Sept. 22 (Bloomberg) -- Senate Finance Committee Chairman Max Baucus will seek to make insurance more affordable for low- income people and may scale back a proposed tax on high-end health plans to win support for an overhaul of the system.

The Montana Democrat, whose health-care proposal drew fire last week from both parties, will expand subsidies for people trying to obtain coverage through an online exchange, said Senator Kent Conrad, a finance panel member. He is also likely to cut back an excise tax on so-called Cadillac plans so fewer people would be affected, a critical issue for labor unions.

Baucus discussed other amendments with fellow Democrats last night, including one to lower penalties for those who fail to buy insurance. Conrad said he is likely to cut in half a $3,800 fine on families that don’t meet the insurance mandate.

“This is our opportunity to make history,” Baucus said today as his committee began meeting to amend the proposal. He recalled failed efforts to overhaul the health-care system in the past and said his plan is tempered, avoiding too much government intervention in an attempt to win bipartisan support.

The top Republican on the panel, Senator Charles Grassley of Iowa, said he can’t support the proposal as put forth, in part because it’s too costly. He blamed the White House and Senate Democratic leaders for pushing for speedy action rather than lengthier talks with Republicans for compromise.

Democrats, he said, “would like to see it done now, rather than to see it done right.”

Affordability Concern

Baucus plans to present a revised proposal “that addresses a lot of the individual concerns of members,” he told reporters after the meeting in his office on Capitol Hill yesterday. “And the most frequent concern I’m hearing about is affordability.”

Democrats in Congress are struggling to meet President Barack Obama’s call for legislation that curbs the rising cost of health care and expands coverage to most of the 46 million Americans who lack health insurance.

The finance panel is drafting the legislation this week, making it the fifth and final congressional committee to deal with the issue. The modifications present a challenge to Baucus in his bid to get a measure before the Senate that can get the 60 votes needed to block Republican delaying tactics. Democrats control 59 votes, making some bipartisan support necessary.

564 Amendments

Members of the committee, split between 13 Democrats and 10 Republicans, have filed 564 amendments for consideration. The changes would add to the cost of the proposal, which Baucus last week placed at $856 billion. Baucus will build in other cost cuts to make way for the changes.

His legislation would require almost all Americans to have insurance or pay a penalty. It would also expand Medicaid and provide subsidies to help millions of people get coverage.

The plan uses nonprofit cooperatives rather than a government program to compete against Hartford, Connecticut- based and other insurers. The government program, or “public option,” is favored by many Democrats, including Obama, as the best way to lower prices. The Baucus proposal also drops a mandate that employers provide insurance for workers.

Both provisions are designed to make the measure more attractive to Republicans, although no Republican in the chamber has yet signed on.

Medicare Savings

To pay for his plan, Baucus seeks savings in programs such as Medicare, the federal insurance plan for the elderly. In addition to the levy on the costliest health plans, he wants to impose about $13 billion in fees on insurers, medical-device manufacturers, drugmakers and clinical laboratories.

Most of the toughest criticism of his plan has been in the area of affordability. Under his original proposal, beginning in 2013, tax credits would be available on a sliding scale to individuals and families earning between 134 and 300 percent of the federal poverty level, based on the percentage of income spent on health premiums. The scale ranges from 3 percent to 13 percent of income.

Additionally, those at between 300 percent and 400 percent of the poverty level can get a tax credit to help pay for their insurance once they’ve spent 13 percent of their income on coverage.

Some senators, including Democrat Ron Wyden of Oregon, say 13 percent is too high, and Conrad, a North Dakota Democrat, said the cap on income would probably be brought down.

The penalties for people who fail to get insurance also face criticism. Baucus proposed last week imposing fines of $750 per person and $1,500 per family for those between 100 percent and 300 percent of the poverty level, and $950 for individuals and $3,800 for families for those at higher income levels.

Penalty for Families

The penalty for families at the higher income levels is likely to be cut in half to $1,900, Conrad said. The individual levy will probably stay at $950.

As the panel weighs in, other key changes lawmakers want to make include a plan by Senator Olympia Snowe, a Maine Republican, to create a nonprofit government entity to provide insurance if private coverage proves too expensive for some people. Her amendment would establish the program in any state unless coverage is deemed affordable to at least 95 percent of the residents.

To contact the reporters on this story: Laura Litvan in Washington at llitvan@bloomberg.net