WASHINGTON—President Barack Obama's health-care proposal reject

WASHINGTON—President Barack Obama's health-care proposal is a victory for those in the White House who want to press ahead with ambitious legislation over those who counseled scaling it back. The proposal, unveiled Monday, reaffirmed Mr. Obama's support for the policy's sweeping objectives: expanding health-care coverage to some 30 million Americans, new efforts to control health spending and new rules for health insurers. Continued pursuit of a comprehensive health-care overhaul had been uncertain following the victory last month of Republican Scott Brown in the Massachusetts U.S. Senate election. Mr. Brown won partly by campaigning against the health bill, which was proving increasingly unpopular with voters. "People were in shell shock after Massachusetts," said one person close to the White House deliberations. Advocates of a "skinny bill," including White House Chief of Staff Rahm Emanuel, made headway after that defeat, according to people involved in the discussions. This camp argued for a slimmer measure that would include provisions from the pending Democratic legislation—such as forcing insurers to cover pre-existing conditions—in a bid to attract Republican support or reduce the risks if Democrats pushed it through Congress on their own. Mr. Obama himself publicly suggested such a step. A day after the Massachusetts election, he signaled he might support a smaller measure. "I would advise that we try to move quickly to coalesce around those elements in the package that people agree on," Mr. Obama told ABC News. Mr. Emanuel, who had long advocated for a smaller health-care bill, argued that the state of play in Congress did not favor the Democrats' sweeping legislation, which was helping drive down Mr. Obama's approval ratings, one person involved in the talks said. "Rahm strongly believes that incremental reform is all that can (and should) be done," this person said in an email Monday. White House senior adviser David Axelrod led the counterargument, according to Democrats familiar with the debate. He saw the Obama legacy as intertwined with revamping health care and didn't relent after Massachusetts. The president explored a scaled-back approach and asked his staff to examine areas of broad political agreement, according to congressional aides involved in the process. The exercise quickly pointed to a practical problem: You could not make incremental changes that were politically popular without pursuing the whole package. For instance, Republicans and Democrats agree they should prevent insurers from denying coverage based on pre-existing conditions. But without a mandate requiring healthy people to buy coverage, insurers would wind up with a slew of sick customers without healthy ones to balance them out. That would likely lead to either soaring premiums or a bankrupt industry. After a series of conference calls and meetings, the White House was left with a list of policies that looked very similar to the House and Senate bills. "The practical problems all lead back to themselves," one knowledgeable Democrat familiar with the debate said. White House aides say Mr. Obama tipped his hand at a town-hall meeting Jan. 22 in Elyria, Ohio, when he discussed the results of trying to tease out insurance regulations. "A lot of these insurance reforms are connected to some other things we have to do to make sure that everybody has some access to coverage." Despite Mr. Obama's resolve, the White House may still wind up supporting a scaled-back bill if congressional Democrats are unable to rally enough support for the comprehensive measure. Aides left the door open to that approach. Inside the White House, the calculations involved both politics and policy. "There is a growing realization that we are still so very close," one person involved in the talks said Monday. "Today was a big victory for the comprehensive advocates."