If enacted, the switch would mean greater federal regulation for an industry that recently has stepped up its criticism of portions of a health-care bill moving towards the Senate floor.

Obama is proposing the most far-reaching overhaul in decades, which aims to protect millions who have unreliable insurance coverage or none at all in the only major industrialised country without universal health care.

Congressional officials said Senate Majority Leader Harry Reid of Nevada and Senator Patrick Leahy of Vermont, chairman of the Senate Judiciary Committee, arranged to make the announcement Wednesday, joined by Senator Chuck Schumer of New York.

Anonymity condition

The officials who disclosed the plans did so on condition of anonymity to avoid pre-empting a formal announcement.

In a statement, the major industry trade group, America's Health Insurance Plans, said the industry already was one of the most regulated in the country.

The focus on the industry's antitrust exemption, it said, was "a political ploy designed to distract attention away from the real issue of rising health care-costs."

The move against the antitrust exemption came as Obama appealed to congressional Democrats not to let internal differences sink his comprehensive plan to remake the nation's health-care system. "The bill you least like" improves coverage for millions, he said in New York. "Let's make sure that we keep our eye on the prize."

After months of struggle, Democratic leaders in the House and Senate hope to have legislation ready for votes in both houses within a few weeks, and plan on having a compromise measure ready for Obama's signature by the end of the year.

Progress has been slow, particularly as Democrats squabble over whether to allow the federal government to sell insurance in direct competition with private insurers and if so under what terms. Obama's remarks appeared an attempt to place that and similar disagreements in a larger context - a decades-long attempt to provide insurance for millions who lack it while cracking down on insurance-industry practices such as denying coverage on the basis of pre-existing medical conditions.

Insurance-industry officials have been involved in discussions for months with the White House and key congressional Democrats over proposed legislation. They repeatedly said they would accept a series of new restrictions, as long as the legislation required Americans to purchase insurance, thus assuring insurers millions of new customers.

Change of tone

The tone changed last week after the Senate Finance Committee approved legislation that exempted an estimated two million individuals from the requirement to purchase insurance and greatly reduced the penalties on those still subject to the requirement.

In a report paid for by the insurance industry, the accounting firm PricewaterhouseCoopers said the legislation would add $1,700 a year to the cost of family coverage in 2013 when most of the major provisions of the Senate Finance Committee bill would be in effect.

- AP