With all eyes on the Senate Finance Committee markup of a health care overhaul this week, House Democrats plan to use the breathing room to resolve outstanding issues holding up their own reform push.

The public insurance option remains at or near the top of that list, but House Democratic leaders are positioned to avoid a brewing showdown over its fate.

Rep. Jim Matheson (D-Utah), a leading member of the fiscally conservative Blue Dog Coalition, was slated to propose replacing the public plan with a state cooperative model akin to that in Senate Finance Chairman Max Baucus’ (D-Mont.) proposal.

But Matheson has decided against offering the amendment, which would have been considered as part of a follow-up package that the House Energy and Commerce Committee will put together starting Wednesday to wrap up unfinished business from its July health care markup.

A Matheson spokeswoman said the lawmaker is stepping back to see how the debate over the co-op approach unfolds in the Senate Finance markup this week. Others close to the issue said Matheson couldn’t count on the Republican votes he would need to pass the amendment in committee. Rather than suffer an early loss, these sources said, the lawmaker is saving his energy for a floor fight on the provision.

Although House Democratic leaders have not begun a formal effort to gauge support for the public plan, Rep. Jerrold Nadler (D-N.Y.) said in an online chat Monday the chamber’s liberal Democrats are whipping in their own ranks to determine whether they have the numbers to sink a package that lacks the provision. Leaders will get a chance to hear from their rank and file on the issue Thursday morning, when the Democratic Caucus meets behind closed doors — the latest in a series of issue-specific meetings leaders have organized to try to find consensus on remaining points of contention.

Meanwhile, House Energy and Commerce Chairman Henry Waxman (D-Calif.) is still in talks with Del. Donna Christensen (D-Virgin Islands) over whether she will offer an amendment to the follow-up package that would replace a government-run panel evaluating health care outcomes with one staffed by outsiders. The drug industry, among others, strongly prefers Christensen’s approach.

Leaders have a raft of other issues to sort out, as well. Among them: whether to toughen language limiting federal funding for abortions and care of illegal immigrants, twin hot-button issues for conservatives; smoothing out a compromise to address regional disparities in Medicare reimbursements; trimming the overall cost of the package to bring it in line with President Barack Obama’s preferred $900 billion price tag and finalizing the mix of funding mechanisms to pay for it.

Overlaying the substantive issues is the question of timing. Politically vulnerable House Democrats have pressed their leadership not to force action until the Senate moves. But Speaker Nancy Pelosi (D-Calif.) repeatedly has said her chamber will move when it is ready, indicating her limited patience for the slower pace on the other side of the Dome.