The U.S. Senate passed a health care reform bill today (Dec. 24), excluding a government-run insurance plan, but calling for sweeping changes in the nation’s $2.5 billion health care system

By a 60-39 party-line vote, the Democrat-led Senate at 7:12 a.m. ET put an end to weeks of internal and often rancorous debate and backroom dealing in its quest for passage of the bill.

The Senate’s bill must now be reconciled with the House of Representatives’ version, which differs in some key areas, including the inclusion of a government-run insurance option. President Barack Obama and Democrats say they will have a final bill completed and ready for the president’s signature by late January.

If either bill or its major components win final approval, the changes it causes will be the greatest to health care in the U.S. since the creation of the Medicare program for the nation’s elderly in 1965.

Vice President Joseph Biden presided over final passage of the 10-year, $871 billion health bill, forcing people to carry insurance and providing subsidies to those who cannot afford it. It establishes exchanges, where people who cannot obtain coverage from their employers can buy from a range of health plans, and it would prohibit insurers from refusing to cover those who have pre-existing conditions.

The Senate favors expansion of Medicare, rather than House’s plan to create an insurance program to be run by the government, the so-called “public option,” to compete with private insurers. Several House leaders have said they will not support a bill excluding the public option, which they see as a tool to rein in private insurers, who they say will benefit as people are forced to obtain coverage through an individual mandate.

Senators approved increasing the Medicare payroll tax from 0.5% to 0.9% for individuals whose income exceeds $200,000 a year and for couples whose income eclipses $250,000 a year.

Senators added language requiring health plans for large groups to invest at least 85 cents on every dollar into medical costs, thus trimming their potential profits.

The Senate’s bill is expected to cut the deficit by $132 billion over the next 10 years while providing health care to an additional 31 million currently uninsured Americans, according to estimates by the Congressional Budget Office.

Since Dec. 19, the Senate bill won a series of procedural votes, edging it closer toward eventual passage, despite repeated and determined efforts by Republicans to delay the vote, including forcing a complete reading of a 383-page amendment offered by Senate Majority Leader Harry Reid (D-Nev.), who also authored the Patient Protection and Affordable Care Act, on a snowy Saturday.

The Senate version, after a Reid amendment garnered approval, offers one perk to private insurance companies: It defers for one year the excise tax to be imposed on their operations as a means of generating an estimated $67 billion annually to pay for the expansion of coverage. To qualify for the exemption, insurers must provide guaranteed-issue coverage to those who cannot obtain coverage elsewhere.

The last Democratic holdout, Sen. Ben Nelson (D-Nev.), agreed to a compromise last weekend, making sure that federal funds would not be used to pay for abortions and securing extra money to his home state. Without Nelson’s support, the bill, which passed procedurally, 60-40, along party lines, would have failed to advance, giving Democrats and Obama a black eye.

The House version contains stricter language prohibiting the funding of abortions, whereas the Senate version had to soften language to appease moderates.