Among the bevy of options to fund health system reform, a tax on employer-sponsored health insurance now appears to be gaining momentum faster than Oprah Winfrey on a Luge track.

The idea apparently won general acceptance during last week’s Senate Finance Committee meeting, and House Democratic opposition has begun to melt as well.

The Big O has a political problem with the tax, since he pasted Top Gun during the presidential campaign for making the very same idea central to his health proposals.

And Republicans will surely remind people that 2 years ago, a Democratically-controlled Congress zapped the idea after George W. Bush put it in his budget request.

Nevertheless, the Big O has signaled he’s happy to absorb the hit if it’s for the greater good.

US Census data show that in 2007, 177 million Americans received health benefits from their employers. Currently the benefits are not taxed as income. Congressional tax analysts estimate that closing the yawning loophole would have generated $133 billion last year.

Senate Finance Committee Chairman Max Baucus would prefer not to close the loophole altogether. He’s suggested two alternatives—limiting the tax to high-income earners, or taxing the benefits after they exceed a pre-set limit.

The former option may not raise enough cash, and if that income limit is dropped too far, “you’re impacting workers and threatening the employer-based system,” Senator John Kerry told the Washington Post.

Yet capping employer-provided health benefits, somehow, some way could generate upwards of $500 billion over the next decade. No one’s come up with another politically viable method that could raise anywhere near that kind of dough.

Two Democratic senators in the eye of Hurricane Health Reform are butting heads over the most explosive political issue in the process—whether or not to establish a public health insurance plan.

Massachusetts’ Edward Kennedy favors a Medicare-like government-sponsored plan that would compete with Big Insurance.

Montana’s Max Baucus, who has been holding hands with Republican Senator Charles Grassley for months in an attempt to craft legislation that is at least vaguely bipartisan, prefers to bag the public plan or at least play it down initially.

For his part, Grassley, who seems to have forgotten how to count to 60, told the New York Times, “we cannot afford the public health plan we have already,” a slap at Medicare.

The Big O believes a public plan would “keep the private sector honest,” but says he can live without it.

Most House Democrats, including the 3 committee chairmen who are drafting the House bill, are in Kennedy’s camp.

In the Baucus compromise, a public plan would be formed only if Big Insurance fails to provide affordable coverage to all Americans by some deadline, presumably during the lifetimes of our great-grandchildren.

Meanwhile, New York Senator Charles Schumer has floated yet another proposal, in which the public plan would have to comply with the same rules and standards that apply to Big Insurance, including a requirement that it sustain itself with premiums rather than a money-tree over at Treasury.

Opinion polls show that health consumers would like a public plan, but Big Insurers worry it would drive them out of business and lead to a government-run, single-payer system.

No one knows how the dispute will be settled, but the Big O has offered to host a winner-take-all game of H-O-R-S-E during halftime of an NBA Finals game.