WASHINGTON (CNN) -- A top House Democrat said Tuesday he could vote for a health-care bill that lacks a government-funded public insurance option, signaling movement toward a compromise as Congress returned from an August recess dominated by the issue.
House Speaker Nancy Pelosi insisted that a public option was essential to passing health care reform legislation.
However, the statement by House Majority Leader Steny Hoyer, the chamber's second-ranking Democrat, differed from the insistence later Tuesday by House Speaker Nancy Pelosi that a public option was essential to passing a bill in the chamber.
The contrasting statements showed the political obstacles facing legislators as they confront at least five health-care proposals after hearing from a divided public at hundreds of town meetings during the August break.
Also Tuesday, the chairman of the Senate Finance Committee held out hope for reaching agreement with Republican colleagues on a compromise health-care bill that lacks a public option provision but includes a new tax on insurance companies that provide expensive health coverage.
Sen. Max Baucus, D-Montana, told reporters after meeting with five other committee members who have been negotiating a bipartisan proposal for months that only a handful of outstanding issues remain.
"There are about four or five things that I would say are somewhat significant," said Baucus, who gave the negotiators until 10 a.m. Wednesday to come up with counter-proposals. "There are ways to solve those."
President Obama and most Democratic leaders continue to back the public option, which has become the most contentious issue in overhauling the nation's ailing health-care system.
Obama will address a joint session of Congress on Wednesday night, with aides saying the president will be more specific than he has been so far about what he wants included in a health-care bill.
"People will come away understanding where he is on these big issues and these big questions," White House spokesman Robert Gibbs told reporters Tuesday. However, Gibbs sidestepped questions about whether Obama would sign a bill that lacks the public option favored by many Democrats.
Gibbs said Obama will emphasize that it is time for action on health care to get a bill passed by the end of the year.
"How much longer do we have to talk about this?" Gibbs said of a debate that dates back decades. Watch Obama speak on health care in his Labor Day speech »
Rep. Charles Boustany of Louisiana, a doctor, is slated to deliver the Republican response to the speech, said House Minority Leader Rep. John Boehner of Ohio on Tuesday.
Hoyer, the House Majority leader from Maryland, has previously hinted that a public option wasn't essential for House approval of a health care bill, but his statement Tuesday was more direct.
"I want to see us adopt a public option, but I think there is a lot in the bill that is very good in addition to the public option," he said of health-care proposals before the House. "Interpreted, that means if the public option weren't in there, I still could support a bill because I think there's a lot in there that's good."
Asked about Pelosi's insistence that a public option is necessary to get a bill through the House, Hoyer didn't answer directly, but indicated there would be support for a bill as long as it included major reforms.
"I think a bill can pass the House that the majority of the House believes enhances, moves forward substantially, the providing of access for affordable, quality health care," he said, adding that a bill "that accomplishes very substantially the objectives the president has put forward and we put forward can pass the House."
Public option divides Democrats
The Democratic majority in the House has been divided over the public option, with the progressive caucus representing liberals demanding inclusion of a strong government-run alternative while fiscally conservative Blue Dog Democrats have expressed reservations.
Republicans unanimously oppose a public option, claiming it would drive private insurers from the market due to government subsidies.
On the Senate side, the compromise proposal put together by Baucus drops the public option, according to a copy of the 18-page outline obtained Tuesday by CNN.
Instead, the plan would allow for the creation of nonprofit health-care cooperatives and tax insurance companies that provide the most expensive health-insurance plans. The tax would be for 35 percent of the amount if a plan's cost exceeds thresholds of $8,000 for individuals and $21,000 for families.
For example, an individual plan that costs $10,000 would require the insurance company to pay a tax of 35 percent on the $2,000 above the $8,000 threshold.
The proposed compromise emerged from months of negotiations by Baucus and five other Finance Committee members -- two Democrats and three Republicans -- as the only potential bipartisan bill so far.
As with other reform proposals, the bill would bar insurance companies from dropping a policyholder in the event of illness, add new protections for people with pre-existing conditions, and establish tax credits to help low- and middle-income families purchase insurance coverage, according to a source close to the negotiations. The plan also would create health-insurance exchanges to make it easier for small groups and individuals to buy insurance, the source said.
It includes other proposed new fees intended to generate $6 billion from health insurance companies and $4 billion a year from the medical device manufacturing sector starting in 2010, along with additional money from drug makers and clinical laboratories.
Under the proposal, health insurance would be mandatory for all Americans, and those lacking coverage could be fined, with a maximum penalty of $3,800 for families making more than 300 percent above the poverty line.
Criticism from key Republicans
The provision drew quick condemnation Tuesday from Sen. John McCain, R-Arizona, who asked on the Senate floor: "Do we want to do that to the American people?"
Considered part of a last-ditch effort to secure Republican votes for a health-care bill, the compromise proposal also received a lukewarm reception from Sen. Charles Grassley of Iowa, one of the Republicans among the committee's bipartisan "Gang of Six" negotiators.
Grassley criticized the proposed tax on expensive health insurance policies Tuesday morning, telling CNN it would likely be passed on to consumers in the form of higher premiums and therefore drive up the cost of insurance. However, he indicated he could support the idea of nonprofit health insurance cooperatives so long as the federal government had no role in operating them.
If "somebody comes along and wants a federal board" and the government ends up creating "a health-care Fannie Mae," that would be a "no-no for me," Grassley said.
In addition, a source close to Grassley, who asked not to be identified because the negotiations are private, told CNN that the senator wants the bill to be less expensive than the estimated $880 billion price tag.
Baucus said later Tuesday that he hoped to know before Obama's speech Wednesday night whether he can strike a deal with Grassley and the other participating Republicans, Sen. Mike Enzi of Wyoming and Sen. Olympia Snowe of Maine.
"Time is running out very quickly, and I suspect that I'll be making some decisions fairly quickly" on whether to continue seeking agreement with Republicans or to push ahead with the plan as now written, Baucus said.
White House and Democratic leadership sources have said for some time they do not think Grassley and Enzi will sign on to a compromise bill. However, the Grassley source told CNN that the senator would offer counter-proposals to Baucus on Wednesday morning, as requested.
Snowe, meanwhile, said Tuesday that a deal on Baucus' timetable was "overly ambitious," but that she remained committed to continuing to negotiate a bill that can win support from Republicans and Democrats. One of the Democrats involved in the negotiations, Sen. Kent Conrad of North Dakota, also questioned whether an agreement could be reached by the time Obama speaks to Congress Wednesday night.
The "trigger" provision
Snowe and the White House have been discussing a "trigger" provision that would mandate creation of a public-health-insurance option in the future if specific thresholds for expanded coverage and other changes are not met.
Support by Snowe would improve the chances of the Senate's Democratic majority to compile the 60 votes necessary to overcome a possible Republican filibuster against a health-care bill.
Pelosi, the House Democratic leader, on Tuesday refused to rule out a bill that contains a triggering mechanism. Instead, she warned the insurance industry that it should accept a public option as proposed now, instead of gambling on a trigger mechanism that she said would bring a more robust provision. Watch report on the "trigger" option from CNN's Dan Acosta »
"They'd be better getting a public option now than one that is triggered," she said.
The Senate Finance Committee is the last of five congressional committees needed to approve health-care legislation proposals before the topic can be taken up by both the full Senate and the full House of Representatives.
CNN's Lisa Desjardins, Deirdre Walsh, Ted Barrett, Dana Bash, and Ed Henry contributed to this report.