Iowa Republican Sen. Charles Grassley said Monday he remains hopeful a limited health care reform measure can be negotiated, but that a small bipartisan group of senators working on the issue agrees a government-run public option won’t be part of the package.

Senate Finance Chairman Max Baucus, D-Mont., meanwhile, said an overhaul measure will be presented this year with or without bipartisan support — though he said a compromise would be far better than any bill pushed through solely by Democrats.

The senators are among a group of three Democrats and three Republicans on the pivotal Finance Committee who are negotiating a proposal to overhaul the nation’s health care system. Both said Monday they were hopeful a bipartisan deal could be reached.

“I think the chances are still good,” Baucus told The Associated Press. “I talked to (the Republicans) and they all want to do health care reform. But the sad part is a lot of politics have crept in.”

Grassley, the GOP’s key negotiator, expressed similar determination, but made clear he doesn’t expect a public health care option sought by President Barack Obama to be in a final deal.

“I’m still hopeful, but I’m hopeful based on I think you’re talking about something a little less sweeping than what we talked about before,” Grassley told the AP in a telephone interview.

Grassley in the past has roundly criticized the public option, but went a step further Monday in saying the core group of senators agreed such a provision would not be in a bill.

“It’s pretty clear that’s something not on the table,” Grassley said. “It’s fair to say that not every one of the six is opposed to it, but they realize the reality of it.”

The six senators have scheduled a conference call Friday, but Grassley said nothing can be resolved until next week when Congress returns and the affect of nationwide town hall meetings can be assessed.

Grassley reiterated that there are limits on what he can accept in a final health care reform package.

“There are things that for months have been things I have said can’t be in a bill,” Grassley said. “There are some instructions from my caucus I have tried to take to the table: no public option, no rationing and tort reform.”

He declined to be precise about what he could accept.

“I think that would be negotiating through the press, and I don’t think I should do that,” he said.

In Monday remarks to the Center for American Progress, a liberal think tank, AFL-CIO secretary-treasurer Richard Trumka — who is expected to become the labor union’s next president — said lawmakers would pay a political price if they abandon a government-run option.

Baucus meanwhile promised constituents that health care reform would not increase the deficit, would pay for itself over time and is necessary to rein in costs. Baucus also said he understands criticism is weighing heavily on the minds of Republicans.

“They are in their home states and they are hearing a lot of what I am hearing: concerns,” Baucus said. “In some ways it is easy in the short term to vote against it.”

During the congressional recess, Grassley has been among the many Congress members who attracted huge crowds at town hall meetings, where many speakers expressed anger about health care proposals they believed were being pushed in Washington. Grassley said it remains unclear how much they have changed the debate.

“There’s an entirely different environment, I believe, as a result of democracy working through the town meetings,” he said.

Baucus said lawmakers also would be thinking differently about health care reform in the wake of U.S. Sen. Edward Kennedy’s death.

“I think the death of Ted Kennedy is a factor here. How much? I don’t know,” Baucus said. “It causes everyone to pause and to think that maybe we should find a solution after all.”