Associated Press
Senate Majority Leader Harry Reid, D-Nev.

WASHINGTON — Senate Democratic liberals are seeking expansion of two large federal programs, Medicare and Medicaid, in exchange for dropping a government-sold insurance option from health care legislation sought by President Barack Obama, several lawmakers said Monday.

Under the potential trade-off with party moderates, near-retirees beginning at age 55 or 60 who lack affordable insurance would be permitted to purchase coverage under Medicare, which generally provides medical care beginning at 65. Medicaid, the federal-state health care program for the poor, would be open to all comers under 300 percent of poverty, or slightly over $66,000 for a family of four.

Senators and aides said the changes have been discussed extensively in recent days as a small group of moderate and liberal Democrats search for a middle ground to assure passage of the bill atop Obama's domestic agenda.

Given the complexities of the two programs, and the White House's goal of passing legislation by year's end, it wasn't clear whether the negotiations would ultimately prove successful, or whether they merely were a last stab by liberals to salvage some concession in a monthslong debate.

Senate Majority Leader Harry Reid, D-Nev., imposed a deadline of Tuesday to complete the talks, according to Sen. Tom Harkin, D-Iowa, a participant in the negotiations.

"It's one of those kind of things in the middle that doesn't make everybody very happy but that's our compromise," Harkin said. "It's something I'm going to probably have to live with."

As the search for compromise intensifies, several Democrats said a plan by Sen. Maria Cantwell, D-Wash., was receiving new interest. It gives states an option to negotiate with private industry to provide group coverage for lower income residents. Currently, the bill allows that for any state's residents up to twice the federal poverty level, about $44,000 for a family of four, but that could be raised if negotiators decide they want to do so.

"There's push and pull," said Sen. Chuck Schumer, D-N.Y., who has been involved in the discussions. "We have to find the right balance that satisfies the party as to how much government involvement there should be and how much private involvement."

Said Senate Finance Committee Chairman Max Baucus, D-Mont.: "It's probably the closest proposal thus far that could get the support of 60 senators. It's got legs."

Democrats need 60 votes to pass their bill over Republican objections, and while liberals far outnumber moderates inside the party, they appear at least four votes short of the number needed. That gives moderates such as Sens. Blanche Lincoln of Arkansas, Mary Landrieu of Louisiana, Ben Nelson of Nebraska and Joe Lieberman, an independent from Connecticut, key leverage as the White House and Reid try to complete work on the bill.

At its core, the legislation is designed to expand coverage to more than 30 million who lack it, while curbing controversial insurance industry practices and generally restraining the growth of medical spending.

Several party officials said the negotiations involving the two wings of the Democratic caucus had given Sen. Mark Pryor, D-Ark., a newly prominent role on the health care legislation, and he has held several meetings in recent days designed to facilitate a compromise. Pryor represents his state in the Senate with Lincoln, who faces a difficult re-election challenge in 2010.

The closed-door talks have proceeded while Republicans on the Senate floor have mounted a series of politically charged challenges to the health care bill. Whatever the long-term political impact, they so far they have failed to win any major changes.

The latest such maneuver came when the Senate rejected an attempt by Sen. Judd Gregg, R-N.H., to prevent Medicare from "being raided" to pay for health care. The vote was 43-56. The bill calls for cuts totaling $460 billion over a decade from projected Medicare spending, much of which would be used to provide subsidies to help lower and middle-income Americans purchase health care.

Another contentious issue is slated for a vote Tuesday, when conservatives from both parties try to stiffen abortion restrictions in the legislation.

As drafted, the bill requires insurance companies to offer policies that both provide and lack abortion coverage in any state where they offer coverage under a new marketplace where consumers would shop for government-regulated insurance policies.

Any consumer who receives federal subsidies to defray the cost of insurance would be required to use personal funds to pay for abortions, except in cases of rape, incest or if the life of the mother was in jeopardy.

Conservatives led by Nelson and Orrin Hatch, R-Utah, want to ban any insurance plan from providing most abortions if any of their policyholders receive a federal subsidy, a stronger restriction that is more in line with the provisions in the House-passed bill.

While the proposed change enjoys bipartisan support, it is unlikely to command the 60 votes needed to prevail.

It was unclear in advance of the vote whether abortion opponents would make another attempt if their first one failed, or whether the issue would be laid aside until any House-Senate negotiations on a compromise.

Both on and off the Senate floor, the health care debate has become intensely political.

Michael Steele, chairman of the Republican Party, demanded an apology from Reid during the day after the majority leader criticized critics favoring a slower, more incremental approach to health care.

"You think you've heard these same excuses before? You're right. In this country there were those who dug in their heels and said, 'Slow down, it's too early. Let's wait. Things aren't bad enough.' — about slavery," Reid said.

Steele said if Reid won't apologize, "Democrats must immediately reconsider his fitness to lead them."

Jim Manley, a spokesman for Reid, said in response, "Today's feigned outrage is nothing but a ploy to distract from the fact they (Republicans) have no plan to lower the cost of health care, stop insurance company abuses or protect Medicare.