By David Alexander and Andy Sullivan

ANNANDALE, Virginia (Reuters) - President Barack Obama on Wednesday sought to build support to overhaul the U.S. healthcare system as a key Republican questioned whether bipartisan support among lawmakers is possible.

With Congress out of session for a week, Obama urged participants at a question-and-answer session in a Washington suburb to be wary of "scare tactics" and hugged a woman who said she did not have health insurance or money of her own to treat a tumor.

"You are what is going to drive this process forward. Because if Congress thinks that the American people don't want to see change, frankly, the lobbyists and the special interests will end up winning the day," Obama said at the meeting, which featured questions posed on YouTube and a parallel discussion on the White House Facebook page.

Obama has challenged Congress to send him legislation by the end of the year that will rein in rising healthcare costs and extend insurance to most of the 46 million Americans who lack it.

Obama hopes his top legislative priority will attract support from both parties, and on Tuesday received a welcome boost when Wal-Mart Stores Inc, the world's largest retailer, said it supported Obama's push to require large employers to offer healthcare insurance to workers -- a key part of the plan.

But an important Republican lawmaker on Wednesday said bipartisan support might not materialize if the Democrats who control both houses of Congress insist on creating a public plan to compete with private insurers, as Obama wants.

"Obviously, I'm not going to be a part of any effort of the government to take over health care in America," Senator Charles Grassley, the top Republican on the Senate Finance Committee, said on a conference call.

REPUBLICAN SUPPORT