Despite optimism that consensus on a major health care overhaul can be achieved this year, a fierce political battle over the perennially partisan issue looms — with Senate Republicans in particular telegraphing their intent to roundly reject anything that smacks of a government-run, single-payer system.

Given that any health care deal is likely to be negotiated in the Senate, the high spirits among Democrats and Republicans intimately involved in the early stages of drafting legislation are notable. But with President Barack Obama’s proposal to pay for health care reform partly by raising taxes — and because Democrats generally favor increasing the federal government’s authority over the health care industry — the current optimism could be short-lived.

Sen. Orrin Hatch (R-Utah), a key player on health care and co-author with Sen. Edward Kennedy (D-Mass.) of the original State Children’s Health Insurance Program bill, said Obama’s goal of health care reform by year’s end is doable, assuming that the final bill is truly bipartisan and stops short of a government-administered, universal scheme. Hatch is part of an eight-member bipartisan task force charged with drafting health care legislation.

“I think it can be done, but it’s going to have to be done in a bipartisan way. I think if [the Democrats] try and do it in a partisan way, it would be an uproar like you can’t believe,— Hatch said. “If they want to do a single-payer system, I don’t think that’s going to work.—

Speaking to reporters this week, Senate Minority Leader Mitch McConnell (R-Ky.) put it more succinctly: “What we fear is a nationalization of health care.— McConnell late Wednesday publicized a letter he sent to the president with four of his GOP colleagues making clear his desire to overhaul health care, while providing a laundry list of potential reforms that Republicans oppose.

Unlike the last time a major federal overhaul of the health care industry was attempted 16 years ago, there appears to at least be a consensus among Democrats and Republicans that something needs to be done. And for the first time since President Bill Clinton pushed for serious reform early in his first term, a sitting president is committed to signing an overhaul into law.

But with outside interest groups on every side of the debate mobilizing and key Democrats including Obama declining to discuss exactly what form they would like the health care overhaul to take, it is clear that the road to a bipartisan deal remains politically sensitive and littered with philosophical disagreements on policy that could be difficult to overcome.

The group Conservatives for Patients’ Rights announced earlier this week that it was launching a multimillion-dollar campaign to argue for “free-market health care reform as opposed to a Big Government takeover many leaders in Washington want to impose on the country.— The left-leaning Public Citizen’s Health Research Group, which favors a government-run, single-payer system, is demanding inclusion in the negotiations.

“It is unacceptable to ignore the only system that will provide true universal coverage,— the group said in a news release last week.

Additionally, interest groups and their allies in Congress will likely fight over the cost of any reform plan and the effect any government mandates might have on businesses.

Even if Democrats and Republicans in the Senate can reach an agreement on policy reform, anything that requires appropriating additional government funds could spur differences over how to pay for it. Republicans have already rejected Obama’s proposals to raise income taxes and lower the value of charitable and home-mortgage deductions on families earning more than $250,000 annually.

A portion of that money is slated to fund whatever health care overhaul is agreed to at a later date, with Obama’s initial budget for the yet-to-be-determined program slated at $634 billion over 10 years.

Sen. Chuck Grassley (R-Iowa) said he is highly concerned about the economic effects of the government mandating that small businesses insure employees, as well as the effects on medical quality of allowing a federal bureaucrat to dictate to a doctor how to treat a patient. But he noted that how any health care overhaul is paid for is of equal importance to most Republicans.

“There’s more of a division [among Republicans] of how you do it, as opposed to a division of to do it or not do it,— said Grassley, another member of the bipartisan task force on health care.

“Some of it was not a health argument,— Grassley continued, describing previous Republican concerns over how to reform health care. “It was kind of an argument about, some people saw it as a tax increase.—

Sen. Ron Wyden (D-Ore.) said the role of employers in any reformed system — and how any overhaul is paid for — could be big issues among Senate Democrats, as well.

Major health care reform was last attempted in the early 1990s, under Clinton. The effort, spear-headed from the White House by his wife, future New York Sen. and Secretary of State Hillary Rodham Clinton, crashed and burned in the Congress despite Democrats’ heavy majorities in the House and Senate.

Although Democrats at that time were also skittish, the move to implement something akin to government-run and guaranteed access to health care for every American was derailed largely by Republicans and their allies, who were successful in persuading the public to reject that type of reform. But with the economy in tatters and the growing cost of health care a major concern of most voters, governments and businesses, Democrats feel the playing field has changed.

Sen. Chris Dodd (D-Conn.) said he expects some major disagreements to emerge during legislative drafting and stakeholder negotiations, but noted that there was not a widespread consensus back in the early 1990s that significant health care reform was needed, as there is now. Dodd, also on the eight-member, bipartisan task force, downplayed the possibility that a disagreement over government involvement in the health care industry remains a potential barrier to any deal.

“In the past, that would loom large,— Dodd said. “The momentum to deal with this from every constituency is a positive one, so I’m optimistic.—

Senate Finance Chairman Max Baucus (D-Mont.), the leader of the task force, has targeted June for the introduction of a bill, and Senate Majority Leader Harry Reid (D-Nev.) has talked about debating a bill on the floor in advance of the August recess.