"Senators are making great progress and we're pleased that they're working together to find common ground toward options that increase choice and competition," said White House spokesman Reid Cherlin.

Senate Majority Leader Harry Reid speaks to reporters Tuesday in Washington about health care reform.

Senate Majority Leader Harry Reid said Tuesday that the Democrats had reached a "broad agreement" on the public option portion of the bill, but at least one liberal senator who took part in the negotiations wasn't so sure.

"It goes without saying it's been kind of a long journey," Reid said. "Tonight we've overcome a real problem that we had. I think it's fair to say the debate at this stage has been portrayed as a very divisive one."

Without revealing any details, Reid said the negotiating senators had reached "a broad agreement" that "moves this bill way down the road."

Two Democratic sources said the deal includes a proposal to replace the public option by creating a not-for-profit private insurance option overseen by the federal Office of Personnel Management, much like the current health plan for federal workers, and another allowing people 55 or older to buy into Medicare coverage that currently is available to those 65 or older.

But liberal Sen. Russ Feingold of Wisconsin, one of 10 Democratic senators working on the deal, said in a statement released after Reid's announcement that he would not "support proposals that would replace the public option in the bill with a purely private approach."

"We need to have some competition for the insurance industry to keep rates down and save taxpayer dollars," Feingold said. "I will base my vote on the bill on the entirety of what is in the bill, and whether I think the bill is good for Wisconsin."

Two senators who oppose a public option, moderate Republican Sen. Olympia Snowe of Maine and independent Sen. Joe Lieberman of Connecticut, said they were open to the non-profit private alternative to a public option.

"It can be an innovative approach," said Snowe, considered perhaps the lone GOP senator who might support the health care bill. "I just would need to understand more about how it would work."

Lieberman, a member of the Democratic caucus who said he would join a Republican filibuster if the health care bill contained a public option, called the alternative "an idea worth considering, so long as it remains private insurance companies that would be essentially regulated by OPM."

However, Lieberman and Snowe expressed concern over the idea of allowing Americans 55 or older to buy into Medicare.

"I want to make sure we're not adding a big additional burden to the Medicare program, which we need to figure out how to save, because it's going bankrupt," Lieberman said.

The idea appeals to liberal Democrats seeking to expand health coverage to more Americans and could offset their opposition to a bill that lacks a full public option as originally proposed.

Also Tuesday, the Senate rejected an amendment to tighten restrictions on federal funding for abortion now in the sweeping health care bill.

On a 54-45 vote, the chamber agreed to table the amendment, which effectively killed it from further consideration. Rejection of the amendment means the Senate health bill, if approved with the current abortion language, would differ from more restrictive language in the House version of the bill passed last month.

The amendment filed Monday by moderate Democratic Sen. Ben Nelson of Nebraska and Republican Sen. Orrin Hatch of Utah mirrored language in the House bill that prevents any health plan receiving federal subsidies from offering coverage for abortion.

Nelson has said he won't support a final bill without the tougher language in his amendment, but he also has signaled his stance could change.

Other ideas in the health care reform package under discussion include expanding the Medicaid program more than currently called for in the bill and expanding a proposal in the bill that would give states money to cover low-income people through existing programs instead of Medicaid.

Snowe flatly rejected a possible expansion of Medicaid.

"It's a huge burden on the states," Snowe said. "It is without question and without a doubt a very expensive proposition."