Lawmakers on both sides of the US Capitol struggled to reach a healthcare deal, with Senate Democrats near agreement with three Republicans on a plan that would not include a government-run insurance option backed by President Barack Obama.

After more than six hours of closed-door meetings, however, Democrats in the House of Representatives said they had not reached a deal with rebellious fiscal conservatives and it was unlikely they would vote on a healthcare overhaul before heading home for their August recess at the end of the week.

House Democratic Leader Steny Hoyer said there would not be a vote on Friday and there was a "pretty slim" chance lawmakers would be held for a vote on Saturday. "We're trying not to foreclose our options," he told reporters.

Obama has pushed for a measure that will rein in healthcare costs, improve care and cover most of the 46 million uninsured US citizens, making it his top legislative priority.

Democrats on the Senate Finance Committee said they were close to success in bipartisan negotiations with three panel Republicans -- even if the full group does not take up the bill before the break starts on August 7.

"Whether we get through markup or not I can't tell you today. But I am confident we'll have a concept we'll agree on," Senator John Kerry, a Democratic member of the panel, told reporters.

NON-PROFITS AND TAXES

The Senate Finance negotiations have zeroed in on a plan that would use non-profit cooperatives to compete with private insurers to drive down costs, members say, not the public plan favored by Obama and many Democrats.

The panel also is likely to back a tax on high-cost insurance policies to try to raise revenue and keep costs down.

The White House said it would wait until it sees the bill to comment on the cooperative approach, which is certain to disappoint some Democrats even if it wins over the three Republicans involved in the negotiations.

"I have done a lot of reading on the history of co-ops and it is not a nice history," Senator John Rockefeller told reporters after a closed-door meeting of Democrats.

Democratic Senator Kent Conrad said the approach would use non-profit associations at a state, regional and national level and could attract some 12 million people.

He said the US government could provide about US$6 billion in start-up money to help healthcare cooperatives meet reserve requirements. Any co-op would need about 25,000 members to be financially viable and about 500,000 members to negotiate competitive rates with providers, he said.

Shares of US health insurers rose broadly on Tuesday on hopes a health reform bill would not include a government-run option, which has drawn strong opposition from insurers who fear it would destroy the private marketplace.

The S&P Managed Health Care index of large US health insurers closed 6.5 percent higher.