WASHINGTON - Democratic leaders in the U.S. House of Representatives reached a deal on Wednesday with a group of fiscal conservatives in their own party on healthcare legislation in a significant step forward for the bill.

Representative Mike Ross, who leads the so-called Blue Dog conservative coalition, said members of the group who are on the House Energy and Commerce Committee reached a deal with leadership after days of long negotiations.

Ross told reporters that under the agreement, a healthcare bill would be moved to the committee on Wednesday but the full House would not take the issue up until September after it returns from its month-long break.

The Blue Dog coalition had put the brakes on consideration of the legislation while it negotiated about a dozen issues aimed at reining in healthcare costs.

Members of the group met for more than six hours on Tuesday with House Speaker Nancy Pelosi and White House officials before resuming talks on Wednesday.

Ross said the deal will shave $100 billion off the bill's original estimated $1 trillion cost. The House Energy panel will resume consideration of the bill at an afternoon session.

He also told reporters that the deal would exempt 86 percent of small businesses from any government mandate requiring them to provide employees with health insurance.

Specifically, he said there would be no mandate for businesses with payrolls below $500,000, while a mandate would be phased in for those with payrolls between $500,000-$750,000. Businesses that do not offer insurance to employees would be required to pay a fee to the government.

Under the proposed bill, states would have the option of setting up healthcare insurance cooperatives, while the government would be required to negotiate prices with healthcare providers as private insurers do now, Ross said.

Rep. Frank Pallone, another member of the Blue Dog group, said some work still remained to be done on the deal.

We're trying to finalize it so we can go to markup today, Pallone said. We still need to work it out. It's not totally finalized.

(Reporting by Jackie Frank and Susan Cornwell; Editing by Eric Walsh)

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