U.S. & World News

GRAND JUNCTION, Colo. (CBS) ― President Barack Obama's administration signaled on Sunday it is ready to abandon the idea of giving Americans the option of government-run health insurance as part of his ambitious health care proposal.

Facing mounting opposition to the overhaul, administration officials left open the chance for a compromise with Republicans that would include health insurance cooperatives. Such a concession is likely to enrage his liberal supporters but could deliver Obama a much-needed win on a top domestic priority opposed by GOP lawmakers.

Officials from both political parties reached across the aisle in an effort to find compromises on proposals they left behind when they returned to their districts for an August recess.

• Video: Obama Calls Out Health Insurance Companies
• Story: Health Care Town Hall Meetings Getting Ugly
• Video: Obama, Pharmaceuticals Strike Back Room Deal?

Obama has been pressing for the government to run a health insurance organization to help cover the nation's almost 50 million uninsured, but Republicans remain steadfast in arguing against it.

Health and Human Services Secretary Kathleen Sebelius said that government alternative to private health insurance is "not the essential element" of the administration's health care overhaul. The White House would be open to co-ops, she said, a sign that Democrats want a compromise so they can declare a victory on the showdown.

"I think there will be a competitor to private insurers," Sebelius said. "That's really the essential part, is you don't turn over the whole new marketplace to private insurance companies and trust them to do the right thing."

Obama's top spokesman refused to say a public option was a make-or-break choice for the administration.

"What I am saying is the bottom line for this for the president is, what we have to have is choice and competition in the insurance market," White House press secretary Robert Gibbs said.

• Web: Congressional Budget Office On Health Care Costs
• Web: GOP Criticism Of Obama's 'Grand Experiment'
• Web: White House Health Reform 'Reality Check' Page

Sen. Kent Conrad, D-N.D., chairman of the Senate's budget committee, pushed the co-op model as an alternative.

"It's not government-run and government-controlled," he said. "It's membership-run and membership-controlled. But it does provide a nonprofit competitor for the for-profit insurance companies, and that's why it has appeal on both sides."

As proposed by Conrad, the co-ops would receive federal startup money, but then would operate independently of the government. They would have to maintain the same financial reserves that private companies are required to keep to handle unexpectedly high claims.

Sen. Richard Shelby, R-Ala., said Obama's team is making a political calculation and embracing the co-op alternative as "a step away from the government takeover of the health care system" that the GOP has pummeled.

"I don't know if it will do everything people want, but we ought to look at it. I think it's a far cry from the original proposals," he said.

Republicans say a public option would have unfair advantages that would drive private insurers out of business. Critics say co-ops would not be genuine public options for health insurance.

• Watch: 'President In Mont.: 'TV Loves A Ruckus'
• Web: Obama Op-Ed Makes Case For Overhaul

Rep. Eddie Bernice Johnson, D-Texas, said it would be difficult to pass any legislation through the Democratic-controlled Congress without the promised public plan.

"We'll have the same number of people uninsured," she said. "If the insurance companies wanted to insure these people now, they'd be insured."

Rep. Tom Price, R-Ga., said the Democrats' option would force individuals from their private plans to a government-run plan, a claim that the nonpartisan Congressional Budget Office supports.

"There is a way to get folks insured without having the government option," he said.

Obama, writing an opinion piece in Sunday's New York Times, said political maneuvers should be excluded from the debate.

"In the coming weeks, the cynics and the naysayers will continue to exploit fear and concerns for political gain," he wrote. "But for all the scare tactics out there, what's truly scary — truly risky — is the prospect of doing nothing."

Congress' proposals, however, seemed likely to strike end-of-life counseling sessions. Former Alaska Gov. Sarah Palin has called the session "death panels," a label that has drawn rebuke from her fellow Republicans as well as Democrats.

Sen. Orrin Hatch, R-Utah, declined to criticize Palin's comments and said Obama wants to create a government-run panel to advise what types of care would be available to citizens.

"In all honesty, I don't want a bunch of nameless, faceless bureaucrats setting health care for my aged citizens in Utah," Hatch said.

Sebelius said the end-of-life proposal was likely to be dropped from the final bill.

"We wanted to make sure doctors were reimbursed for that very important consultation if family members chose to make it, and instead it's been turned into this scare tactic and probably will be off the table," she said.

Sebelius spoke on CNN's "State of the Union" and ABC's "This Week." Gibbs appeared on CBS' "Face the Nation." Conrad and Shelby appeared on "Fox News Sunday." Johnson and Price spoke with "State of the Union." Hatch was interviewed on "This Week."

Separating Fact From Fiction In The Health Care Debate

President Obama continues his campaign-style effort to win the hearts and minds of Americans over health care reform. The latest stop - a town hall meeting in Grand Junction, Colorado.

"These struggles have always boiled down to a contest between hope and fear," the president said Saturday.

That was true when social security was born. That was true when Medicare was created. And it' s true in this debate today, reports CBS News correspondent Martha Teichner.

• Watch: Getting To The Core Of The Health Debate

For the third time in five days, Mr. Obama used the presidential bully pulpit on behalf of what he's now calling health insurance reform in an effort to seize back control of the agenda from an angry opposition.

Here's a question: Do they even know what's in the bills currently being considered by Congress?

Do you?

"For all the chatter and yelling and shouting and the noise, what you need to know is this: If you don't have health insurance, you will finally have quality affordable options once we pass reform," Mr. Obama said last week at a town hall in Portsmouth, New Hampshire.

Right now, though, reform is a moving target, still changing. There is no such thing as an Obama bill.

The president presented a wish list to Congress, where five different committees - three in the House and two in the Senate - are in various stages of drafting bills, with some big differences but a lot of similarities.

"All agree that all Americans should be covered. They all agree that you cannot be denied coverage because of a pre-existing condition," said Ralph Neas, CEO of the National Coalition on Health Care, a non-partisan alliance of groups working for health care reform.

"The all agree that if you leave a job, you don't lose health care coverage. They all agree if you have health care coverage, you can't be denied it once you get sick."

"And they would mandate that all but the smallest employers would have to provide insurance for their workers," adds Jonathan Oberlander, a professor of health policy and management at the University of North Carolina at Chapel Hill.

"The second thing that they would do is create a new marketplace, where the uninsured and small businesses could go to get insurance. It would be called a health insurance exchange and if you didn't have insurance from your employer, you would get subsidies from the government and you go to this exchange and you could choose what insurance plan you would have." Oberlander said.

And each of the proposals would expand Medicaid. Where there's disagreement is over how all of this will be paid … and over the so-called "public option," a government-run health care plan that would be available alongside private plans.

The public option is by no means a done deal, but tell that to the people doing all the yelling at town hall meetings last week.

"I don't want this country turning into Russia, turning into a socialist country," a woman said at a town hall organized by Pennsylvania Sen. Arlen Specter, a Democrat. Specter denied that's where the country was heading.

"The reason they oppose the public option is they think it's a stalking horse. They think the real plan of President Obama, or those who want health care reform, is to have single-payer, totally government-run health care reform," Neas said. "It will fail if people think it is tilted to kill the private insurance industry."

And now to address some of the health care reform's hottest hot-button issues, such as the reference to a "death panel" on Sarah Palin's Facebook page.

"The America I know and love is not one in which my parents or my baby with downs syndrome will have to stand in front of Obama's death panel so his bureaucrats can decide whether they are worthy of health care. Such a system is downright evil," the message read.

The reality?

"You would have a greater chance of being killed by a Death Star in one of the Star Wars movies than you would being killed by a government-run death panel, which is to say they don't exist," Oberlander said.

Another hot-button issue - taxpayer-funded abortions.

"On the contrary, there is language in the House Energy and Commerce bill that says federal monies cannot be used for abortion," Neas said.

And what about those television ads aimed at the elderly, claiming that seniors may lose their own doctors?

"That is absolutely false," Oberlander said. "In fact, the opposite is true. This legislation is absolutely good for seniors."

"There is now, every year, $2.5 trillion spent on health care. The United States spends twice as much as the average of all the industrialized nations in the world. One half of all the foreclosures, one half of all the bankruptcies [in the country] are because people can't pay their medical bills and it's because of the broken system we have," Neas said.

The American public agrees.

"Our most recent poll found that more than eight out of 10 Americans think the U.S. health care system either needs fundamental change or needs to be completely rebuilt," said Sarah Dutton, the head of surveys at CBS News. "Even 70 percent of Republicans feel that way."

A poll at the end of July showed nearly two-thirds of Americans supporting some sort of public option - 66 percent exactly, although fewer Republicans, 49 percent, than Democrats, 85 percent.

Where Americans are most ambivalent is over the cost of health care reform.

"We can't spend any more money. We gotta stop," one angry opponent said in Mississippi.

That's the third hot-button issue.

"You can't tell us how you're going to pay for this," one person questioned Mr. Obama in Montana.

"Look, you're absolutely right that I can't cover another 46 million people for free," the president replied. "Two-thirds of the money we can obtain just from eliminating waste and inefficiencies."

But the Congressional Budget Office has put a trillion-dollar price tag on health care reform over the next 10 years and calculates it will add $239 billion to the federal deficit.

And what happens if health care reform fails?

"The Urban Institute estimates that as many as 66 million Americans could be without health insurance in 2019," Oberlander said.

"There is now, every year, $2.5 trillion spent on health care. This $2.5 trillion will soon be $3.5 trillion, $5 trillion. Our economy cannot sustain it now," Neas said.

In the face of these estimates, President Obama has often repeated the message that "for all the scare tactics out there, what is truly scary is if we do nothing."

A contest between hope and fear is what Mr. Obama has called the fight for health care reform. At week's end, with the decibel level still rising, President Obama's battle cry had the unmistakable sound of his presidential campaign.

"I need your help," the president said in Colorado. "I need you to stand against the politics of fear and division. I need you to knock on doors and spread the word."

CBS News correspondent Martha Teichner contributed to this report.

(© 2010 CBS Broadcasting Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.)