by John Whitesides and Donna Smith

A key U.S. Senate committee endorsed a sweeping healthcare overhaul on Tuesday, gaining the support of an influential Republican and delivering President Barack Obama a victory on his top domestic priority.

The Democratic-controlled Senate Finance Committee approved the measure by 14-9, with Senator Olympia Snowe becoming the first Republican in Congress to back a healthcare reform bill.

Snowe, who had been courted by Obama and his fellow Democrats, said she backed the plan with reservations and could not guarantee her continued support as the overhaul advances through Congress.

"My vote today is my vote today. It doesn’t forecast what my vote will be tomorrow," Snowe said, warning there was still a long road ahead for healthcare reform.

Any measure approved by the Senate also would have to be melded with whatever comes out of the House of Representatives, where Democrats are trying to blend three bills into one.

But the committee vote was good news for Obama, criticized in recent weeks for taking too much on board, from wars in Iraq and Afghanistan to climate change and gay rights.

Health insurer companies stocks fell on fears the reform will hurt profits if it is passed. The S&P Managed Health Care index <.GSPHMO> of large health insurers was down 1.9 percent.

"Support for Democratic healthcare legislation by Senator Snowe is a critical development, which definitively shifts the political balance in Democrats’ favor," said healthcare equities analyst Avik Roy.

The proposal to reduce costs, regulate the insurance market and expand coverage was the last of five pending health bills to clear a committee in Congress.

It will be merged with the Senate health panel’s version and moved to the full Senate for debate in the next few weeks.

"Pretty much everything has been said and now it’s time to get the job done," Democratic Chairman Max Baucus said. "Americans are looking for common-sense solutions."

Republicans condemned the plan as a costly and heavy-handed government intrusion into the private healthcare sector and said the measure would get even worse as it moves forward.

"We can now see clearly that the bill continues its march leftward," said Senator Charles Grassley, the senior Republican on the panel. "This bill is already moving on a slippery slope to more government control of healthcare."

Snowe’s support could give Democrats a crucial swing vote as they try to hold the 60 Senate votes needed to overcome procedural roadblocks. Democrats control exactly 60 seats in the 100-member Senate.

KEY ELEMENTS INTACT

Two weeks of panel debate had left the key elements of Baucus’ plan intact. Support was strengthened by last week’s estimate from nonpartisan analysts that it would cost $829 billion—well below Obama’s target of $900 billion—and meet the president’s goal of reducing the budget deficit.

Snowe and Democratic Senator Blanche Lincoln, a moderate from Arkansas, urged Baucus to make sure the Finance Committee bill was not drastically altered in the merger with the Senate health panel.

"My support today does not ensure my support for a final product," Lincoln said, echoing Snowe.

The Senate Finance Committee bill requires all U.S. citizens and legal residents to have health insurance and provides subsidies on a sliding scale to help them buy it.

It would create state-based exchanges where individuals and small businesses shop for insurance and would bar insurers from refusing to cover people with pre-existing conditions or dropping those with serious illnesses.

The bill does not include a government-run "public" insurance option backed by Obama and liberal Democrats as a way to create competition for insurers. Republican critics say that approach would undermine the private insurance industry.

All three House bills and the other Senate bill, passed by the Health Committee, include a public insurance option. Supporters have vowed a Senate floor fight over the issue.

Democratic senators condemned an attack Monday on the Senate Finance bill by the insurance industry, which paid for a report charging the bill would drive up costs and insurance premiums.

"The insurance industry ought to be ashamed of this report," said Democratic Senator John Kerry. "The results were simply not valid."

(Editing by Doina Chiacu)

Copyright Reuters 2009. Click for Restrictions