Congress back to wrestle with healthcare reform

By John Whitesides

WASHINGTON (Reuters) - After a week of holiday barbecues and hometown parades, the U.S. Congress returned to work on Monday to face what could be the year's most severe test -- finding common ground on a huge and costly U.S. healthcare overhaul.

President Barack Obama's top legislative priority has made unsteady progress, with lawmakers struggling to meld five separate healthcare bills into versions that can pass the Senate and House of Representatives by the August 8 start of a month-long recess.

The proposals still face plenty of obstacles, with lawmakers trying to trim costs, find ways to cover a price tag of $1 trillion or more, and gather Republican support for a Democratic-backed government-run public insurance option to cover about 46 million uninsured Americans.

Congress returned from the weeklong Independence Day break with no clear resolution in sight on those and other issues that are at the heart of a long-sought comprehensive overhaul of the healthcare system.

"We are getting to the point where choices have to be made -- and choices are hard," said Len Nichols, director of the Health Policy program at the New America Foundation.

The drive for reform, knocked off stride earlier this year by estimates it would cost a staggering $1.6 trillion, regained some traction in the last two weeks as cost estimates for the two key Senate proposals were trimmed.

Senate Finance Committee Chairman Max Baucus, a key player in the negotiations, was upbeat after announcing before the holiday break that the panel had lowered the price tag to about $1 trillion over 10 years.

An increase in taxes to pay for the plan could carry heavy political consequences in a difficult economic climate. That increases pressure to scale back the proposal, analysts said.