Senate Majority Leader Harry Reid says moderate and progressive Democrats have worked out an agreement on the “public option” health plan issue.

Reid, D-Nev., who introduced H.R. 3950, the main Senate health bill, announced the deal Tuesday evening at a brief press appearance. The deal was negotiated by a group of senators led by Sen. Mark Pryor, D-Ark., and a second group of senators led by Sen. Charles Schumer, D-N.Y.

“We have an agreement,” Reid said.

Senate Democrats will send an official description of the deal to the Congressional Budget Office for budget “scoring” Wednesday, and they will not release details about the proposal until they have the CBO score, Reid said.

“We want to know the score before we give all the details even to our own members,” Reid said.

Reid created H.R. 3950, the Patient Protection and Affordable Care Act bill, by melding bills developed by the Senate Finance Committee and the Senate Health, Education, Labor and Pensions Committee. The HELP Committee and Senate progressives have pushed for creation of a government-run public option plan. Finance Committee are opposing the idea of a public option plan and looking for an alternative.

The Associated Press is saying that the Democrats will drop the public option plan concept from their bill, but Reid has told Reuters that reports of the public option concept being dropped are false.

The compromise apparently calls for replacing the public option plan proposal with a plan similar to the Federal Employees Health Benefits Program. The Office of Personnel Management would try to provide the benefits by awarding contracts to private insurers, and OPM would set up a true government-run plan only if insurers failed to provide acceptable plans, according to press reports.

Earlier in the evening, during another brief press appearance, Reid said he believes the Senate can pass a bill by the end of the year, and he emphasized the need for action.

“Does anyone here honestly believe that doing nothing is the right think?” Reid asked.

In response to a question about disagreements between moderate Democrats and progressive Democrats, Reid said the purpose of legislation is to build a consensus.

“It’s not often that you have a piece of legislation that is perfect,” Reid said. “But we cannot let the perfect be the enemy of the good.”

Also today:

– Senators spent much of the day discussing Senate Amendment 2962, offered by Sen. Ben Nelson, D-Neb., which would have amended H.R. 3950 to prohibit subsidized plans sold through a new health insurance exchange system from paying for abortions.

Senators voted 54-45 to table the proposed amendment.

Critics argued that the amendment would have kept women from buying plans with abortion benefits with their own money; Nelson said insurers could sell plans with abortion benefits to women who bought coverage through the exchange system without using any federal subsidies.

The abortion benefits restrictions that applied to health exchange system plans would be the same restrictions that apply to most other federal health programs, such as Medicare and Medicaid, Nelson said.

Last week, Nelson said he would filibuster H.R. 3950 if the final bill did not include a provision prohibiting using of PPACA program funds to pay for abortions. Nelson reacted to the tabling of his amendment with a statement saying he is disappointed about the outcome. In the statement, Nelson does not saying anything about whether he now plans to filibuster the bill.

Shortly after the Senate tabled the Nelson amendment, lawmakers voted 42-57 to reject a motion made by Sen. John McCain, R-Ariz. The motion called for the Senate to send H.R. 3950 to the Senate Finance Committee with instructions to revise the bill so that all Medicare Advantage plan enrollees throughout the United States would get the same Medicare Advantage deal that Florida residents get.

McCain introduced the proposal in response to report that Democratic senators in Florida, New York and Oregon have cut special deals to shield Medicare Advantage plan enrollees in their states from the program cuts that H.R. 3950 would impose on the rest of the country.

Lawmakers also continued to introduce and line up support for other amendments.

Schumer, for example, pleased leaders of the Save the FSA campaign, which has been organized by the Employers Council on Flexible Compensation, Washington, by introducing an amendment that could ease the proposed PPACA bill cap on flexible spending account contributions.

To cut “tax expenditures” on the FSA program, Reid has proposed capping FSA contributions at $2,500 per year, without indexing the cap for inflation. The Schumer amendment would adjust the cap for inflation.

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Note: This is an updated version of “Schumer Goes To Bat for FSAs.” Please check on our home page often for the latest news about the latest health bill developments.