Washington (CNN) -- The contentious debate over health care took a new twist Monday as Senate Majority Leader Harry Reid announced his decision to craft legislation including a public insurance option allowing states to opt out.
Reid's decision is a major victory for the more liberal wing of the Democratic Party.
Reid, a Nevada Democrat, has been melding legislation from the more conservative Senate Finance Committee and the more liberal Senate Health, Education, Labor, and Pensions Committee. The Health Committee included a form of the public option in its bill; the Finance Committee did not.
House Speaker Nancy Pelosi has insisted that the House of Representatives will pass a health care reform bill including a public option.
President Obama is "pleased that the Senate has decided to include a public option for health coverage," White House Press Secretary Robert Gibbs said in a written statement.
"He supports the public option because it has the potential to play an essential role in holding insurance companies accountable through choice and competition," Gibbs said.
Although Obama has indicated his preference for a public option, he has not indicated that he would a veto a bill without one. Several top Democrats have expressed concern that the traditionally conservative Senate would not pass a bill with a public option.
"While the public option is not a silver bullet, I believe it's an important way to ensure competition and to level the playing field for patients with the insurance industry," Reid said on Capitol Hill.
Polls show that a wide majority of Americans support a public option, he said. Individual states would have until 2014 to decide whether they want to opt out, he added.
Reid's health care bill, which will be given a cost assessment by the nonpartisan Congressional Budget Office, also includes a provision from the Finance Committee bill allowing for the creation of nonprofit health care cooperatives that would negotiate collective insurance coverage for members.
Reid hopes his compromise will appeal both to liberal senators insisting on a public option and to conservatives wary of a government-run plan, several Democratic sources said.
The sources said Reid does not have firm commitments for the compromise from 60 senators, the number required to break a Republican-led filibuster.
It is likely he would need that number for even a vote to begin Senate debate.
Reid's strategy of publicizing his intention is risky, multiple sources also said. A Reid aide said Sunday, however, that the majority leader is cautiously optimistic, based on a series of conversations with Democratic senators, that he will ultimately find the votes.
"I believe we ... will have the support of my caucus," Reid said Monday.
An administration official went so far as to call Reid's move "dangerous" but quickly followed by saying Reid knows his caucus better than anyone and will therefore have the support of the White House.
Reid said he was disappointed that congressional Republicans have almost unanimously opposed Democratic-led reform efforts. The number of moderate Senate Republicans can now be counted "on two fingers," he argued.
Reid said he hoped to eventually win over Maine Sen. Olympia Snowe, the lone Republican to back the Finance Committee bill. Snowe has indicated her preference for 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 were not met.
Snowe issued a statement Monday, saying she was "deeply disappointed" with Reid's decision on the public option. She argued that a decision in favor of a trigger "could have been the road toward achieving a broader bipartisan consensus in the Senate."
"It's unfortunate the Senate majority leader decided to take a different path, because he did say it was a pretty good doggone idea with respect to the trigger in September, so I don't what has happened to change his mind," she said later.
"It's regrettable, because I certainly have worked in good faith all of these months on a bipartisan basis and, as you know, have been standing alone at this point as a Republican to do so because I believe in good public policy," Snowe added.
Reid said he was "disappointed that the one issue, the public option, has been something that's frightened" Snowe.
CNN's Dana Bash and Ted Barrett contributed to this report.