Oct. 21 (Bloomberg) -- House Speaker Nancy Pelosi said health-care legislation being considered by her chamber would reduce the U.S. budget deficit over the next 20 years, meeting one of President Barack Obama’s main demands for the overhaul.

Pelosi cited preliminary estimates by the Congressional Budget Office that various plans being debated by House Democrats for the biggest health-care expansion in four decades would cut the deficit over both the short and long term.

“Whatever choice we make will reduce the deficit,” the California Democrat told reporters yesterday in Washington, “not only under 10 years but over 20 years.”

While the estimate may help the lawmakers overcome concern about the legislation’s cost, House and Senate Democrats are still grappling with issues dividing them, such as whether to set up a government-run health-insurance program -- a key feature of the House plan to cut costs -- and whether to require employers to provide their workers insurance.

Three House panels approved legislation in July that would have cost more than $1 trillion over 10 years. A member of Pelosi’s Democratic leadership team said yesterday the revised measures would come in lower, putting them roughly in line with proposed Senate legislation.

“We got a number of good options from CBO,” said Representative Chris Van Hollen of Maryland. All the versions analyzed by the nonpartisan budget office “give us a number below $900 billion,” the target set by Obama, he said.

Surpassing the Test

The budget office determined the House legislation “is not only going to meet the president’s test but surpasses it,” said Representative Xavier Becerra of California, another member of the Democratic leadership.

The legislation being considered by the House and Senate is intended to extend health coverage to tens of millions of the uninsured while curbing medical costs.

The CBO has already said legislation passed by the Senate Finance Committee would start cutting the deficit within 10 years.

In all the health-care proposals, insurers would have to take all applicants and Americans would be required to buy insurance, with new purchasing exchanges and government subsidies provided to help lower-income Americans.

Pelosi says the House will include the government insurance program, or public option, in its blended version. The question is whether the program would negotiate rates with care providers or peg reimbursements to those paid by Medicare.

‘Robust’ Option

At a meeting last night, Pelosi exhorted members of the Democratic caucus to support the most “robust” form of the public option, which links doctor reimbursements to low Medicare rates, according to Representative Raul Grijalva of Arizona. The caucus is “gravitating” toward that version of the public option, Grijalva said.

House Education and Labor Committee Chairman George Miller, a California Democrat, said supporters of that plan are “very close” to getting the 218 votes needed for passage. House Rules Committee Chairwoman Louise Slaughter, a New York Democrat, said “we are heading in that direction.”

In the Senate, the chamber’s health committee included in its bill a public option to compete with private insurers such as Hartford, Connecticut-based Aetna Inc., while the finance panel didn’t. The health panel also opted to require that employers cover their workers, an idea the finance committee also rejected.

Those two issues will be among the biggest obstacles to a House-Senate agreement on common legislation.

Not Over

“It’s not done yet,” Senate Majority Leader Harry Reid, a Nevada Democrat, told reporters yesterday of the effort in his chamber to merge its bills. He said officials involved in the talks were “leaning toward talking about a public option.”

The White House official in charge of the health-care effort, Nancy-Ann DeParle, told reporters the differences aren’t great and called the blending an “easy process.”

“I can’t say enough how much agreement there is between the two committees,” DeParle said.

To contact the reporters on this story: Kristin Jensen in Washington at kjensen@bloomberg.net; Brian Faler in Washington at bfaler@bloomberg.net

Last Updated: October 21, 2009 00:01 EDT