A pair of moderate Senators reacted favorably today to a proposal by Sen. Kent Conrad (D-N.D.) that would avoid the need for a government-run insurance option by allowing individuals and small businesses to band together into co-ops that would compete with private insurers.

Conrad, who appeared today on CNN’s “State of the Union,— suggested that a public plan of the type envisioned by President Barack Obama and Democrats on the Finance and Health, Education, Labor and Pensions committees will not pass the Senate, necessitating another option for expanding coverage, such as the co-ops.

“It’s not a matter of right and wrong, it’s a matter of where are the votes in the United States Senate,— Conrad said in explaining his reasoning behind an alternative to the public option. Conrad said that for “arcane— procedural reasons it will not be possible to run the health bill under reconciliation, and that Democrats will have to keep their centrists in line and possibly pick up Republicans.

“I think we are in a 60-vote environment,— Conrad said.

On the same show, two moderate Senators representing those badly needed votes, Ben Nelson (D-Neb.) and Susan Collins (R-Maine), expressed strong interest in Conrad’s co-op plan. “I commend Sen. Conrad for coming up with this idea,— Collins said. “It’s far preferable to a government-run plan that has been discussed by the administration.—

Nelson said Conrad is “on to something here.— He suggested a government plan might serve as a backup that would be triggered if there is no private insurer available.

Appearing earlier on CNN, Health and Human Services Secretary Kathleen Sebelius offered strong support for a public insurance option, but she did not reject — nor did she explicitly back — Conrad’s co-op plan.

“Having these ideas on the table is exactly where we need to be right now,— she said.

Meanwhile, Sen. Chris Dodd (D-Conn.), who is helping steer the health care bill in the Health, Education, Labor and Pensions Committee during the absence of Chairman Edward Kennedy (D-Mass.), ruled out tax increases to pay for health care reform. “This is unnecessary in my view and I feel very strongly about this,— Dodd said in an appearance on “Fox News Sunday.—

Rather than implement new taxes on workers’ existing private health insurance, Dodd suggested health care reform could be funded through a reduction in medical testing, as well as through the implementation of “prevention programs,— which encourage healthier behaviors in individuals. “We can actually pay for this in the ways I’ve suggested,— he added.

But Sen. Chuck Grassley (R-Iowa) appeared open to a potential tax on private insurance.

“We could, but it’s going to take the president of the United States, who made a big deal out of [then Republican presidential nominee and Arizona Sen. John] McCain’s so-called increasing taxes … and I think for the benefit of making this bipartisan, presidential leadership in this area would be very good.—

Sebelius expressed skepticism about a proposal to help pay for health care overhaul by taxing employer-provided health benefits, but she did not rule it out. “It’s one of the items being discussed — not by the president but by Members of the House and the Senate,— she said.

“What we don’t want to do is destroy the system that currently is in place,— she added, saying the country needs to “continue what works.—

Sebelius also offered a glimpse of the administration’s upcoming public relations strategy to promote Obama’s health care overhaul plan, emphasizing that a proposal for a government-run insurance option would add “competition— to the system. “Competition is a good thing,— Sebelius said. “Most Americans understand that competition is what we want.—

Sebelius sought to describe the government as potentially just one among a number of insurers that would compete in the market.

“You can write the rules for a level playing field,— she said. “The president doesn’t want to dismantle— private coverage.

She also noted that some regions of the country have only one insurer.

Sebelius opposed the idea of a “trigger— that would bring on a government option after a period of time if private insurers failed to reduce costs. But she appeared to back “comparative effectiveness,— which would compare treatment approaches based on cost and effectiveness. Some believe comparative effectiveness could lead to rationing, but she said it could be structured so this doesn’t happen.

Dodd also addressed revelations in his financial disclosure report, released Friday, that his wife, Jackie Clegg Dodd, sat on the boards of four health care companies in 2008.

“She was a highly professional woman when I married her 10 years ago,— Dodd said, adding that suggestions that it is inappropriate for her to hold those posts is “offensive to my wife.—

“She deserves to have a career,— he said, adding that Clegg Dodd will not step down from any of the boards. “There’s no reason to.—