, at taxpayers’ expense,” said Senator Charles Grassley of Iowa, the top Republican on the Finance Committee.

In debating the 2,074-page bill, senators will focus on issues including how to pay for the legislation and how to prohibit the use of federal money to fund abortions.

Public Option Debate

One sticking point: the Senate bill would create a government-run insurance program, the so-called public option, to compete against private insurers such as Hartford, Connecticut-based Aetna Inc. The measure would let individual states choose not to offer it.

Senator Joe Lieberman, a Connecticut independent who caucuses with Democrats, said on NBC’s “Meet the Press” program yesterday the public option may be more expensive than private insurance, adding that “it’s going to run a deficit, and it’s only the taxpayers who are going to pay for it.”

Another issue is whether to help finance the plan with a 40 percent tax on high-value insurance policies. Labor unions object to the tax, saying their members would be hit too hard.

Senate Democrats Ben Nelson of Nebraska, Lincoln and Landrieu oppose the public option and also want adjustments in the abortion language and more aid for small businesses.

Louisiana Aid

Landrieu said she won the inclusion of almost $300 million in federal assistance for low-income people in her state, not $100 million, as the Congressional Budget Office originally estimated. In remarks on the Senate floor before her vote, She said the aid was the No. 1 request of Louisiana’s Republican governor and that was “proud to have asked for it.”

The addition of the money “is not the reason I am moving to debate,” she said. The reason is “the cost of health care is bankrupting families and it is bankrupting our government.”

The funds are intended to adjust the percentage of federal payments to the state for Medicaid to avert a scheduled cut in U.S. assistance in 2011 for the program, which provides medical care for the poor. Louisiana had a bump in per capita income from the post-Katrina construction boom, which would force the decline in federal aid.

Lieberman says he won’t support a bill that includes the government-run plan, as has the only Republican who supported a health bill in a committee vote, Olympia Snowe of Maine.

Snowe favors creating a public option only if private insurers aren’t offering enough affordable policies.

On “Meet the Press,” Illinois Democrat Dick Durbin, the Senate majority whip, said the public option is negotiable. “There are many variations on the theme,” he said.

Abortion Dispute

In a sign that abortion remains a stumbling block, the U.S. Conference of Catholic Bishops sent a letter last week calling the Senate measure an “enormous disappointment” that didn’t “live up to Obama’s pledge to bar the use of federal dollars for abortion.”

Senate Democratic leaders say the measure keeps existing restrictions on the use of taxpayer money for abortion services. It requires state insurance purchasing exchanges to offer at least one policy with abortion coverage and one that doesn’t.

The House legislation goes further, barring the public plan from covering abortions and banning use of federal money on the exchange to buy a private policy that covers abortion.

If the Senate passes a bill, it would work toward a compromise with the House that would be voted on in both chambers before a measure could go to Obama.

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

Last Updated: November 23, 2009 12:08 EST