By John Whitesides
WASHINGTON (Reuters) - The U.S. Congress has started work on a broad overhaul of the healthcare system in a rare spirit of optimism, but brewing battles over its cost, scope and structure could still scuttle hopes for a solution.
From President Barack Obama's declaration that "the stars are aligned" on healthcare to a recent cost-cutting pledge by a half-dozen industry groups, momentum has built steadily on an issue that has eluded consensus for decades.
The first test comes in a few weeks when Congress unveils legislation, launching months of expected wrangling over the specifics of tax hikes, spending cuts and the government's role in a revamp that could cost as much as $1.5 trillion.
"It's true that the planets are aligned for healthcare as never before, but there are still big obstacles," said Drew Altman, president of the Kaiser Family Foundation, a nonpartisan health policy group.
"We are about to enter a very different stage of the debate once everyone sees the specifics and how it will be paid for," he said. "Getting a comprehensive agreement is a high hill to climb. We have failed many times."
The push for reform is still haunted by the most spectacular of those failures, the collapse of the Hillary Clinton-led effort in 1994. But analysts say Obama so far has avoided some of the pitfalls that doomed that plan.
Obama has pursued a more open approach than Clinton in developing the legislation, which he hopes will curb costs and expand coverage to many of about 46 million uninsured Americans.
He asked congressional leaders to put together the bill, rather than presenting it to them as a finished package, and brought to the table many of the groups like insurers who helped kill the Clinton plan.
Congressional leaders have backed a quick timetable for approval, limiting time for opposition to mount. The first proposal will be unveiled in the next few weeks and Obama wants to sign a final bill before the end of the year.
"The whole approach has been eminently superior, tactically, to 1994," said Ed Howard, executive vice president of the Alliance for Health Reform, a non-partisan health policy education group.
Obama has a strong political hand after a decisive White House win in November over Republican John McCain, and has large majorities of fellow Democrats in both houses of Congress to work with.
Obama and McCain backed dramatically different approaches to healthcare reform. But the issue rarely won the spotlight in a 2008 campaign dominated early by the debate over wars in Iraq and Afghanistan and late by the collapsing economy.
Since then, the economic pain of the recession has strengthened the drive for reform, spotlighting worries about spiraling costs and bolstering Obama's argument that reform is vital to an economic cure.
"The status quo has been shown to be unsustainable right before our eyes," said Len Nichols, director of the Health Policy program at the New America Foundation. "Healthcare is an economic issue again. How do you go out there and tell people we will not do anything about this?"
But economic concerns will fuel what is likely to be the biggest battle over the plan: How much will it cost and how is it paid for?
Lawmakers have floated a variety of possible tax proposals to help pay for covering the uninsured. Nearly any tax hike will run into opposition from interest groups, and many could drain public support.
"A lot of middle-income people who have insurance are probably going to read an article soon saying they are going to have to pay a lot more for this at a time when they are economically hurting," said Bob Blendon, a health policy and political analysis professor at Harvard University.
"And they are going to say, 'That's not what I mean by health reform'," he said.
Republican opponents have been slow to organize and uncertain how to proceed as they search for the proper way to frame their warnings that Obama's approach could reduce choice and lead to a government-run healthcare system.
"We're dealing with shadows. No one knows what is going to be in the bill so it's impossible to assess," said Gary Ferguson, a Republican pollster who specializes in healthcare.
The leader of the first organized campaign against the overhaul is Rick Scott, a multimillionaire ousted as head of the huge healthcare firm Columbia/HCA during a fraud investigation that eventually led to $1.7 billion in judgments against the company.
But the insurance industry, which helped kill the Clinton plan, could still spring to life if the legislation includes a public insurance plan favored by Obama and many Democrats that would help cover the uninsured and create competition for private insurers.
Opponents say it could drive companies out of business. But Blendon said given the economy, it will be easier to find a compromise on the issue of a public plan than on the money.
"Because of the problem of finding the money to pay for it, the bill could wind up being more modest in the beginning or it could be phased in over a longer period of time," he said.
"There are so many options here. The one option Obama can't accept is to go back to Democrats and say 'I couldn't get a bill passed.'"