By: Erica Werner 

WASHINGTON - House Speaker Nancy Pelosi said Thursday that the case is growing stronger for allowing the government to sell health insurance in competition with private companies, contending recent attacks from the industry should dispel any doubts.

"The need for a public option is very clear," the California Democrat told reporters at her weekly news conference, making the argument as lawmakers on both sides of the Capitol work to finalize sweeping legislation extending coverage to millions of the uninsured.

Whether the Senate bill will include a public plan in any form is a major question mark, but "our House bill will have a public option," the California Democrat declared.

"Anyone who had any doubts about the need for such an option need only look at the behavior of the health insurance industry this week," Pelosi said. "The idea that we would have health insurance reform without a public option becomes less likely."

She was referring to an industry-funded study earlier that said insurance premiums would rise under health overhaul legislation advanced by the Senate Finance Committee earlier this week. Pelosi also referenced an insurance industry ad campaign targeted at seniors.

The speaker has been on the attack against health insurers for months, but the latest developments clearly strengthened her resolve to make them pay. She also said the House was now considering adding to its health care bill a $6.7 billion-a-year fee on insurance companies that is part of the Senate Finance package.

"There are some things we'd like to see happen to the insurance companies that they might not like," Pelosi said.

Although it's been clear for months that the House health overhaul bill would likely include a public plan, its design remains unsettled. However, the stronger version favored by liberals — one that would use reimbursement rates to providers based on Medicare rates — appears to be gaining favor.

Pelosi favors that version though she said a final decision hadn't been made. In the Senate, Majority Leader Harry Reid is weighing whether to include some version of a public plan as he works to merge the Finance bill with a more liberal version approved by the Health, Education, Labor and Pensions Committee.

Because of opposition from moderate Senate Democrats, any public plan Reid does include would likely be some type of compromise, such as leaving the decision on a public plan to states, or offering public coverage only as a backstop in areas where one insurer has a lock on the market — the approach favored by moderate Sen. Olympia Snowe, who has considerable leverage as the lone GOP vote in favor of the health care bill in the Finance Committee.

Pelosi didn't rule out or in supporting any such compromise but said that when the House and Senate meet for negotiations on their respective health care bills, she wants the House to have passed the strongest public plan version possible.

"I want to send our conferees to the table with the most muscle for the middle class," she said.

A spokesman for an industry group, America's Health Insurance Plans, didn't immediately respond to a request for response to Pelosi's comments. The insurance industry and other business groups contend a public plan could drive private insurers out of business because they wouldn't be able to compete with the weight of the federal government.

Negotiations were continuing in the House and Senate with the aim of beginning floor debate in each chamber within weeks, though likely not this month. Obama wants to sign a bill this year. Overall, the legislation would carry a price tag around $900 billion over 10 years, require most people for the first time to purchase insurance, provide subsidies to help lower-income people do so, and put new requirements on insurance companies to prevent them from charging much more to older people or denying coverage to people with pre-existing conditions.

The House and Senate would also have to reconcile the very different methods the two chambers use to pay for their health bills. The House legislation would raise taxes on high earners, whereas the Senate Finance bill would tax high-value health insurance plans.

Labor unions strongly oppose the insurance plan tax, fearing it would hit their members. The No. 2 Senate Democrat, Dick Durbin of Illinois, said Wednesday that he had similar concerns and that the bill probably will be changed to tax fewer high-cost health plans.

"Of course, that will cost money," Durbin said, adding that he did not know where it would come from.