us healthcare overhaul poised for big step forward

WASHINGTON (Reuters) - U.S. President Barack Obama's push for sweeping healthcare reform was poised to clear a key Senate hurdle on Tuesday, opening a new phase in the raging debate over his top domestic priority.

The Democratic-controlled Senate Finance Committee will consider its plan to cut healthcare costs, regulate insurers and expand coverage at a meeting starting at 10 a.m. EDT (1400 GMT), with a vote a few hours later.

If approved as expected, the bill would be merged with the Senate Health Committee's version over the next few weeks and moved to the full Senate, setting off an eventual floor battle with Republicans who call it too costly and a heavy-handed government intrusion.

The Finance Committee vote will be closely watched to see if Senator Olympia Snowe, a moderate from Maine, becomes the first Republican in Congress to back a health reform bill and if any of Obama's fellow Democrats defect on the issue.

Snowe's support could give Democrats a crucial swing vote as they try to hold the 60 Senate votes needed to overcome procedural roadblocks. Democratic defections would create a major threat to passage in the Senate, where the party controls only 60 seats and has no margin of error.

Two weeks of panel debate left the key elements of Chairman Max Baucus's plan intact. Support was strengthened by last week's estimate from nonpartisan analysts that it would cost $829 billion -- well below Obama's target of $900 billion -- and meet the president's goal of reducing the budget deficit.

The insurance industry launched an attack on the measure on Monday, releasing a report it commissioned that charged the bill would drive up costs and insurance premiums. The White House dismissed the report as "self-serving."

The Finance Committee bill requires all U.S. citizens and legal residents to have health insurance and provides subsidies on a sliding scale to help them buy it.

It would create state-based exchanges where individuals and small businesses shop for insurance and would bar insurers from refusing to cover people with pre-existing conditions or dropping those with serious illnesses.

The bill does not include a government-run "public" insurance option backed by Obama and liberal Democrats as a way to create competition for insurers. Republican critics say that approach would undermine the private insurance industry.

The other Senate bill, passed by the Health Committee, includes a public insurance option and supporters have vowed a floor fight over the issue in the Senate.

Democratic leaders in the House of Representatives have been trying to meld three versions of a healthcare bill. Last week they submitted a single bill to budget analysts for cost estimates that included three different versions of a public insurance option.