Obama wants a bill this year that would provide coverage to the nearly 50 million Americans who lack it and reduce medical costs.

In a statement, Obama welcomed the legislation, saying it "reflects many of the principles I've laid out, such as reforms that will prohibit insurance companies from refusing coverage for people with pre-existing conditions and the concept of insurance exchanges where individuals can find affordable coverage if they lose their jobs, move or get sick."

The Senate Health Education, Labor and Pensions bill also calls for a government-run insurance option to compete with private plans as well as a $750-per-worker annual fee on larger companies that do not offer coverage to employees.

Sens. Edward M. Kennedy, D-Mass., and Christopher Dodd, D-Conn., said in a letter to colleagues that their revised plan would cost dramatically less than an earlier, incomplete proposal, and help show the way toward coverage for 97 percent of all Americans.

The Congressional Budget Office, in an analysis released Thursday evening, put the net cost of the proposal at $597 billion over 10 years, down from $1 trillion two weeks ago. Coverage expansions worth $645 billion would be partly offset by savings of $48 billion, the estimate said.

However, the total cost of legislation will rise considerably once provisions are added to subsidize health insurance for the poor through Medicaid. Those additions, needed to ensure coverage for nearly all U.S. residents, are being handled by a separate panel, the Senate Finance Committee. Bipartisan talks on the Finance panel aim to hold the overall price tag to $1 trillion.

The Health Committee could complete its portion of the bill as soon as next week, and the government health insurance option virtually assures a party-line vote.