WASHINGTON – By the narrowest of margins, the Senate Finance Committee on Thursday approved an amendment by Sen. Maria Cantwell that would allow other states to establish basic health care plans for low-income residents similar to the one in Washington, but with the federal government providing the funding.

Cantwell, D-Wash., declined to liken her proposal to a controversial “public option,” which has become a major sticking point in health care reform. But it does allow the states, if they choose, to negotiate with insurance companies for lower rates on health coverage polices for those living barely above the poverty line and provides federal dollars to pay for it.

Cantwell said her proposal would cover about 75 percent of those who currently don’t have health insurance.

The amendment to a health care bill written by Montana Democratic Sen. Max Baucus, the committee chairman, was approved 12-11. All of the committee’s Democrats except for Arkansas Sen. Blanche Lincoln supported Cantwell’s amendment, while all of the Republican members opposed it.

“You worked on it with mongoose tenacity,” Baucus said as the committee neared a vote. “You are ahead of the curve.”

Cantwell later said, “I don’t know what a mongoose is, but I am determined and dogged.”

The adoption of her amendment, along with a change in the Medicare reimbursement rates that could benefit Washington state, will be enough for Cantwell to support Baucus’ bill. Several weeks ago Cantwell said she couldn’t support legislation that didn’t include a public option and the change in Medicare reimbursement.

“This is a foothold in a big mountain to climb,” Cantwell said, adding that though the Baucus bill could still be improved, she will work for it.

The committee could vote on the bill early next week, and Senate Majority Leader Harry Reed has said he wanted a bill on the floor by mid-October.

In drawing up her amendment, Cantwell said she worked with Washington Gov. Chris Gregoire’s office and that of Washington House Speaker Frank Chopp. The state’s basic plan covers about 67,000 low-income people, but the state pays for it, Cantwell said.

Under Cantwell’s federal proposal, those between 133 percent and 200 percent of the poverty line would be eligible for a state’s basic plan. That would include a family of four with an income of $44,000. Those living a below 133 percent of the poverty line are eligible for Medicaid.

Baucus’ bill provides low-income people with a $6,500 health insurance tax credit. Under the Cantwell amendment, the $6,500 instead would be redirected to states that decided to provide a basic health care plan.

The states would be allowed to negotiate with companies providing managed care to get the lowest-cost premiums.

“Our objective is to drive down the cost of health care,” Cantwell said as the committee debated her amendment. “It hits the sweet spot — a public plan using private insurers.”

Other Democrats supported the amendment.

“This is an important piece of the puzzle,” said Sen. Debbie Stabenow, D-Mich.

Sen. Charles Schumer, D-N.Y., said it would give the states more choices and more options.

“No matter what your party, ideology or philosophy, I think this should get broad support,” Schumer said.

But Republicans countered that the cost were uncertain and could affect other parts of the Baucus bill, such as medical exchanges or markets that consumers and small business could use to purchase health care.

“This could have unintended consequences,” said Sen. John Cornyn, R-Texas. “I think there is danger to try and implement this on a national basis.”

Rep. John Kyl, R-Ariz., said he supports state experimentation but was “concerned if this becomes law.”

After the vote, Cantwell said Washington state should be proud of its basic health plan.

“It will become a model and help drive the country toward better health care,” she said.

Les Blumenthal: 202-383-0008

lblumenthal@mcclatchydc.com