(The New York Times News Service) -- WASHINGTON -- The Senate Finance Committee may represent President Obama's last and best chance of enacting the historic remaking of the U.S. health care system, but senators on the panel found out Tuesday just how hard it will be to get legislation approved.

The health care measure unveiled last week by the committee's chairman, Sen. Max Baucus, D-Mont., was greeted with 564 amendments during the panel's first hearing on the proposal.

Baucus repeated the word "balanced" as he offered changes to appease liberals while not offending Democratic conservatives, and simultaneously kept on board the lone Republican who expressed a deep desire to act: Sen. Olympia Snowe of Maine.

Snowe is critical to Democratic hopes. After months of closed-door, bipartisan negotiations, she is the last Republican at the table. With the death of Sen. Edward Kennedy, D-Mass., and the illness of Sen. Robert Byrd, D-W.Va., Snowe could provide Democrats the 60th vote they need to overcome a Republican filibuster -- and political cover to conservative Democrats.

Senate liberals are insisting on generous subsidies for private insurance coverage and a "public option" of government-run insurance. Conservatives fearful of rising government costs and new federal programs prefer private insurance cooperatives.

Each compromise Baucus makes with liberals tends to add to the roughly $800 billion that the legislation is estimated to cost over 10 years, undermining the promise of deficit reduction that is its chief selling point.

Such clashes are certain to play out through hours of debate and votes. Democrats such as Kent Conrad of North Dakota, a fiscal hawk, will battle to preserve the private insurance "cooperatives" he designed as a substitute for a government-run plan. Sen. Jay Rockefeller, D-W.Va, who loathes the co-ops, will wage an all-out fight to restore a public option.

In the middle sits Snowe. Citing a "perfect storm" of rising costs that threatens Americans who now have insurance, she made clear Tuesday she wants to vote for a sweeping overhaul.

The Senate Finance panel legislation contains many elements Republicans have demanded, including a health insurance "exchange" that Snowe called a "powerful marketplace" that would allow as many as 25 million people to shop for policies.

But she made equally clear that she will demand concessions for her vote, calling the Baucus draft "a solid starting point" but saying "we are far from the finish line.

"We simply cannot address one-sixth of our economy, and a matter of such personal and financial significance to every American, on a legislative fast track," Snowe said, warning that she will insist on a cost estimate before a final committee vote.

Republicans, some of them glaring at Snowe as she spoke, made clear they will have no part of a Democratic version of health reform, arguing that it will increase taxes, cut Medicare benefits to the elderly, and lead to government rationing.

Sen. Chuck Grassley, R-Iowa, after months of negotiations with Democrats, complained that the White House refused to assure him that no public option will be in a final bill.

House Speaker Nancy Pelosi, D-Calif., has promised that a House bill will have a public option. She will fight to preserve it if and when House and Senate versions are melded.

After Democrats argued that his initial legislation last week would force too many people to buy insurance they could not afford, Baucus added $50 billion in subsidies. These would raise the income threshold at which people would qualify for help, to $43,200 for individuals and $88,200 for a family of four. He also reduced the much-criticized fines on people who refuse to obey a mandate to buy health insurance, from $3,800 to $1,900 for a family of four.

Baucus also loosened a tax on "Cadillac" high-cost insurance plans -- his main source of revenue -- for firefighters and other "high-risk" workers, many of whom are unionized.

Unions and their Democratic allies oppose a tax on high-cost health plans; Baucus and many economists see the tax as key to reducing costs because such plans encourage over-use of medical services.

To appease conservatives, Baucus also carved out an exemption for those who have only catastrophic insurance, allowing them to keep those policies and not buy additional coverage.

The Senate Finance Committee bill is the last of five to be voted on in the House and Senate. Baucus promised a final vote this week, but even if amendments are limited, those that remain will contain serious policy issues that will take time to resolve.

Senate Majority Leader Harry Reid, D-Nev., indicated a desire to let members battle out their differences in the committee.

"You're going to find there's going to be a very healthy, deliberate debate," Reid said. "There have been changes proposed by both Democrats and Republicans to improve what Senator Baucus has laid down."

He bent over backward to praise Snowe, calling her arguments "brilliant."

--

(E-mail: clochhead@sfchronicle.com)

Copyright 2002 The New York Times News Service. All rights reserved.