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MATTHEWS: Welcome back to HARDBALL. Will President Obama's health care plan allow for taxpayer-funded abortions-subsidies, in other words? Some House Democrats say it will unless they can put language into the bill now that affirms the federal policy known as the Hyde amendment that's been in place for 30 years and says you cannot spend federal dollars on abortions.

Joining me right now are two Democratic congressmen, Michigan's Bart Stupak and Kentucky's John Yarmuth. Gentlemen, listen to what the president said when he addressed you in joint session a couple weeks ago. Here he is.

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BARACK OBAMA, PRESIDENT OF THE UNITED STATES: And one more misunderstanding I want to clear up. Under our plan, no federal dollars will be used to fund abortions and federal conscience laws will remain in place.

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MATTHEWS: Congressman Yarmuth, as you read the bill now, does it provide federal money to subsidize people who get health insurance?

REP. JOHN YARMUTH (D), KENTUCKY: To have abortions? No. What the bill does and what the Capps amendment that was added in the Energy and Commerce Committee is basically maintain the status quo in the Hyde amendment standards. And we think that's where it would be. This is not the appropriate forum to actually re-debate abortion. We've been trying to do that for 36 years. And right now, the most important thing is that we get a comprehensive health care bill passed. This bill does not do that.

As a matter of fact, if you wanted to stretch that argument further, you would end all taxpayer-or tax breaks to employer-based insurance because about 80 percent of private plans cover abortions, and you would also probably end federal subsidies to some hospitals who perform abortions. So there's no limit to where you could take it if you want to end all federal support that even indirectly could be involved in an abortion.

MATTHEWS: OK. Congressman Stupak, does the bill now-it's headed toward the floor in the House-provide subsidies for abortions?

REP. BART STUPAK (D), MICHIGAN: Yes, Chris, it does. It does. In fact, everyone who plays in the public option must pay $1 per month per enrollee into this abortion services. And for the firsts time ever, federal policy recognizes abortion as a benefit. It's in section 122. It was called the Capps amendment in the Energy and Commerce Committee, the committee in which I said-in which I offered the counter-amendment which basically says, Keep the Hyde amendment. No public funding for abortion.

I agree with John. We should not be having this debate on abortion.

It should be on health care.

So, let's maintain the law, and let's hold President Obama to his word.

MATTHEWS: OK.

Well, let me ask you, Mr. Yarmuth, what would wrong-be wrong with taking the president's words from his speech to you in joint session and offering that as an amendment on the floor that says no money here can be going toward subsidizing abortion? Would that be all right with you?

YARMUTH: Well, that really doesn't clear up the problem, because, again, there are so many different ways that you could argue that federal funds could be used to support an abortion, again, through hospital funding or tax breaks for insurance policies.

MATTHEWS: No.

YARMUTH: Yes.

I think what we are talking about is direct funding. We already make this distinction in the Medicaid laws. We preserve the Hyde amendment. We segregate funding in those states that allow abortion, so that no federal funds are used to pay. They segregate those accounts. So, it can be done. We know how to do it. And there is no reason we can't do it here.

MATTHEWS: But let me ask you this, Mr. Yarmuth. Then, why is Mr. Stupak opposed to this? Why would anybody something who is anti-abortion if there is no abortion money in this?

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MATTHEWS: Why-why are you having this debate if there is no abortion money in here? It doesn't make any sense.

YARMUTH: Well, I think there's real-I think there really isn't that much of a debate, to be honest.

I think there is widespread consent that we-or consensus that we are not going to use taxpayer funds. The question is how you define it. And-and I think what Bart wants to do-and I have the greatest respect for his conviction on this issue-what he wants to do is go a lot further than the status quo.

And that is make it-basically, change the terms of a lot of insurance policies that people now have. And a woman under his amendment, as I understand it, shopping in the exchange for insurance would not be able to buy coverage for insurance, even with her own money. She would have to actually buy a separate rider, which means she would have to plan for an unplanned event, which I think is illogical.

MATTHEWS: OK.

Mr. Stupak, let's get back not to the question of the exchange, but to the subsidy.

STUPAK: Sure, Chris.

MATTHEWS: I understand English language to conversation. If you subsidize ethanol, you are subsidizing it. If you reduce the price of something by using federal dollars to somebody, you are encouraging it.

I understand exactly why you're in this debate. If you reduce the price of something by using taxpayer money to subsidize it, you are in effect encouraging it.

STUPAK: Correct.

MATTHEWS: Make that point, the way you want to make it.

STUPAK: Sure. I mean, even the Capps language says, in the exchange, at least one plan-could be nine out of 10 -- must have abortion coverage. We have never gone there before.

The Hyde language is very clear. You do not use public funds to pay for abortion or for policies. And we are just saying maintain the law that has been on the books for 35 years and let's live up to the president's word, no public funding for abortion in this health care plan, and we are happy...

MATTHEWS: OK.

STUPAK: ... and we can go away.

MATTHEWS: Mr. Yarmuth, I understand Chris Van Hollen. Let's listen to him. I think he's trying to broker this and get a health care bill that does not provide for abortion coverage.

Here he is. Let's listen to him trying to broker this.

(BEGIN VIDEO CLIP)

REP. CHRIS VAN HOLLEN (D), MARYLAND: Well, we are working very closely with Bart Stupak and that coalition of Democrats and the Republicans that they have reached out to on this issue to write the bill in a way that makes it absolutely clear that no public dollars, no taxpayer dollars can go to fund abortions as part of the health care reform bill.

(END VIDEO CLIP)

MATTHEWS: OK. I don't think anybody wants to see health care die over this issue.

Mr. Stupak, whatever you think, I think most people don't want it to happen. So, is there any way to avoid this at this point?

STUPAK: Chris, in the last 12 hours, we have had some good conversations. We're starting to share some language.

We would like this resolved before the bill comes to the floor, so we don't have to have a rule fight on it. We would like to get this resolved internally. And, hopefully, we can. I appreciate the dialogue we have had in the last 12 hours. And let's continue that dialogue, get this matter resolved, no public funding for abortion, and let's get health care passed.

MATTHEWS: Mr. Yarmuth, are you willing to compromise on this, or do you think you have issued your final position on this, the lowest Capps position? You think you have already dealt with it, right?

YARMUTH: Well, I think that is probably the best solution I have seen. I would be open to a different set of words on it.

Again, I think we are actually seeking the same objective here, but we

we have to make sure we don't go too far and have a lot of unintended consequence, which is to change basically all the insurance policies which exist now.

MATTHEWS: It seems to me, Mr. Stupak, that the speaker has about 38 votes to spare among Democrats and still pass this bill and get 218. I'm not sure of the exact math. How many votes do you have to block it?

STUPAK: Around 40, 41.

MATTHEWS: So, you can stop health care reform in its tracks?

STUPAK: Well, no, we can't stop it. What we do, we would delay it. They would have to go back to the Rules Committee, bring back the rule, and make our amendment an order which says no public funding for abortion. And then we can move on with health care.

MATTHEWS: Well, what will happen? Well, what-what will...

(CROSSTALK)

STUPAK: We don't-we don't-we don't stop it.

MATTHEWS: OK.

STUPAK: We just delay it.

MATTHEWS: OK.

And then the pro-choice people, who are adamant on this issue and don't want any differential, they don't want any higher premium for people that want abortion coverage, they will go to war, won't they?

Mr. Yarmuth, won't you go to war if they make these changes?

YARMUTH: Well, I'm not-I'm not sure I would go to war.

But I think there are probably enough votes that would go to war. And what it would effectively do is would make Bart-put Bart in a lose-lose situation, because, if he lost his amendment, he wouldn't get what he wanted, and if he-if he got what he wanted, he would lose the bill. So, eventually, it wouldn't be any change in the law.

So, I think it would be tough if Bart prevailed, with the more pro-choice segment of the caucus.

MATTHEWS: Mr. Stupak, will you bring down the health care bill if you have to?

STUPAK: I will prevent the rule from coming up, which would prevent the bill from coming to the floor by blocking the rule. I'm not interested in torpedoing health care. I would like to see health care. I'm excited about our chances, the closest we have ever come as a country.

This issue was resolved about 35 years ago. Let's stick to it, as point says, no public funding for abortion in health care, and we can resolve this difference, and move on, and provide health care for all Americans.

MATTHEWS: Well, good luck to all of you. It looks like something that smart politicians ought to be able to deal with.

Thank you very much. Congressman...

YARMUTH: I think we can.

STUPAK: Thank you.

MATTHEWS: ... Bart Stupak and Congressman Yarmuth, thank you for both coming on.

YARMUTH: Thank you.

MATTHEWS: Smart people can disagree.