WASHINGTON - A potential compromise emerged yesterday on one of the most vexing issues of the health-care overhaul debate - whether to create a new government-sponsored health plan to compete with private insurers.

The compromise offered by Sen. Kent Conrad (D., N.D.) would create health-care cooperatives owned by groups of residents and small businesses, similar to how electric or other cooperatives operate. They would be nonprofit, and without the government involvement that troubles Republicans and business groups about the public plan options.

Senate Finance Committee Chairman Max Baucus (D., Mont.) said yesterday that the idea could be key to a bipartisan health bill. Baucus raised it in a meeting with President Obama, saying later that Obama showed interest.

The top Finance Committee Republican, Sen. Charles E. Grassley of Iowa, also said the concept had potential.

"It's a way to bridge the gap," Baucus said.

The dispute over a public plan has been a major obstacle to bipartisan consensus on Obama's goal of reshaping the nation's health-care system to bring down costs and extend coverage to 50 million uninsured Americans.

The development comes as Obama heads today to Green Bay, Wis., for a town-hall-style meeting on his first presidential trip to promote health-care reform. His public push on the subject will also include a speech Monday to the American Medical Association's annual meeting in Chicago.

Spokesman Robert Gibbs said that in Monday's speech, Obama would call the status quo unacceptable. Yesterday, the president insisted to Democratic and Republican senators whom he had summoned to the White House that Congress must pass a bill this year that reins in costs and helps provide coverage to millions of uninsured Americans.

Although the Democrats who run Congress might be able to pass a health-care bill with little or no Republican backing, Baucus and others say a single-party measure would enjoy less public support and would be less sustainable over time.

Many Democrats, including Obama, strongly favor a new public plan that would, for the first time, offer government-sponsored health insurance to Americans not eligible for Medicare, Medicaid, or other programs. Democrats say this would keep costs down for consumers.

Most Republicans and business groups just as ardently oppose such a plan, saying that private insurers would end up going out of business, unable to compete with a government plan that did not have to make a profit.

Conrad's plan seeks to satisfy both sides. Profit-making insurance companies would not run the show, but there also would not be the federal government backing that Republicans fear would eliminate fair competition with private companies.

The co-ops could get federal seed money, Conrad said, but that would be the end of federal involvement. The co-ops would negotiate directly with medical providers.

"I'm doing all I can to get a good bipartisan solution," Baucus said, "and right now the so-called public option is being transformed into a private alternative to put pressure on insurance companies, hold their feet to the fire, help them keep costs down.

"It may not work. If it doesn't, we've got to find something else, but right now it looks like it has a decent chance of working."

Senators stressed that many questions remained unanswered because the idea had just surfaced.

"It's got possibilities," Grassley said. "There were lots of questions raised about it - not outright objections in our caucus, but a lot of questions."