October 27, 2009 Pelosi: It's not really a public option, it's a consumer option Play video

(NECN: Washington) - Inclusion of a government insurance plan in Senate health care legislation is posing problems for moderate senators whose votes are critical to passing the bill.

Reverberations could be felt across the Capitol, where House Democratic leaders are finalizing a bill with a government plan.

It's not clear that Sen. Harry Reid, D-Nev., has the 60 votes needed for the controversial government insurance plan to prevail on the Senate floor. If it fails, that could affect the thinking of House members, particularly moderate Democrats.

Lawmakers must meld the House and Senate versions of the health care bills.

House Democratic leaders have been debating the shape the government insurance plan will take in their bill, with Speaker Nancy Pelosi pushing for a strong version that would tie payment rates to providers to rates paid by Medicare - likely resulting in cheaper costs for patients but lower payments to hospitals and doctors, something that troubles moderates.

Pelosi doesn't appear to have the votes for that plan.

Reid's plan would allow individual states to opt out of the public insurance plan. In the wake of his announcement Monday the focus of the health overhaul debate shifted to the handful of moderate senators whose support will be crucial to get him to 60.

Reid's decision amounted to a victory for liberal lawmakers who have pushed for a public insurance option they contend would

Both the House and Senate are struggling to complete work by year's end on legislation extending coverage to millions who lack it, banning insurance industry practices such as denying coverage because of pre-existing medical conditions, and slowing the rise in medical costs nationally.

*Material from The Associated Press used in this report*