The president is likely to say that a government-run insurance plan, known as the “public option,” will not provide a level of subsidies that give it an unfair advantage over private insurers, according to aides familiar with the speech preparations…

Congressional leaders, meanwhile, breathed new life into a proposal for a legislative mechanism to trigger a public plan if private insurers fail to reduce health-care inflation or cover the uninsured.

House Majority Whip James Clyburn (D., S.C.) said the idea — suggested by moderate Republican Sen. Olympia J. Snowe of Maine and embraced by moderate Democratic Sen. Ben Nelson of Nebraska — could save the public option from its opponents…

Instead of a public option, the Senate Finance Committee proposal authorizes federal funds to create nonprofit insurance cooperatives. The government would provide loans to help start the cooperatives and grants to make sure they met state solvency requirements. People who earn up to 300% of the poverty level would be eligible for tax credits to help them buy insurance, and some would also be eligible for certain cost-sharing assistance.