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As part of the $3.5 trillion budget he proposed on Thursday, President Barack Obama is pushing for a down payment on universal health care, a reserve fund of $634 billion over 10 years paid for by higher taxes on the wealthiest Americans and savings from government programs like Medicare and Medicaid. By putting the funding on the table before the program has even been crafted, though, Obama is essentially putting the cart before the horse. Many health-care analysts hope to see more details of the President's plan during a White House health-care summit expected at the end of next week — but they may be looking toward the wrong end of Pennsylvania Avenue. Unlike the failed 1994 Clinton health-care-reform effort, this isn't going to be a bill that the Executive Branch drafts in isolation and then tries to ram down the throats of Congress. Instead, Congress — particularly a working group convened by longtime health-care-reform advocate Senator Edward M. Kennedy — is working on a consensus solution following the road map laid out by Obama. (See the top 10 medical breakthroughs of 2008.)

In fact, since the middle of last fall, Kennedy's group has held biweekly meetings that feel somewhat like a college class — albeit the most advanced seminar on health policy on the planet. There's a curriculum for each of the two-hour sessions; topics have ranged from benefits packages and employer mandates to tax treatment of health insurance, payment reform and prevention and wellness. Although they are about halfway through the agenda, participants say progress has already been made. The group agrees on broad principles like a focus on prevention, a commitment to cutting costs and universal coverage approached through the expansion of employer plans. But the group — so far on the friendliest of terms — has disagreed on whether coverage should be mandated or simply offered to all individuals, how much money is needed and what the proper role of government plans should be in the private system. And they haven't even gotten to some of the tougher parts yet, like how to make cuts in Medicare and Medicaid. (See pictures of health care in Iran.)

Taking part in these meetings, as was reported last week in the New York Times, are a diverse group of stakeholders: AARP, the insurer Aetna, the AFL-CIO, the American Cancer Society, the American Medical Association (AMA), America's Health Insurance Plans, the Business Roundtable, Easter Seals, the National Federation of Independent Business, the Pharmaceutical Research and Manufacturers of America (PhRMA) and the U.S. Chamber of Commerce. Most participants declined to comment directly on the talks, saying they were sworn to secrecy by Kennedy and risked expulsion from the meetings by talking on the record — though a few were willing to speak anonymously about some of the progress that has been made. Most were eager to praise the new momentum Obama has breathed into the talks this week, including the breakout session on health in his fiscal-responsibility summit on Monday, the underlining of his commitment to health-care reform in his address to the joint session of Congress on Tuesday and in his budget announcement on Thursday, and his announcement of a health-care summit for next week. "This is a frank and respectful discussion that essentially began in earnest on Monday," says Dr. Nancy Nielsen, president of the AMA. "What we're hearing from him is that there is an urgent need for health-care reform and that we also want to make sure that we get it right when we do those reforms."

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Senator Chris Dodd, who often sits in on the meetings in case Kennedy, who is battling brain cancer, can't participate, has said he expects to see legislation introduced by Memorial Day. Kennedy monitors the progress by telephone from home. Senate Finance Committee chairman Max Baucus, who has called health-care reform his top priority this year and is working hand-in-hand with Kennedy — Baucus' staff has often been in the room when stimulus negotiations allowed them the time — has said that he expects to hold hearings in the spring. By all accounts, the bill will go through the usual committee process in an effort to draw as much bipartisan support as possible. Democrats control the Senate with 58 votes — two votes short of preventing a Republican filibuster, so at least some GOP support must be drawn. There has been concern among the stakeholders that the Republicans have not been in any of the meetings thus far; one person involved in the talks said they have been invited but have declined to attend, though several participants have said they keep GOP colleagues abreast of progress. "We would hope that any process that goes forward will actually include Republicans and Democrats to get support not only of both parties but of the American people," says Dan Smith, president of the American Cancer Society Cancer Action Network. (See the most common hospital mishaps.)

The House, meanwhile, has been waiting for guidance from the Administration before it gets the legislative ball rolling — guidance that could come as early as next week at the anticipated White House summit. Obama is still struggling to put his team in place after the loss of Tom Daschle, the former Senate majority leader who withdrew his name from consideration to become Secretary of Health and Human Services and the Administration's health-care czar after revelations of his failure to pay $128,000 in taxes. At least three experts involved in the talks say the House is so far behind, they will have to run to catch up to the Senate. The Senate's progress is largely due to Kennedy's "incredible ability and strength," says Billy Tauzin, CEO and president of PhRMA, and a former Congressman from Louisiana. "He's anxious to make this a great legacy." (See pictures of Barack Obama's nation of hope.)

The sticking points within the group are no surprise to the health-care community. "You don't need to know what's going on in the secret meetings to know the two biggest challenges are the individual mandate and costs," says Senator Sherrod Brown, an Ohio Democrat who sits on the Senate Health, Education, Labor and Pension Committee, which is convening the meetings. Obama's budget also draws some battle lines on these issues: the White House, for instance, doesn't support an individual mandate as Kennedy and Baucus do. Then there's the question of whether the program can really be shoehorned into the $634 billion 10-year budget figure that Obama has proposed; some have estimated that it would take at minimum $1 trillion over 10 years. And while everyone in the room has marveled at how congenial the discussions have been, the hardest part is yet to come. "Whenever there's change, there will be a winner and loser," says one meeting participant. "It will be not easy."

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• Jay Newton-Small / Washington
• The Senate is taking the lead on legislation as Obama tries to put the issue on the fast track