WASHINGTON - The U.S. Senate began work on a sweeping healthcare overhaul on Monday, with senators on both sides pouncing on findings in a nonpartisan budget report on insurance premiums to bolster their arguments.

With the debate expected to last up to three weeks, Senate Democratic leader Harry Reid warned senators they would work on weekends if necessary to hammer out compromises on issues like a government-run insurance plan, abortion coverage and holding down costs.

The next few weeks will tell us a lot about whether senators are more committed to solving problems or creating them, Reid said.

In a report that gave ammunition to both sides, the Congressional Budget Office estimated on Monday that the 70 percent of Americans who receive insurance through employer-sponsored plans would see little change or slight reductions in their insurance premiums by 2016.

Those who buy coverage independently could see premiums rise by 10 percent to 13 percent by 2016, although the federal subsidies given to lower-income individuals to help them purchase coverage would reduce the actual costs for more than half of that group, the CBO said.

The higher premiums would be incurred in part because they would get more comprehensive coverage, it said.

The analysis we received today indicates that whether you work for a small business, a large company or you work for yourself, the vast majority of Americans will see lower premiums than they would if we don't pass health reform, said Democrat Max Baucus, chairman of the Senate Finance Committee.

Senate Republican leader Mitch McConnell said Americans do not want the healthcare bill to pass and the CBO report showed why. A bill that's being sold as a way to reduce costs actually drives them up, McConnell said.

Senator Charles Grassley, the senior Republican on the Finance Committee, said the CBO report showed the Senate bill would not fix a fundamental problem -- the high cost of healthcare.


Millions of people who are expecting lower costs as a result of health reform will end up paying more in the form of higher premiums, Grassley said.

The Senate plan is designed to rein in costs, expand coverage to about 30 million uninsured Americans and halt industry practices such as denying coverage to those with pre-existing medical conditions.

The U.S. House of Representatives passed its version of the healthcare overhaul on November 7. If the Senate passes a plan, the two versions will have to be reconciled and passed again by each chamber before they are sent to Obama for his signature.

Shares of health insurers were weak as the broader market showed modest gains. The Morgan Stanley Healthcare Payor stock index closed 1 percent lower and the S&P Managed Health Care stock index was almost 1.5 percent lower.

Many Democratic senators have expressed concern about the bill's effect on consumer costs and insurance premiums. Democrats cannot afford to lose any of them in the debate -- they control 60 seats in the 100-member Senate, exactly the number needed to overcome Republican opposition.

At least four moderate Democrats have voiced doubts about the bill because it includes a government-run insurance option, which backers say will create more choice but critics believe will lead to a government takeover of the industry.

Some Democrats also hope to tighten language barring the use of federal funds for abortions to make it match the stricter restrictions in the House bill.

The Senate held no votes on the healthcare overhaul on Monday. The first Republican amendment was offered by Senator John McCain, the party's 2008 presidential candidate.

McCain proposed sending the legislation back to the Senate Finance Committee to restore about $400 billion in cuts to Medicare, the federal health program for the elderly.

He chastised AARP, the powerful lobbying group for seniors, and the American Medical Association, which represents doctors, for endorsing a healthcare reform effort he said would cut Medicare benefits for patients and doctors.

Shame on AARP and shame on the AMA, McCain said.

(Editing by Doina Chiacu and Alan Elsner)