* Obama tells rally: "This is the hard part."
* Baucus launches sales job on healthcare bill
* Democrats grumble, Republicans oppose Baucus bill
By John Whitesides
WASHINGTON, Sept 17 (Reuters) - President Barack Obama pitched his U.S. healthcare reforms to college students on Thursday as Senator Max Baucus launched a tough sales job after his highly anticipated plan drew heavy grumbling from fellow Democrats and no support from Republicans.
Baucus, chairman of the Senate Finance Committee, hopes for broad backing from Senate Democrats for his $856 billion 10-year proposal to rein in healthcare costs and reshape the way Americans get insurance coverage.
Obama, pushing his top domestic priority with frequent public and media appearances, fired up enthusiasm for his overhaul of the $2.5 trillion U.S. healthcare industry at a rally at the University of Maryland near Washington.
"We are closer to reform than we have ever been but this is the hard part," he declared. Students were a key base in his presidential campaign last year and are an important target of his healthcare and economic policies.
Obama said he would "seek common ground" and his door was always open to negotiate with Republicans but that he would not waste time with those trying to kill his healthcare overhaul.
"I never said change would be easy," he told the cheering crowd of 15,000 people packed into a college basketball stadium. "Change is hard. It has always been hard. Civil rights was hard. Getting women the right to vote was hard."
Obama's overhaul has been besieged by critics and slowed by intense political battles in Congress, with the insurance and healthcare industries lobbying hard against parts of the plan.
Opinion polls show Americans are also divided over the president's moves, which are designed to rein in costs, improve care, regulate insurers and expand coverage to many of the 46 million people in the United States who now have none.
NO 'PUBLIC OPTION'
Advocates of a healthcare reform hoped the long-awaited Baucus plan could break the stalemate in Congress and serve as a framework for a compromise.
But the proposal, one of five healthcare bills pending in Congress, drew a tepid response from Democrats after its release on Wednesday. Many doubted it would create enough competition in the insurance market to lower costs make cover more affordable for lower- and middle-class Americans.
After months of closed-door negotiations by three Republicans and three Democrats on his panel, the Baucus plan drew no Republican support and was sharply criticized by party leaders as a costly, big-government program.
The Baucus bill would create state-based exchanges where individuals and small businesses shop for insurance.
But instead of a government-run public option favored by liberals to create competition in the insurance market, it calls for the creation of non-profit cooperatives.
The Baucus proposal is the only pending congressional bill that does not have the public insurance option. All three bills passed by committees in the House of Representatives include a government-run plan.
"I fully support the public option. The public option will be in the bill that passes the House of Representatives," House Speaker Nancy Pelosi said.
The legislation will be considered by the Senate Finance Committee next week and the finished product will be merged with a bill passed by the Senate Health Committee for action by the full chamber, probably in October.
With congressional elections in 2010, Obama has urged Congress to finish work on the issue by the end of this year.
Keeping up a high-profile presence on the healthcare issue, Obama will appear on five morning TV talk shows on Sunday and plans to be a guest on David Letterman's late-night show on Monday.
The Baucus plan also would require all U.S. citizens and legal residents to obtain health insurance, offer subsidies on a sliding scale to help people buy it, levy fees on healthcare companies and insurers, tax high-cost insurance plans and expand Medicaid, the healthcare system for the poor.
Congressional budget experts said the plan would cost $774 billion over 10 years, lower than the Baucus panel's estimate, and would cut the federal deficit by $49 billion and the ranks of the uninsured by 29 million people over the same period.
In a nod to Republicans, the White House on Thursday allocated $25 million to support grants to states for a pilot program on reforming medical malpractice laws to help bring down healthcare costs.
The long-sought Republican goal is also included in the Baucus bill. (Additional reporting by Caren Bohan, Thomas Ferraro, Andy Sullivan and Patricia Zengerle; Editing by John O'Callaghan and David Storey)